INUVIK
In a cost-saving move, the GNWT housing corporation introduced a bulk-procurement pilot project last year in the Beaufort-Delta region. Five communities were involved: Inuvik, Aklavik, Sachs Harbour, Ulukhaktok, and Paulatuk.

Maintaining supplies for northern projects like this school renovation in Inuvik is costly. The community was part of a GNWT housing corporation pilot project that some Inuvik suppliers say brought to the fore inadequacies in the GNWT business incentive program. - NNSL file photo

“Last year we did some re-organization,” said Scott Reid, director of infrastructure services with the NWT Housing Corporation. “We recognized the opportunity to realize some savings through bulk procurement through our local housing authority procurements.”

The idea behind the project was to collect the needs of various housing authorities into individual tender packages divided into 11 commodity groups.

For example, if 3 doors were needed in Inuvik, 5 in Sachs Harbour, and 9 in Iklavik, the housing corporation would tender 17 doors with delivery to the individual communities rather than tender three different packages for each community.

The tenders were centralized and made available to suppliers territory-wide.

“It was an attempt to realize economies of scale by buying material in bulk,” Reid said. “Instead of having five organizations requesting quotes individually, the intent was to take all those materials and just request once.”

Reid reported cost savings of between 10 and 15 per cent on almost $280,000 worth of purchasing under the pilot project. But that success has also raised concerns among local business people surrounding the fairness of having regional suppliers compete territory-wide for what used to be local bids.

Previously, housing corporation tenders would have been distributed by local housing organizations to local suppliers in the region, who then offered competing bids.

It may not have guaranteed the lowest possible price, but it did mean regional suppliers who shared a similar cost of living and doing business - heat, fuel, and wages for example - would be competing with each other.

“It worked,” said Mario Lemieux, owner of Rocky’s Plumbing in Inuvik. “They (the local housing authority) may have paid a little more, but they were helping to support the people who are here to provide the service.”

The GNWT business incentive program (BIP) awards a 15 per cent bid advantage to NWT companies and a further five per cent bid advantage to regional suppliers.

Without getting into the mechanisms of how a company is defined as territorial or regional - a separate issue some suppliers say - if local suppliers were only competing with each other on bids, then whether or not their five per cent additional BIP allowance reflected cost of living realities was a moot point.

By opening local bidding to bulk purchasing through regional suppliers, as in the Beau-Del pilot project, some local suppliers believe the five per cent BIP advantage shows itself to be inadequate.

“You get five per cent for local, 15 for NWT,” said Lemieux. “But (when you) do an accurate up-to-date cost analysis… that percentage is not even close.”

Local supplier and Home Hardware owner Joe Lavoie agrees. Lavoie now finds himself competing on local bids with his own suppliers.

“Five per cent doesn’t equal the reality of our cost of living,” Lavoie said. “We need more than five per cent.”

Cost of living differentials published by the GNWT Bureau of Statistics for federal isolated post living costs show the cost of living in Inuvik to be 20 per cent higher than in Yellowknife. The BIP allowance for Lavoie, or any other Inuvik-based business, is an additional five per cent.

Lavoie points to statistics like this to highlight his concern that opening local bidding to territorial suppliers isn’t fair to local businesses, at least under the BIP as it stands now.

Reid said that eighty per cent of the pilot project dollars awarded in supply contracts went to businesses in Inuvik that met BIP criteria for the extra local five per cent advantage. The other twenty per cent went to businesses based in Yellowknife and Hay River.

At the time he spoke to News/North, Reid could not confirm whether or not 100 per cent of purchasing previously went to local suppliers.

The pilot project has since been extended to all the NWT. Bidding is not closed on the most recent round of tenders, and data will not be available regarding cost savings or the distribution of awards for a couple of weeks.

Reid said the housing corporation has a mandate to spend tax dollars efficiently.

“We can’t restrict tenders (to local suppliers),” Reid said.

“The bottom line is, we have a policy we have to follow. We are using government funds. We need to make sure we’re using taxpayers dollars as effectively as we can.”