Waterloo to try new procurement plan
WaterlooChronicle.ca
Aug. 24, 2016
By James Jackson
Council has given staff the ability to take price out of the equation when it comes to awarding engineering contracts on city projects.
Councillors voted Monday to allow staff to consider using the so-called Qualifications Based Selection (QBS) methodology on a trial basis, on the condition they report to council whenever they plan to use it.
QBS means project tenders submitted by outside firms will be evaluated on the quality of the applications and the qualifications of the companies alone - price will not be a factor. Once the tenders are ranked, staff will work with the highest-scoring contractor to refine the scope of the work and negotiate a price.
If a negotiation can’t be reached, the city will move on to the second-highest ranked submissions, and so on down the list until a deal is reached.
The city currently uses a ranking system that assigns 65 per cent of points to the quality of the application, and 35 per cent to the price. Staff will determine on a case-by-case basis when they will use QBS over the current system.
Despite the limited use of QBS in Canada, and a relative lack of data on its efficacy, a staff report suggests there are advantages to the system, including a better understood scope of work, improved innovation, reduced risk for complex projects and potential cost savings.
There are challenges, however, as the system could favour large consulting firms with more resources to negotiate with the city, it could place higher demand on city resources to negotiate deals with contractors, and the limited use of QBS in Canada means there is little data on its ability to reduce costs.
“The literature does speak to limited change orders, but it’s hard to determine the cost savings because you’re negotiating the fee,” said Tracie Bell, manager of purchasing with the city. “Unless you did the same project side-by-side using QBS and our typical methodology, we don’t know if we’ll save on costs.”
The city’s audit committee cautioned against using QBS to rank projects given the lack of comparable municipal examples in Canada.
Coun. Diane Freeman is a proponent of QBS methodology and said its extensive use across the United States has shown it can save governments money. “The scholarly articles demonstrate time and again it saves money (and) it saves staff time,” she said.
Since 1972, QBS has been required by law when hiring architects and engineers for federally funded projects in the U.S., and it’s required in 46 states.
Coun. Mark Whaley expressed some concern with the new methodology. He suggested the city should test the system first by employing both the current methodology and QBS to the same project. “It makes sense to do some experimentation,” he said.
Bell reiterated that it wouldn’t be a wholesale change system, simply where staff thought it could be useful. She also said there are no projects in the city’s queue currently considering QBS.
