Presentation toMMCD/MED AGM

25 November 2011

Canadian Internal Free Trade AgreementsThe Unintended Consequences for

Consulting EngineersBy

Chris Newcomb on behalf of

Consulting Engineers of BC

Unintended Consequences in a NutshellMore bureaucracy in procurement,

Adversarial client relationships,

Poor taxpayer value,

Compromised public safety,

Discrimination against engineers,

Decline of locally-based expertise,

Weaker consulting engineer industry.

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Presentation Outline

• History and Purpose of Trade Agreements,

• Why Consulting Engineers have a problem with Trade Agreements,

• Four unintended consequences of Trade Agreements,

• Six myths about Consulting Engineering.

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History

1995 Agreement on Internal Trade (AIT) 2007 Trade Investment & Labour

Mobility Agreement (TILMA) 2010 New West Partnership Trade

Agreement (NWPTA)

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Purpose

To remove trade barriers through

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Investment liberalisation – we

support!

Labour mobility provisions – we

support!

Procurement provisions for

government-funded work – we

oppose!

NWPTA (Part V – A & C)

Doctors & Lawyers exemptEngineers

not exempt “Services & investments

pertaining to water” exempt

AIT Engineers permanently exempt (Annex 502.1B)

TILMAEngineers exempt for 2 year transition period

Exemptions from Procurement Provisions

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What is Qualifications Based Selection (QBS)?

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International Best Practice for selecting professional consultant

Mandated law in USA and Quebec Enshrined in InfraGuide program of

Canadian municipal best practices Three step process:

1. Shortlist three best-qualified firms2. Select best-quality proposal3. Negotiate fair priceProblem: NWPTA inhibits QBS

How NWPTA Procurement Inhibits QBS – Part 1

Obliges client to broadcast opportunities,

Forbids rotation system,

Forbids arbitrary shortlisting,

Forbids consideration of local knowledge.

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How NWPTA Procurement Inhibits QBS – Part 2Forbids consideration of

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Previous experience with client Timely access to site & approval

agencies Local project knowledge, such as:

Soil conditions & underground utilities Drainage & environmental conditions Snow & wind loads Traffic and safety Socio-economic considerations Local codes & practices

Any other quality measure that infers location

Why NWPTA Procurement Inhibits QBSDoesn’t recognize that:

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Most engineering is site-specific, Engineering is 2% of life-cycle cost,

but influences 100% of life-cycle cost,

Rapid site access enhances problem resolution and public safety,

Professional engineering is not a

commodity.

Broadcasting of Requests for Proposals (RFP’s),

Unlimited numbers of proposals,

Increased cost to produce, Increased cost to review, Same quantity of work awarded.

First Unintended Consequence of NWPTA Rise in procurement costs

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Reduced public safety

Adversarial client relationships Lack of innovation Poor life cycle value

Clients overwhelmed by quantity of proposals

No resources to apply QBS Cheap engineering resulting in:

Selection by lowest fee

Second Unintended Consequence of NWPTA

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• Save On Foods• Laval Bridge

Writing more proposals, and Struggling with adversarial client

relationships Instead of building the province

Waste of talent Our best engineers are:

Third Unintended Consequence of NWPTA

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Small regional firms can’t compete in major urban centres,

Large urban firms taking larger share of regional work,

Outcome: small regional firms are in decline,

Outcome: less local expertise available for small, urgent or emergency assignments.

Fourth Unintended Consequence of NWPTADecline of consulting engineering in small communities

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Just like lawyers, Just like doctors, Just like engineers

are exempt from AIT.

The Solution?

Exempt engineers from NWPTA procurement provisions!

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Wrong! Cronies prosper in a

low bid environment, Cronies lose out in a

transparent QBS environment.

First Myth Supporting NWPTA Status QuoMunicipal officials will award projects to their friends

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Wrong again!! CEBC Memorandum of Agreement

proves 100% oppose procurement provisions,

CEBC & APEGBC do support mobility provisions,

Hence the myth?

Second Myth Supporting NWPTA Status QuoThe Consulting Engineers support NWPTA

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Wrong again!!! CEBC represents firms of all sizes in

all locations, CEBC is trying to protect:

The integrity of professional procurement,

Public safety, Taxpayer value.

Third Myth Supporting NWPTA Status QuoCEBC is trying to protect “local” consultants

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Wrong again!!!!NWPTA catchment area has about 70,000 P. Eng.’sMost specialize in one discipline, not othersNWPTA low-bid environment leads to:

Economic pressure, Lack of innovation, Lack of quality, Short cuts, Compromised value and safety.

Fourth Myth Supporting NWPTA Status QuoP. Eng. seal guarantees project value & public safety

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Wrong again!!!!!In which other industry is:

Local knowledge so important to quality of service?

Cost of service such a small percentage of life-cycle cost?

Timely site access so important to public safety?

Fifth Myth Supporting NWPTA Status QuoExemption for engineers will open flood gates for other industries

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1. Win first project using low price2. Impress the client3. Win subsequent work on quality

Wrong again!!!!!!Clients that hire you using low price, will hire someone else using low price on the next project.

Sixth Myth Supporting NWPTA Status QuoNWPTA allows firms to grow using low-price strategy

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Moving Forward

CEBC Memorandum of Agreement, Campaigns under way in BC, AB, SK,

MB and Nationally, Seeking exemption for engineering, Non-partisan issue.

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