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ONE GIANT EXPERIMENT - 
PWGSC hands 13 contracts and 
300 keys to Brookfield LePage

by Gord McIntosh

For years Canadians have been treated to scary stories of government incompetence and misspending in reports of successive auditors general (AG). So a chapter in last fall's report by Auditor General Denis Desautels stood out.

This chapter dealt with a decision by Public Works and Government Services Canada (PWGSC) to contract out the property management and maintenance of 300 government buildings from Vancouver Island to Newfoundland in 1998 - work being done then by 500 government employees. The department chose one contractor, Markham-based Brookfield LePage Johnson Controls (BLJC) - a partnership of two longstanding property management firms - and signed thirteen contracts worth an annual total of $170 million in March 1998.

And the project so far is going fine, a term not commonly found in the AG's report.

It may be too early to tell how much the government will save, the AG said, but there were a lot of things about the project that Desautels liked such as quality reviews, environmental protections and the way BLJC took on government employees who were doing the jobs previously. Almost all government employees whose work would be transferred to BLJC were offered jobs at 100 percent of salary and benefits for at least three years.

"The contracting process used by PWGSC to contract out the operation and maintenance of two-thirds of its buildings was well managed and consistent with the objectives of the department," Desautels wrote in his report. "We found that the bidding process was open, transparent and fair. The contracts were well designed and the hand-over to the contractor went smoothly."

As a result, this is an outsourcing project that is being watched closely inside and outside government as a likely case study of how alternative delivery of services can be implemented in the public sector. And this project is set apart by the lack of news coverage of government functions being handed over to a private contractor.

David Glass, president of BLJC, remembers the day in September 1997 when his company formally bid for the project. There were 13 separate requests for proposals (RFPs) for 13 contracts. BLJC delivered enough paper in the 13 proposals to fill one cube van.

"We did not anticipate getting them all. In hindsight perhaps we should have. If you respond successfully for one, then you're probably going to be in the top one or two across all thirteen."

George Butts, director of alternative forms of delivery, part of contracting services at PWGSC, says 14 companies bid a total of 62 proposals. BLJC was the one bidder for all 13 RFPs - one company bid on 10, another on just one.

"Brookfield came up on top on all 13 packages. The fact that one bidder got all 13 contracts will work to the advantage of both sides," Glass says. "There are synergies. There are efficiencies that you otherwise might not get."

It has almost been a given when government services are contracted out - particularly when a large unionized workforce is involved - that jobs will be lost and those keeping their positions will have take a pay cut. But for Glass, full employment is a no-brainer. In addition, the RFP made it clear the government wanted the staff taken care of, he says. All workers were to be guaranteed employment for three years.

Glass gives PWGSC credit for doing advance work to alleviate employee anxiety long before the formal hand-over in May 1998. "The anxiety levels were there, no question. That's to be expected. The government communicated well. Their focus all the way through this had been on people."

Basically, his mandate is to do what PWGSC was doing at 10 percent less cost. At least the government is guaranteed to spend 10 percent less on the maintenance of those buildings. If BLJC can't do the work at 10 percent less than what it was costing PWGSC, it must eat the difference out of its margins.

"They (staff) knew what to expect and they got what they were told to expect. There weren't any surprises. The surprise was everything clicked," Glass adds.

And, although every new employer starts off the boss-to-worker relationship by asking for suggestions, it was very important that those solicitations were followed up with action instead of platitudes, Glass says.

"It's often the case where people are asked for their opinions on how to improve things and that's about as far as it goes," he says. "Part of the way we save the money is by working with people, getting their thoughts on how to improve, listening to them and then doing it." As for how exactly BLJC plans to save all that money, that's a trade secret. But Glass wants one thing on the record:

"If you attempt to achieve financial objectives on the backs of people then you're never going to achieve them. That might sound like a dream, but when you think about it, you're asking people to commit both their hearts and their minds to you. And if prior to doing that you say, 'and by the way we're going to pay you at 75 percent of your current income,' you're never going to get their hearts and minds. We don't have a choice but to improve things. So we have to listen and we have to act." Productivity is up as a result, he says.

Of the 500 people who were looking after the buildings prior to the contract, 465 have moved over to BLJC. Indeed, the workers were taken care of salary and benefit-wise, acknowledges the president of the union that used to represent the workers involved. "I think they went over with a better salary, benefit, employment package than I've seen in most privatizations," says Mark Brunell, president of the Government Services Union. Certainly, he says, the PWGSC employees were treated far better than workers were in some of the controversial hand-overs Ottawa has done such as the Cerco take-over of a military base in Newfoundland.

But Brunell says, "It's good that they went over with good benefits, but they have paid some price for it." Increased workload and pension benefits have already emerged as workplace issues.

When Ottawa surrendered management of the 300 buildings, the workers were no longer under jurisdiction of the Federal Labour Code. That meant the union lost its national certification as the bargaining agent. Now it must apply for re-certification in all the provinces involved. So far it has won back certification in Quebec and is planning applications in other provinces, says Brunell.

Some of his former members have since left BLJC because it was not to their liking, he adds. Others have been fired. Some of the tensions no doubt are due from transition to a non-union environment. But an important test will come next March, when the employer is no longer required by its agreement with the government to employ all the workers. The union and the workers will be watching.

According to Butts, the staff was kept informed through every step of the process with regular meetings and credits BLJC with continuing the flow of information.

"I wouldn't want to say there wasn't staff anxiety. There was," he says. "We started very early in the process keeping them informed of what was happening and worked very closely with Brookfield, once Brookfield was the selected contractor, to alleviate any concerns - to make sure the transition was smooth." That included training exercises to get employees ready for the change in workplace culture. Credit also should go to the employees themselves for wanting the transition to work, Butts says.

Indeed a lot of people inside and outside government want this transition to work.


Gord McIntosh is an Ottawa-based freelance journalist specializing in trade and finance issues. He spent 20 years as a journalist with The Canadian Press and has been published in the Financial Times of London, The Economist and Canadian Business among others.

Read his regular column, Common Cents.

 

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