I have a story to tell.....
This scenario sounds pretty good. Start an Engineering firm outside of Halifax, in a market where there is no access to Professional Engineering, other than from people driving from Halifax. Start with 4 people, and in two years, grow it to 20, all with no help from any funding program, and almost no government work.
Once established as a member of the local economy, active in the community, with almost all your payroll going back into that economy, you decide you are ready to start asking for work from your governments. The places your taxes, and your employees' taxes go.
You've created about 8 new jobs without any help from government. No ACOA grants, no tax breaks, no subsidies. You've provided a place for local kids to work in a technical, highly trained group, without having to move away. If you were some foreign owned industry, the Province would be paying you hundreds of thousands of dollars. You really can't be blamed for expecting some sort of welcoming reception from government when you see publicly funded projects about to happen in your own community, and you'd like to be involved.
But here is where the stupidity begins.
Government purchasing seems completely disconnected with reality and with economic development of our region. The policies in place have evolved over the years to create a form of exclusion of local companies. This has happened in ignorance of the work actually being done, the economic benefits of buying local and keeping jobs in a community, and, sometimes, just to perpetuate the status quo. Remember, as a rule local companies will be smaller, and multinationals will be, well, multinationals.
Here are two real situations I've encountered in Nova Scotia since the fall. Tell me if you think the bureaucrats I have to deal with are spending your tax dollars wisely.
The first foray into government work was with the Province. We had someone who wanted to hire us, because we are one of the best firms at the specific task they needed done, and the job was close to our office. It was a job of small scale for us, routine. BUT in order to actually be hired to do this simple task, we first had to develop a safety plan (for our office, not for out on constructions sites), we had to double our insurance policy for general liability above what our insurance broker had already recommended and sold us, and we had to double, or, really, quadruple our coverage for Errors and Omissions Insurance. This cost us a fair amount of money, just to qualify to do government work.
All this had absolutely nothing to do with any real change in liability, people doing the work, the work itself, its outcome, or anything else. All it did was cost us money. The only reason we had to do this was that someone in government decided some time ago to set everything up the same way - the same liability for a multi-million dollar sewage treatment plant design as a $20,000 sewage system for a park. What is the real effect here? It means that sometimes the only firms who can afford the coverage and assorted bullshit for huge jobs get to do the small jobs (big wrench, small bolt). So we, as taxpayers, end up having our little routine jobs done by the big foreign or out of Province controlled firms, and not by the smaller firms that might be next door to the work. The smaller, more efficient local firms are shut out by our own governmental purchasing restrictions. Do you think this saves us money? If you do, you need to read a bit more economics.
If every engineering firm were the same size, this might be acceptable. But here's the reality in the consulting engineering business in Eastern Canada right now. With the exception of one firm, CBCL Limited, any company large enough for the Province to consider hiring them for a larger project is owned by out of Province interests. And to add to the problem, the Province is fixated on "Big Project = Big Firm" foolishness, despite the fact that even in a big firm, usually only 3 or 4 people do the work on a project.
A smaller, local firm is automatically thrown into the pit with these big multinationals, but it has all its advantages stripped away. Being able to move fast, charge less, and be close to home matters nothing. What matters is bulking up your overhead with useless government stipulated requirements designed for larger projects. This just costs the taxpayer more. The same thing applies for contractors building our designs. The best septic system installers usually can't get bonded enough to do government work. So we taxpayers pay more, for what may end up being a lesser quality job.
In the end, we used our profit from this job to pay for all the bullshit we had to go through to even be allowed to work for our own government. The fees and the construction all stayed in the local economy. And now we are ready for future work, if it comes along.
More recently, however, we have run into another bit of bureaucracy emanating from the Public Tenders Office. There is a fair amount of new road work planned for the part of Nova Scotia our offices are in. And we have first class expertise in road design now. So we asked the Province how we could compete for that work.
It turns out that all Provincial road design work is given out to firms already listed on a "Standing Offer". This is a list of firms who meet minimum qualifications to do certain kinds of work, from which a contracting officer (in this case someone who needs a road designed) must choose three to invite to compete, or, if the job is under $10,000 in fees, pick one. There are rates for staff associated with these standing offers, but they are not really judged in a competitive manner. It's just a list of qualified people from which the government can buy services at a set, pre-stated rate.
So here we are, the only engineering firm at all in our part of Nova Scotia, and one of the few locally owned companies even capable of designing roads, and we are told that this standing offer is closed to us until April 2012 when it will be opened again to new firms. No reason is given why this cannot simply be something you apply to be registered under. No, they just say, "no, you have to wait a year".
The apparently open it once every two years. In two years, we have gone from 4 to 20 employees. Two years is a long time in our business.
To add insult to injury, however, two local firms that were on the list were recently taken over by out of Province firms. But these new to Nova Scotia firms from away did not have to wait a year, they simply got to enjoy the rights of the firm they bought, and they are among the dominating firms on the list of suppliers. So the system allows firms from outside to get on a list because they have deep enough pockets to buy out local businesses, but discriminates against local firms wanting to work in their own neighbourhoods.
This purchasing policy encourages the shipping out of our tax dollars from our economy, and discourages the hiring of locally owned companies that are an integral part of our economy. There is preferential treatment, alright, but it's to the companies NOT owned locally. This is just plain stupidity for which there can be no excuse, and for which there has to be a remedy.
This is a basic, ill conceived policy designed and implemented by people who apparently know nothing about the industry from which they are buying services. It runs contrary to every fundamental economic development principle. As Jane Jacobs said, import substitution is the most powerful economic development tool. In Nova Scotia, we are stupid, and we do the opposite. We encourage imported services over those provided from within our already weak economy. And that is one reason why it stays weak.
We are waiting to hear back from the Public Tenders Office. They seemed very understanding, and are "looking into it". But they seem so caught up in their own role, and in some fear of NAFTA (like we are going to be stealing from American firms), that I will be very surprised, but happy, if they find a workaround. Remember, I'm not asking for work, just the right to compete for it fairly.
In the end, until we can allow our own entrepreneurs fair and equal access to our own governments' work, we'll remain the Upper Canada-dependent, second class Province we are now. No matter how much spin you put on this, the only spin is a money sucking vortex taking those fees all the way back to Ontario and Quebec instead of keeping them here to be of great benefit to our economy.
----> Late breaking news: After being a little bit of a pain, I have found someone who seems to understand what I am saying, and they are in a position to do something about it. So, my Civil Servant of the Year Award (so far in 2011 anyway) goes to Mr. Robert Salah, the head of Procurement. He managed to interpret a clause in the Standing Offer in a manner that was "open for business" instead of "closed to business". For this, he becomes that rare Civil Servant - one who makes a judgement call that may end up causing him more work, but more fully satisfies the reason he is there for.
----> Later breaking news: The RFP was re-released as an interim registration offering. I dropped a proposal for providing services yesterday. It was amazing how many minutiae were involved in even registering to be considered for work. If I showed you, you would not believe it. It is a lesson in how something so simple as hiring expertise to do something for you can be turned into a horribly complicated and bureaucratic process.
So now we may soon win back our right to compete. We may lose every time we try, but at least we'll have a fair shot. I hope.
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