PWGSC hands 13 contracts and
300 keys to Brookfield LePage
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
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
"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,
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.
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.
regular column, Common