Debates of October 31, 2012 (day 26)

Topics
Statements

Thank you, Madam Chair. I just would like some background on this. I thought that this work had been brought back into the public service fold some time ago. There were some issues early in the 16th and there was quite a review done. I wonder if I could get the background behind this. It seems like a substantial amount. I don’t know what the total contract is, but this is an area where, obviously, we want the highest standards. When we didn’t have them, our people suffered and our system was not working well. If I could get some background that gives some perspectives on that, thank you.

Thank you, Mr. Bromley. Mr. Miltenberger.

Thank you, Madam Chair. The existing base funding was $2.527 million. The contract amount was $3.069 million. There’s a shortfall of $542,000 and the cost drivers of the increased costs for dietary, housekeeping and laundry services related to the contract. Thank you.

So let’s see, it’s currently $2.5 million and we are adding a little bit more than .5, so something like a 20 percent increase here. When was the last time this was increased?

This Minister, I know, has some history and knowledge about the back and forth between public servants and contracting out these services. I wonder if he could remind me of what that has been and what our current thinking is. Thank you.

My understanding is that this is basically an accumulated amount, that over the last number of years the costs have been absorbed within the operation. It’s no longer sustainable, hence the request that’s now before this House. Thank you.

I appreciate the Minister’s remarks. Have we done a review on whether we want these services carried out by a contract versus public employees?

Madam Chair, with your indulgence, I would ask the Minister of Health to speak to that program issue. Thank you.

Thank you. Minister Beaulieu.

Thank you, Madam Chair. Built into the contract is an escalation of 2.9 percent, an annual increase. I think that so far that contract has been moving along, from our understanding, between Stanton and the provider. I don’t believe we have done a review, but I could check to see if the review has been done and advise the Minister, but I don’t know if there’s been a review done recently.

Thank you, Mr. Beaulieu. Mr. Bromley.

Thank you, Madam Chair. That’s all the questions I have. I appreciate the Minister’s commitment. I would look forward to any information he could provide on that.

Like I said, I believe it was done early to midterm in the 16th Assembly, if my memory is correct, which there are no guarantees. Thank you.

Thank you, Mr. Bromley. Next I have Ms. Bisaro.

Thank you, Madam Chair. I have a question on this item as well. It also refers to the item under community wellness and social services. In this particular one with the dietary, laundry and housekeeping contracts, we are catching up to what the actual expenditures are as opposed to what we are budgeting. This is not the first time that we have run into these kinds of requests in a supplementary appropriation. So I’d like to know from the Minister if he can tell me – we always seem to be in a catch-up situation, we always seem to be granting these requests to top up contracts or top up the expenses of contracts after the fact – is this something that is standard practice and why do we do that. Thank you.

There hasn’t been any target investment in the amount of $632,000 that’s already been approved for 2013-14 in ongoing. As we look at improving and having a process that better reflects the concerns of the Legislature, I give the Member acknowledgement of her interest in this issue both in health, but across government, forest firefighting, for example, of making the base more reflect the reality of the operation as opposed to having to come back. As we identify these areas, that’s what we’re attempting to do going forward here. Thank you.

Thanks to the Minister for those comments. I would like to say that I appreciate that we’re going in this direction. I think it is the right way to go.

I’ll ask the question and the Minister can confirm when we get to the section, but I’d like to know whether or not there’s an increase to the base for the Charlotte Vehus Group Home and Billy Moore Assisted Living Group Home contracts when we get to that section. It’s the same principle and my questions apply to both of those. So that’s all I have. Thank you, Mr. Chair.

Mr. Chairman, when I get to that question, I will answer yes. Thank you.

Thank you, Minister Miltenberger, for saving the committee time. Health and Social Services, operations expenditures, health services programs, $1.212 million. Is committee agreed?

Agreed.

Thank you. Health and Social Services, operations expenditures, supplementary health programs, $6,000.

Agreed.

Thank you. Health and Social Services, community wellness and social services, not previously authorized, $1.385 million. Mr. Moses.

Thank you, Mr. Chair. If anybody remembers, this was a big issue that we brought up when the contract was actually being awarded, and it went out for tender and we had two contractors come back with bids, and we had a northern contractor and a southern contractor. There was a lot of mix-up. The northern contractor initially won the bid, then he ended up losing out because of the Business Incentive Policy that the NWT promotes and somehow the southern contractor won this bid.

What we have before us now is that this southern contractor is coming back to this government and asking for an extra $850,000 to do the programs and services that are provided. When we first saw this supp, it raised questions, obviously, right from the start.

