In mid-April, Hay River town council awarded a major contract for a two-year water and sewer project, with road repairs to follow, on Riverview Drive.
While the awarding of an $8.8-million project is notable enough, some of the concerns raised by town council were equally notable.
That included questions about what may have been cut from the project to bring the one tender down from $9.6 million to the more acceptable number of $8.8 million which was approved by councillors. There were also questions about how the town’s estimated costs for such projects are developed during the budgetary process.
However, the most interesting concern was raised by Coun. Brian Willows, who wondered how the town could know if it is getting value for its money when only one bid is received for a contract.
Willows, the chairman of council’s finance committee, asked how a market can really be tested in such a situation.
“I have no clear picture of whether our cost projections are invalid or if we’re just not getting competitive bids, because there’s only one bidder,” the councillor said.
That, of course, is a legitimate concern. How can there be a “competition” if there is only one player?
However, in the world of tendering, there really is no way to address the issue except to let the free market run its course.
It is obviously quite impossible to force companies to make bids, even if they have the expertise to undertake a project. In a free market, that is completely up to them.
Glenn Smith, the town’s senior administrative officer, told the April 12 meeting of council that the tender for the work on Riverview Drive was advertised and eight or nine firms picked up information packages.
In a sense, advertising the tender and having it considered by various companies can be considered a competitive process, even if it only results in one actual bid.
Everyone had a fair shot at making a bid. Again, free enterprise means the companies make their own decisions.
Of course, that still leaves the question from Willows unanswered. How can it be known if a lone bid is competitive, reasonable and good value for the town and its ratepayers?
That responsibility obviously falls back to the town and its consultants. The town sets a budget for a project, so it must have at least some idea of the range in which the cost should fall, and whether a tender is competitive and reasonable.
In the case of the Riverview Drive project, that process seemed to work because negotiations brought the bid down by about $800,000 with some changes.
And even though prices for projects continue to change, the town has a history of awarding tenders to look back upon to judge if a bid is competitive.
It’s not an ideal process, and it would obviously be much better if there were three or four bids for every municipal project in Hay River.
However, you play the hand you are dealt.
And in the world of large construction projects, one bid is certainly better than no bids at all.