Ontario decides to pay compensation to losing bidders
The government of Ontario has announced it will pay some compensation to design-build firms who bid on infrastructu...
The government of Ontario has announced it will pay some compensation to design-build firms who bid on infrastructure projects but don’t win the commissions.
In a press release of September 8, Infrastructure Ontario said it had received authority from the Minister of Public Infrastructure Renewal to give partial compensation to losing bidders who participate in “design-build-finance-maintain (DBFM)” projects.
The idea is to increase the number of companies who will compete on these government construction contracts that require a heavy financial commitment from the private sector. Over the next five years, Infrastructure Ontario “will manage dozens of projects worth billions of dollars through its Alternative Financing and Procurement (AFP) model,” said the press release. It went on to note that several of these upcoming projects will be worth more than $250 million each.
Because of the financial commitment required for these large infrastructure works, only a very small handful of companies are able to take part in the bidding at present. The government wants to open the door to more bidders and increase the competition.
The amount of compensation given to losing firms will depend on the size and complexity of the projects and will be assessed on an individual basis by Infrastructure Ontario.
The government is making it a condition that any losing bidder who receives compensation will hand over the intellectual property of its bid to the government. In other words, by paying the losing organizations some partial compensation, the government will have the right to use any of the ideas and design concepts proposed in the losing bid. This may prove to be unpopular among consulting engineers.
The government acknowledged that the high costs of public-private partnerships have kept smaller construction companies out of the running because they have to hire consultants to help them prepare bids.
“Our government wants to ensure that we get the most competitive bids for our projects, and design and bid fees are a key component to attract firms of different size and specialization,” said David Caplan, Minister of Public Infrastructure Renewal who made the announcement.