Government plans changes to procurement practices

Manitoba looking to move away from project labour agreements

by Russell Hixson 

The Province of Manitoba has announced it is starting a consultation process to change its procurement practices and move away from project labour agreements (PLA).
 Manitoba looking to move away from project labour agreements

 

A release from Infrastructure Minister Ron Schuler stated the government intends to “reduce or eliminate the costly practice of project labour agreements regarding major government projects.”

“It was our promise during last year’s provincial election to shop smarter,” said Schuler. “We believe our procurement policies and tendering practices are an area where we can find savings for Manitoba taxpayers.”

The Manitoba government is now consulting with industry stakeholders and other affected individuals on how to move forward.

“Using government contracts to forward an ideological approach is not an acceptable practice,” Schuler said.

“It is up to companies to decide which labour management strategies work for them, not government.”

The move was met with praise from many in the construction industry who have been calling for an end to PLAs after the former NDP government’s controversial Red River Floodway expansion project that sparked a major battle in the construction industry over the rights of workers.

Work began on the project in late 2005 under a PLA that required non-union participants to pay union dues.

“In order to bid you had to prequalify and demonstrate you were a unionized contractor, in heavy construction 95 to 98 per cent is open shop,” said Chris Lorenc, president of the Manitoba Heavy Construction Association (MHCA). “We said to government that it is a terrible policy. Workers have the right to determine if they wish to be employed in a union or open shop environment.”

Lorenc said the project sparked a huge policy battle with the government that lasted a year. In the end, the trade-off was that open shop companies could participate but employees would have to contribute union dues, though their names and personal information would be kept private in a trust by a third party. Lorenc estimates roughly $1 million in dues were paid by non-union workers.

It also, in some cases, forced workers to be paid below industry rates, Lorenc claimed. The MHCA argued against this, calling it an artificial interference in the forces of supply management and in competitive bidding.

He said this made it difficult for contractors to develop a loyal workforce.

“We said that was a horrific waste of money that added nothing to the project management,” said Lorenc. “It was unconstitutional and morally wrong.”

Sudhir Sandhu, CEO of the Manitoba Building Trades, expressed disappointment in the government’s comments.

“It is an election promise they had made,” Sandhu said. “Our concern is where does the impetus come from? We accept and respect that they are making evidence-based decisions, but their press release echoes sentiments expressed by particular segments of the construction industry that tend to be self-serving and motivated by private interest.”

He said comments stating PLAs are responsible for cost overruns are not only factually incorrect, but are a primary line of attack for some non-union components of the industry. It’s Sandhu’s view that poor project management, unrealistic estimates and supply chain issues often cause problems on megaprojects, not PLAs.

Yvette Milner, president of Merit Manitoba, praised the government’s move, noting Merit has been advocating against PLAs for years.

“We are really quite pleased with the direction that they are going in,” Milner said. “There are numerous studies that show restrictive bidding practices increases the cost of projects and reduces competition. Seventy per cent of the construction workforce is non-union. It doesn’t make any sense for them to be shut out of the work.”

Paul de Jong, president of the Progressive Contractors Association of Canada (PCA), also supported the government’s position saying it restores workers’ rights and allows a fair, open and competitive tendering process.

The PCA stated that research shows opening up competition on publicly funded construction projects saves taxpayers up to 30 per cent.

“This is not just welcome news for construction workers and companies unfairly excluded in the past by outdated and restrictive PLAs. It’s welcome news for the taxpayers of Manitoba as well,” said de Jong in a press release.

The Manitoba Building Trades intends to participate in the consultation process but Sandhu said he is concerned it may be based on a “conclusion rather than inquiry.”

“Words have meaning and we look carefully to try and read without making too many assumptions,” he said.