Surety Association of Canada warns new procurement strategies could harm Newfoundland and Labrador economy

newfoundland dti strategy

Ontario Construction News staff writer

New procurement strategies for local suppliers in Newfoundland and Labrador are “misguided” and could have dire consequences for the province’s economy, says the Surety Association of Canada (SAC).

The association, which represents the Canadian surety industry, is raising concerns about planned policy changes either to reduce or eliminate bid bond requirements for smaller local contractors to achieve two key objectives outlined in the new strategies.

The first is to maximize provincial suppliers’ success in obtaining government contracts. The second is to foster supplier development within the province and enhance sustainable purchasing practices.

The SAC says that bid bonds, which serve as a financial guarantee from vendors when bidding on projects, are essential to the system to ensure that bidders remain committed to their bid and can provide the required project security if selected. The new strategy proposes reducing or eliminating bid bonds, and the SAC says this is “indicative of a total misunderstanding of bonds and their role in protecting taxpayers and small businesses.”

Steven Ness, president and chief operating officer of the SAC, says: “The assertions regarding bid bonds in the government’s statement are not only misleading and inaccurate, but in some cases, patently false. It’s alarming that such inaccuracies and misguided assumptions would lay the groundwork for public policy decisions.”

In a statement, the provincial government said it is committed to ensuring that its procurement practices are fair and transparent, and that the new strategies will help create jobs and boost the economy. The government also said that it will continue to work with stakeholders to ensure that the strategies are effective.

The Newfoundland Department of Trade and Industry (DTI) document says that a bid bond is a payment or other form of financial surety submitted by vendors when bidding on a project or commodity.

“The bid bond ensures the bidder will maintain its bid and complete the work if selected. However, if a business is submitting multiple bids, the submission of multiple bid bonds can be costly and may prevent small businesses from bidding on multiple opportunities.”

DTI proposes: “Bid bonds may not be required in all cases. To help reduce the burden on small businesses bidding on multiple procurements, government will review its goods and services procurements for opportunities to reduce or eliminate bid bonds where possible.”

The SAC has requested an opportunity with the DTI to explain the concerns raised, and has asked the province to reconsider its policy direction.


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