The Yukon government’s new First Nations procurement policy is continuing to not sit well with some people.
A lawyer representing a Whitehorse business has warned the government about the potential launch of a constitutional challenge of the policy.
Meanwhile, in a letter submitted to the Star recently, local resident Mandeep Sidhu outlined his objections to the process announced by the Liberals before Christmas.
“I’m ashamed of the Liberals’ new procurement policy that is pushing for a re-evaluation for bids submitted by First Nation (FN) owned companies,” Sidhu wrote.
“The value can range from 15 per cent to 35 per cent. What this means is that First Nations-owned companies will be given an advantage by being able to bid 15-35 per cent more than a non-First Nation-owned company.”
Sidhu went on to use an example of the way he understands the process would presumably work. He provided an example of his reasoning.
“Say a non-First Nation-owned company bid $100,000 on a contract and received no benefits from the new bid value reduction.
“Meanwhile, a First Nation owned company bid $114,000. The FN bid would be re-evaluated with the reduction of 15 per cent and the bid would be considered $96,900 and the FN company would receive the tender. The First Nation company would be paid the $114,000.
“This means taxpayers will be paying between 15-35 per cent more to have First Nations-owned companies to complete a contract than a non- First Nation owned company.”
Meredith McDonald, a communications analyst with the Department of Highways and Public Works, said Sidhu is not understanding the process properly.
“In terms of policy measures respecting bid value reductions, (they) are a mathematical way of re-ranking bids to increase the participation of YFN businesses and people in territorial procurement,” McDonald said.
“Bids submitted by suppliers are adjusted during procurement evaluation process based on a supplier’s ownership structure as a Yukon First Nations business, partnerships with Yukon First Nations businesses, business location, and hiring Yukon First Nations labour.
“Bid value reductions are applied to bids according to who is doing what work,” McDonald said.
“The use and impact of bid value reductions will be closely tracked and assessed by the Department of Highways and Public Works as well as the monitor and review committee, which will be made up of equal numbers of Government of Yukon and Yukon First Nations representatives.
“There will also be a two-year review on bid value reduction measure in the policy to assess its effectiveness and impact on the economy,” McDonald said.
“In the meantime, if any major market disruptions are observed, the Yukon government will work collaboratively with Yukon First Nations partners to adapt the policy sooner.”
McDonald then went on to discuss the scenario that Sidhu had raised.
“It seems like a scenario about a price-driven procurement,” she said.
“It is important to note that for many important and large Yukon government procurements, the value of technical points is much larger than price points, usually with only 20 per cent for price.
“For a bid value reduction of 15 per cent, the business would have to be a 100 per cent Yukon First Nation-owned business, and the business would have to meet the policy definition of Yukon First Nation business.
“It would also have to be assumed that Yukon First Nations-owned business is doing 100 per cent of the work in the contract, not using any subcontractors,” McDonald added.
“If those assumptions are true, then that Yukon First Nations-owned company would receive a 15 per cent bid value reduction, not 35 per cent.
“Also, there are opportunities for non-First Nations-owned business to partner or subcontract with Yukon First Nations business to also benefit from bid value reductions, which would offset the 15 per cent bid value reduction,” McDonald said.
In his letter, Sidhu said he had asked several government officials and departments “a very simple question.
“Under the previous tendering system, were their obstructions that made it inaccessible for FN owned companies?” he asked.
“I have not received an answer from government; however, one FN company owner did respond, and he said he felt he was just as capable as any other non-First Nation-owned company.
“The Liberal government is saying, by allowing this procurement policy, that that must be impossible,” Sidhu said.
“That’s what the Liberal government would have you believe. That these FN companies aren’t equal to the non-First Nation-owned. That FN can’t compete against non-First Nation-owned without assistance.”
Sidhu completed his comments in the letter by writing, “I strongly disagree. FN-owned companies already compete with non-First Nation-owned companies and don’t need to be coddled.”
Sidhu’s father’s business, JS Sidhu Trucking Ltd., has weighed in on the issue via its lawyer, Brian Beresh. The Star has obtained a copy of that letter.
“My client is extremely concerned about the lack of effective consultation and the constitutionality of this legislation,” Beresh wrote in the letter to minister Richard Mostyn.
“My client has operated in the Yukon for over 30 years and is sincerely committed to the economic and social development of the Yukon.
“It employs 99 per cent of local hires and has a broad and clear track record of employing a large number of First Nations citizens. It has endured additional cost for start-up, utility fees and related costs because of its location in the territory.”
In the letter, Beresh cited “of further concern is that the Umbrella Final Agreement, under which they have operated in good faith, protects not only First Nations individual and business interests, assured that the bid procurement system would remain ‘competitive.’
“My client’s past investments and future plans have been developed and framed with that protection and assurance in mind.”
Beresh wrote, “what is of further concern to my client is that consultation with the industry in which it operates only occurred recently, whereas Yukon First Nations have been at the consultation table, we understand, for two years.
“Had proper consultation been undertaken, you would have received the perspective of my client’s industry and been able to fashion legislation that not only protected Yukon First Nations’ interests but also that of other contractors who, as indicated above, have a similar interest,” Beresh wrote.
On behalf of the firm, Beresh told Mostyn: “Given what has been an artificial time for consultation, we request that you provide to us any and all relevant statistics and data which you believe supports the decision to implement Policy 2.6.”
Beresh then raised some potential constitutional issues with the policy.
“You should be aware that we have obtained a clear and expansive legal opinion in relation to the constitutionality of Policy 2.6 from a well- respected constitutional scholar in western Canada.
“In considering what steps to take hereafter, we ask that you consider the following:
1) The Policy is contrary to the letter and spirit of the Umbrella Agreement and the Final Agreements which have adopted its terms by departing from the commitment to a fully competitive procurement process.
“As it stands, the Policy will have the impact of effectively removing competitive bidding by drastically reducing or eliminating competitive market activity in the Yukon and forcing the removal of a number of existing companies and individuals from the local marketplace entirely.
“The Umbrella Agreement promised to provide support for robust First Nations economic development but to maintain a procurement process ‘on a competitive basis’. The Policy abandons this promise.
“Please consider this our request to delay final proclamation of Policy 2.6 pending further discussions with our client and other members of the industry,” Beresh wrote.
“Failure to do so may result in our decision to launch a constitutional challenge of the policy.
“We trust you will govern yourself accordingly.”
The government did not provide a response to the concept of a constitutional challenge before the Star’s press time this afternoon.