I’m not sure if this is the usual practice of government, to start providing supps to contractors after they’ve awarded the bid. It kind of gets me wondering that we might have contractors out there who are lowballing the bid to win the contract and then when they find out the contract is awarded, then they come back to the government and we find, possibly, excuses to give them the extra funding to run those programs when we have northern contractors up here who provide northern services, understand the northern economy, understand the buying and selling of northern products and yet we went south on this one.

I want to ask the Minister if he could explain to me how this southern contractor won the bid and yet is coming back to us, not even a year later after being awarded this contract, and asking for an extra, I noted this $850,000 for that one specific one with the Billy Moore Group Home. How much money is being put towards the Billy Moore Group Home that they’re asking for extra costs, and how that happens when we had a northern contractor who initially won the bid and possibly had a lower contract number at the same time? Thank you, Mr. Chair.

Thank you, Mr. Moses. For that we’ll go to Mr. Aumond. Sorry, we’ll start with Minister Miltenberger.

Thank you, Mr. Chairman. With your indulgence, I’ll ask Minister Beaulieu to speak to the background issues related to this contract. Thank you.

Thank you, Minister Miltenberger. Minister Beaulieu.

Thank you, Mr. Chairman. This is not an increase in costs as a result of switching the contractors. The breakdown is that the Charlotte Vehus shortfall is $547,000, Billy Moore is $303,000, for a total of $850,000 for both homes. It’s a 2012-13 this year. It’s not substantially higher than any other year preceding up until 2012-13.

I’ll just run through some numbers. There was $1.422 million in 2009-10 and then $1.38 million, $1.45 million in 2012-13 and those were the other. So it’s not all of a sudden jumped up by that amount.

What’s been happening is that the authority has funded this and has put themselves into a deficit with funding both of these homes in previous years. So the Billy Moore went from $683,000, $696,210 and then this year $686,000. So there’s not a substantial jump. It is just a steady growth and sometimes it goes up, sometimes it goes down.

But what’s been happening, like I indicated, the two contractors were doing this and each year the contracts were signed and then its deficit funded, essentially, and the Beaufort-Delta Health and Social Services Authority, as the House knows, goes into a deficit on an annual basis. This forms part of the deficit this year.

We’re trying to deal with the budgeting issues across the board on all health and social services authorities. So this supplementary is $850,000 to just bring the budget up to where it should be.

Thank you, Mr. Beaulieu. Mr. Moses.

Thanks for the explanation. If Members recall, this was a big issue for me when I was dealing with it, but speaking to the contractor that lost the award, there was a stipulation in the contract that if he hadn’t spent certain dollars in areas that he had signed during the contract, he had to give money back to the authority and he was doing that. So now we’re basing our contracts based on a deficit. That doesn’t make any sense, and if he could give a little bit more explanation how we award contracts based on our authority’s deficit. Can I get just a bit more clarity on awarding contracts based on deficit? Thank you.

Thank you. It’s an award, it’s an RFP process. Through the request for proposals we determine which is the best value to the authorities and it’s awarded based on that. So this deficit funding, essentially what happens is when the health authority has a contract that they have to continue to run these two homes almost like a non-discretionary funding, in essence there’s just no possible way that we could get the costs from running these two homes from approximately $2.1 million down to $1.2 million and expect to continue to run these two homes. So this money is put in for that.

As I said, previous years this formed part of the accumulated annual deficit for the Beaufort-Delta Health and Social Services Authority. It had to be done and we had to continue to operate this. So it formed part of the accumulated deficit.

Thank you. In regard to the Charlotte Vehus Home, that was Parkland services, I believe, that was running that program. For somebody to run that program for the amount of years that they have, you’d think that the contractor would bid his contracts based on previous years’ expenditures, and now they’re coming back to us for over half a million dollars. I can see maybe $100,000, but coming back for over half a million dollars to continue to run the same programs and services that they’ve done for years doesn’t make sense to me. Now we’re awarding them a contract where they’ve actually come back to us for over $300,000. Under that award, is it next year that they’re going to come back to us for half a million dollars, maybe more?

This gets back to where I’m feeling that contractors are low bidding this government to win contracts, and only coming back for supps afterwards to do the programs and services. I’m getting the same type of frustrations when this whole process went through and we did it in the House months ago, and I’m very frustrated to see this before us again, and frustrated that it comes in a bundle under a supplementary appropriation act like this, where we have to approve everything together and this is part of that area as well.

The Minister did mention that they determine their contracts based on the best values. Is that value in dollars or value in services and programs? Can he explain what he means by value?

Thank you, Mr. Moses. Before we go to Mr. Beaulieu, we’ll allow Minister Miltenberger.

Thank you, Mr. Chairman. What is before the House is really to cover a base adjustment to a contract cost that has been absorbed to this point by the Beaufort health and social services system that, as the Minister has pointed out, has helped contribute to their significant deficit, which is now in the neighbourhood of over $4 million.

