During the fall session of this Assembly, many questions were raised about this government's policy of entering into negotiated contracts with community organizations outside of the conventional public tendering process.
First of all, we must put the role of negotiated contracts in its proper perspective. On December 13, 1993, I tabled in this House a record of the contracts which the Department of Transportation had negotiated since April 1, 1992. Between the first of April 1992 and the end of November 1993, the department awarded 905 contracts with a combined value of $84 million. During that same time, the department entered into 21 negotiated contracts with a total value of $6.4 million. Negotiated contracts represent a little over two per cent of the number of contracts awarded and less than eight per cent of the department's contractual expenditures. By far, most of the Department of Transportation's business is conducted through the conventional public tendering process and negotiated contracts play only a small part .
I fully support the competitive tendering process as the most efficient means of awarding public contracts. As anyone who has ever made a bid on a public contract knows, bare-knuckle competition can be a pretty rough business. The pricing strategies that bidders employ are highly innovative and competitive. Exactly as it is intended to do, the tendering process selects the most experienced, aggressive and successful entrepreneurs to work on our public projects.
Even so, for many years, the Government of the Northwest Territories has applied a modified version of the public tendering process through its business incentive policy. The business incentive policy corrects for the economies of scale that larger firms in southern Canada enjoy. The policy also takes into account the higher costs of doing business in the north that northern entrepreneurs incur.
The preference that the business incentive policy gives to northern firms has been successful in helping to establish viable business sectors in the larger northern centres. Working from our success, we have revised the business incentive policy again to extend its reach even further to the businesses in the smaller communities.
However, for all the advantages of the tendering process, public government, especially in the NWT, has a broader responsibility to its people than to look always and solely at the lowest bid. Strict adherence to the public tendering process would not, in any acceptable length of time, bring about the socio-economic benefits of business management experience or the training and employment opportunities that our communities so desperately need.
In some cases, the department adopts a special approach to a contract award in which, along with the lowest bid, it evaluates the local training and employment opportunities the contractor can deliver through the project. In other cases, where a local contracting firm may not exist, the department might manage the project itself to make the most of an opportunity to employ local workers.
The negotiated contract is another tool that we use to bring business opportunities to the communities. Until smaller companies in the communities have had a chance to gain some management experience and entrepreneurial skills, they operate at a severe competitive disadvantage to our more established and proven businesses in the private sector.
The decision to enter into a negotiated contract is made by the Executive Council within an established policy framework which sets the criteria and objectives a given proposal must satisfy.
We might have cause for concern if too large a portion of governments' expenditures were made through negotiated contracts or if too many of them went sour. As it is, negotiated contracts are a small part, I repeat a small part, of our public expenditures and most of them succeed. Of the 21 negotiated in the past two fiscal years, only one has gone badly wrong and for that one I have accepted full responsibility.
By the same token, I might add, the public tendering process does not always work as it should. Sometimes the lowest bid is shaved too fine, the contractor defaults and cannot finish the job or deliver the product. No method is perfect and we should not rely on any one method to meet all the objectives of this government.
I am proud of the department's record with negotiated contracts. The figures I tabled on December 13 show that the Department of Transportation's record with negotiated contracts is a good one and one which I, as the Minister responsible and with my colleagues on the Executive Council, fully endorse.
It is my responsibility as a Minister to choose the best tool for the job. For the purpose of stimulating community business development and offering local training and employment benefits, a negotiated contract is one of the tools we have. When I am satisfied that a negotiated contract can accomplish its purpose best, I intend to use it.