February 7, 2006
WILLIAM CONWAY/PROGRESS PHOTOGRAPHY
MTO paves way to longer contracts
Multinationals could hijack jobs: critics
The Ministry of Transportation Ontario will unveil its new plan for 20-year highway maintenance and rehabilitation contracts at the Ontario Road Builders’ Association convention at the Royal York Hotel today.
Reaction to the plan is mixed with one Ontario paving company principle calling it the “end of the family business in this area and a step backwards” and others fearing the industry could be hijacked by massive foreign multinationals.
Sonya Skinner, the MTO’s Project Manager, Area Term Contracts (ATC), told Daily Commercial News the plan has been in development almost since the current Area Maintenance Contracts (AMC) were introduced in 1995-1996.
Those AMCs divide Ontario’s highways and roads into defined zones and let contracts for up to 10 years for companies to maintain roads providing repairs, emergency services such as detours and snow plowing for a set price.
“We thought about extending it at the time to include road rehabilitation as well but didn’t because we were new to the concept,” said Skinner. “At that point we had done everything internally.”
With a decade of experience under their belts and the experience of other jurisdictions such as New Brunswick and British Colombia, the MTO is paving the way for a switch to Area Term Contracts to begin likely in 2007, she said.
MTO oversees about 16,500 centreline-kms, 2,500 bridges, two tunnels and 29 airports and spends about $200 million a year for contracted maintenance covering 60 per cent or more of roads and highways.
ATC will add responsibility for road rehabilitation to the contract and stretch the term to 20 years. New highway construction is not included.
Not everyone is thrilled.
“I think it’s a horrible thing,” said Bill Graham of Graham Brothers Construction a 45 year veteran of the industry. “It’s the end of the family business. It’s okay for the big conglomerate but I think they’ve ruined a perfectly good system and it’s a step backward. I don’t think the roads are better now than they were before all this. I guess we’ll find something else to do, we’ll have to.”
Others are eyeing the future potential.
“We’re taking a wait and see attitude,” said Bob Bugden vice-president of Miller Paving.
“It’s a change and people are fearful of change. I’d like to get a few more details, see what they have to say at OBRA but we’re already involved in AMC and I think we should be able to bid on these.”
ORBA’s executive director Rob Bradford said the board’s response to the minister of transportation has been non-committal, saying “there isn’t enough detail.”
“This is a huge chain and there are many concerns, not least of which is the ability to manage risk over 20 years,” he said. “Who knows what will happen to the price of steel, asphalt or labour over that time?”
He also said large European and U.S. interests are eyeing the plan with some interest and there are fears among Ontario road builders that they could be forced out of their own domestic market because the more highly capitalized competitors can absorb the risks associated with longer term contracts.
“We had discussions with the ORBA executive last fall and this week we’re talking directly to the members,” she said. “Nothing is set in concrete – or asphalt – yet and there are still questions to be worked out.”
Skinner, who can’t be at the meeting where assistant deputy minister Mike Goodale will make the presentation, said the MTO is anxious to engage the road building industry in a debate about the future of contracts.
“There are advantages because we think by letting contracts on a long term basis and making the contractor responsible for the standards of the highways there’s an incentive to do it right the first time,” she said.
“Also there are savings in that we don’t have to deal with the bid and tender process.”
Skinner said the concept will also change the way standards are enforced.
“We’re not so much interested in how they effect the quality and meet the standards, just that they meet the standards and maintain the quality,” she said.
“We’re not going to tell them how to pave.”
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