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SOMBA K'E/YELLOWKNIFE
Council's vote to award a $30-million contract to build Yellowknife's new water treatment plant to a southern company drew criticism from several councillors during Monday's council meeting.

Ontario-based NAC Contractors Ltd. was awarded the $30,280,950 contract after the city held an invitation to tender for the project.

Two also Northern companies bid for the contract, including Det'on Cho Nahanni Construction Ltd. and Clarke Builders, which put in bids of $30,978,876 and $31,153,755 respectively.

Councillor Linda Bussey abstained from the vote, which passed four votes to one with one abstention. Councillor Phil Moon Son declared a conflict of interest because he works for the Det'on Cho Corporation and therefore was excused from discussion regarding the contract.

Bussey said she couldn't support a contract for the project that was awarded to a southern company, especially when the difference between the lowest bid and the next highest Northern bid was only two per cent.

"I need to stand for what I believe in," said Bussey. "I can't support something that I was committed in looking into when I was campaigning - to support Northern businesses."

Bussey said she understood the bid had to be legally issued to the lowest bidder.

However she said, "I think we need to look at maybe finding different ways of doing business. "We have to take time to look at what can benefit our Northern businesses."

Carl Bird, director of corporate services, said the city is bound by regulations set out in the Agreement on Internal Trade (AIT).

"The AIT stipulates that organizations in the municipal sector are not allowed to include local preference in any contracting that they do," said Bird.

He added that when the city puts out an invitation to tender, it is legally obligated to award the contract to the lowest bidder, which in this case was a southern company.

"$30 million is going to a southern company because we're legally required to give it to the lowest bidder leaves a bad taste in everyone's mouth," said Councillor Rebecca Alty.

Alty voted in favour of the contract. She said doing otherwise would have placed even greater financial and legal constraints on the city in the long run.

The city was forced to build a new water treatment facility after the GNWT adopted the Canadian federal guidelines for drinking water as legislation in 2009.

Alty added that if council had voted to award the contract to any company other than the lowest bidder, the city would have had to pay a fine of between $6 million and $7 million for breaking

the trade agreement.

However, she said municipalities in the other two territories are not bound by the AIT.

According to Bird, Nunavut is an observer but not a signatory on the agreement, because it was brought into law in 1995 before Nunavut became a territory. The Yukon on the other hand is not bound by it because it had buy-local agreements in place before it signed onto the agreement.

Alty said it was unfortunate that municipalities in the Northwest Territories were prevented from favouring local businesses, while the other two Northern territories were not.

"We have to adhere to it, and it's a probably a pipe dream that we can get out of it," said Alty. "But I think we should continue to look because economic-development opportunities are being lost."

In order to pay for the project, administration is recommending amending the borrowing bylaw to allow the city to borrow an extra $3.8 million.

The city had originally voted to borrow $20 million for the water treatment plant while it had $5 million in carry-over, that was allocated for the project in previous budgets.

Bird said borrowing the money made sense because interest rates were favourable at the moment. He added that delaying borrowing money might lead to an increase in costs.

Council voted four to two in favour of passing the amendment after second reading, with one abstention during Monday's council meeting. The amendment must now be signed by the GNWT's minister of Municipal and Community Affairs before its third and final reading by council.

Councillor Niels Konge was disappointed council chose to borrow the money without looking at other ways to come up with the funds.

"I feel that as a council we could have worked a little more diligently at finding money for this project, rather than going out and borrowing the money," said Konge.

"I'm disappointed that we borrowed this money and that we're going to have to pass these costs on for the next 15 years to the tax payers of Yellowknife."

Konge said Yellowknife's population decreased by 496 people last year - a fact that he attributed to high cost of living in the city, which he argued would be compounded by having to further increase taxes to pay off the loan.

Moon Son, who was the only other councillor to vote against borrowing the funds argued the city should at least look at other ways of coming up with the money.

"Granted this is not a frivolous expenditure, this is a very important expenditure, but at the end of the day, we're still here evaluating all the pros and cons and trying to make the best decisions for our residents," said Moon Son.

He said the vote should have been deferred and that it was unfortunate the decision not to do so would be felt in the pockets of Yellowknife's residents.

"Residents of Yellowknife are going to have to pay for this for a long period of time," he said.

Bird also helped alleviate council's concerns over the cost of replacing the city's underwater pipeline to the Yellowknife River. He said administration has earmarked $11.3 million for the replacement in its 10-year capital plan.

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