Mike W. Bryant
Northern News Services

Yellowknife (June 10/02) - It will likely be a stormy ride for cabinet when the legislative assembly reconvenes tomorrow.

Workers from JSL Electrical and PCL Constructors load some piping into the ceiling at the Phase I portion of the correctional centre being built in Yellowknife. Contractors are worried that the government's recent decision to rescind its Northern preferential policy for Phase II will have long-reaching implications. - Mike W. Bryant/NNSL photo

At issue is the government's recent decision to rescind its Northern preference policy in tendering construction of the adult correctional facility in Yellowknife.

Construction contractors and MLAs alike are wondering what the future will hold when the government goes tendering for other projects.

"I suspect it will be quite lively because there's lots of members talking about it right now," said Hay River North MLA Paul Delorey. "I want to see everything on the table too, how they're justifying doing this."

But Delorey also wondered whether Northern construction firms may have played a part in the government decision to suspend the Business Incentive Policy.

"Maybe it's time for the department to sit down with (NWT) Construction Association and industry and find out why the tenders are so high?" Delorey mused.

"I know that there's been a lot of tenders awarded that the project design in them just doesn't fit. Once the companies get halfway into doing the work, they have to start changing things, and that is very expensive."

The NWT Construction Association was outraged by cabinet's decision to rescind the BIP for the Phase 2 correctional facility tender.

Keith Houghton, head of the association's BIP committee, says levelling the field for Southern companies will ultimately only put the government and the North at a disadvantage.

He was told the BIP was dropped because the $40 million correctional facility was over budget.

"How can the government possibly go and demand from the multinationals and the petroleum industry that they buy Northern and hire local and develop Northern expertise when, in their own words, 'budget problems are ammunition enough to put the BIP aside?' " asked Houghton.

Yellowknife South MLA Brendan Bell echoed Houghton's concerns over the precedent being set by the territorial government.

"It really is a strange message to be sending to the BHPs and Diaviks of our little world when we insist that we're not so much concerned with their bottom line, but we want them to use Northern contractors and Northern labourers," said Bell.

"When it comes to our own business we're willing to wave this thing because it's inconvenient budget-wise."

One of the decision-makers in this scheme, Finance Minister Joe Handley, said the government rescinded the BIP on constructing the jail because contractors' demands were getting out of hand.

"Where it started, as finance minister, I did approve a supplementary request for over $5 million in February, and then the people that started the project came forward again and said, 'We need another $3 million,' and I just said, 'No,' " said Handley.

"We have to get control on some of this stuff. It's just beginning to be too expensive, too many requests for additional money. So we have to find other ways of cutting costs."

Handley did agree, however, that such a move could have wider ramifications for future government contract tenders.

"It could be precedent-setting, but I'm talking with the Construction Association as the minister of public works, so we'll find our way through this one," said Handley.

Nonetheless, contractor Steve Waser is worried.

The owner of Dowland Contracting, based in Inuvik, said there are many misconceptions on how the BIP works.

Contractors receive a 15 per cent deduction for operating out of the North, and another 5 per cent for being local. He said, in reality, it's a bit of a catch-22.

"On large contracts, there are some services we have to get from the South," said Waser.

"There are speciality items you can't buy in the North."

The more a Northern company has to buy and hire from the South because the services are not available here, the more it works against their BIP adjustment.

Southern companies benefit from the BIP, too . Every time they sub-contract out to local firms, it is more money they can add into the BIP. Ultimately, the ones that will hurt the most by the government's decision to scrap the BIP, said Waser, are Northern workers.

"It's in his (Southern contractors') best interest to have as much Northern content as possible," said Waser.

"Removing the BIP, removes the incentive to hire locally or use Northern services as well."