Mahsi, Mr. Chairman. Since this department is responsible for negotiating, tendering and implementing
many of the contracts of other departments as well as its own, a number of issues relating to contracting in general were discussed when this department appeared before the committee.
Business Incentive Policy
One concern expressed was regarding the business incentive policy (BIP). Committee Members report that many business operators in the north are increasingly frustrated with the current policy. They see it as unnecessarily complicated. They also see it as unfair at times, when southern companies start getting northern preference without, in their view, adequate justification.
The committee acknowledges that the department is re-examining the BIP in hopes of improving it. But committee Members urge the department to go back to the original objective of the policy: to ensure that as much of the government's expenditures as possible stay in the north to the benefit of northerners. Suggestions that a revamped BIP would put more emphasis on the northern labour content of contracts are worthwhile, but the department must be careful not to further complicate the program.
Recommendation 11
The Standing Committee on Finance recommends that the Department of Public Works and Services replace the current business incentive policy with a new program that is simpler, less bureaucratic, enforceable, and more effective.
At the end of this presentation, I will be making a motion on this recommendation.
Contract Estimating And Budgeting
Committee Members also noted a possible problem with the estimation of contracts, and with coordination and communication with other departments. In the past, the standing committee pointed out how many projects had gone over budget and urged the department to improve its estimating procedures. Now, many projects are over budget, but many projects come in under budget, too. While this means that overall spending estimates are more likely to be accurate, the wide variance in project estimation still concerns committee Members.
Granted, estimating projects in the north is much more difficult than elsewhere in Canada, due to the many unique factors affecting construction and planning in the north. But the committee still urges the department to improve its estimating procedures, in order to reduce the variance in project spending and to allow better and more consistent planning. The committee will expect departments to explain and justify wide variances in project estimates.
In his opening remarks, the Minister suggested that the original goal of splitting the budget into two separate bills -- allowing capital project tenders to go out earlier -- would be reached by April 1996 for 1996-97 contracts. Committee Members are concerned, however, that tenders are still often late enough that projects are delayed to future years. Committee Members noted many disadvantages to the two-budget process, and noted that if the advantage of extra lead time was not being realized, then the two-budget concept should be reviewed.
Inuvik HTHW System
Committee Members note that the department is proceeding with the phasing-out of the Inuvik high temperature hot water (HTHW) heating system. As was recommended last year, the committee continues to encourage the department to consult with other departments, as well as agencies such as the NWT Power Corporation, as they plan the dismantling of that system.