The contract, as the Minister pointed out, was let. The contract prices have been fairly consistent. What has reached the breaking point, similar to the discussion we just had about the Stanton and the kitchen and laundry services there, costs have been absorbed in the system and they’re no longer able over time, due to inflation and other pressures, to absorb those costs that have come forward to recognize that there’s a base adjustment required to cover off the costs so that the Beaufort-Delta Health and Social Services Authority does not just continue to run up a significantly increasing deficit. That’s the financial background.

In terms of the question of value that the Member has asked, I’ll ask, once again, Mr. Chair, with your agreement, to have Minister Beaulieu speak to that.

Thank you, Mr. Miltenberger. Yes, for final comment, we’ll go to Minister Beaulieu.

Thank you, Mr. Chairman. Just to speak specifically of the RFP, it’s not only the value for money but there is an approved request for proposal indicators within the government system that Health and Social Services and the authorities follow. It’s outlined that they would receive certain points and values in certain areas such as northern employment, northern supplier, cost, management, experience of management, background, directly related business or expertise and so on. There are several categories that are rated. In this one here the two main contractors were weighed off against each other all the way down, and based on the RFP consideration, which also includes the business incentive policy considerations with you evaluate the overall RFP. Those are, generally, the considerations that are in an RFP. It’s not only cash.

Thank you, Minister Beaulieu. I see no other questions. Sorry. Madam Bisaro.

Thanks, Mr. Chair. I’m going to try and see if I can clarify this here. I have a question to the Minister. Is this money that is being asked for for these two group homes, is that money because the contractor has asked for an increase in the contract price for this particular fiscal year, or is the money going to the Beaufort-Delta Health and Social Services Authority to deal with their deficit?

Thank you, Ms. Bisaro. Minister Miltenberger.

Thank you, Mr. Chairman. The money is a target adjustment to the budget that reflects an underfunding situation for this contract that has been there for some time that has helped contribute, as the Minister of Health and Social Services pointed out, to the significant current deficit of the Beaufort-Delta Health and Social Services Authority. This is recognition of that gap, that deficit in their base funding.

Thanks to the Minister. If I can put it another way: The contract is let for a certain amount, but the GNWT funds the Beaufort-Delta Health and Social Services Authority at a lesser amount. Is that correct?

Yes, they absorb the costs that contributed to their deficit reaching the point where we need to recognize it and do this base adjustment. But it’s because they didn’t have the appropriate amount of funding in their budget to cover that cost.

Just one last question here. To the Minister, I would hope that if we are adding money to the base funding that we give to the health and social services authority, is it correct that we should not see this kind of a request for a supp approval in ’13-14?

Yes, as we pointed out, there has been a base adjustment, a target adjustment of $850,000 to the ’13-14 budget.

Moving on with questions, I have Mr. Moses.

Thank you, Mr. Chair. The Minister mentioned a base adjustment to the programs and specifically the contractor who’s taking care of the Charlotte Vehus Home and the Billy Moore Assisted Living Group Home. Can he give me a percentage on the base adjustments of the overall contract and what were the possible final numbers or where I can find the final numbers in both contracts that were, I guess, admitted?

Thank you, Mr. Moses. Minister Miltenberger.

Thank you, Mr. Chairman. This is not a base adjustment to the contract per se. The contract, as the Minister pointed out, has been fairly consistent in its cost. What this is, is an adjustment to the program area in the budget of the Beaufort-Delta Health and Social Services where they had a certain amount of money for a contract that was inadequate to the tune of $547,000, roughly, and has helped contribute to the accumulated debt of the authority. I’ll ask Minister Beaulieu to speak to the… He already mentioned it, but I’ll ask if maybe he’ll go over the cost over the last number of years for the contract. It has been consistent. What has been underfunded, as we’ve just discussed, has been the budget amount in the Beaufort-Delta’s overall budget that had money to cover this particular program area that was inadequate.

Thank you, Minister Miltenberger. Minister Beaulieu.

Thank you, Mr. Chair. I don’t have the calculations on a percentage basis; however, the amount paying out to the Charlotte Vehus Home, $1.459 million, and the total funding allocated to this line object was $912,000. It was necessary to put $547,000 into it. The change, I guess, in percentage would be moving from $912,000 up to $1,459 million.

In the Billy Moore Home the change is from total funding of $383,000 up to $686,000, for a total adjustment or increase of $303,000. We’ve never had less, this has never cost less than the total funding since what we have recorded here. Even since 2005-2006 it was higher. The cost of running these two homes was higher than what the total funding provided by the system was doing. They’ve been accumulating deficit for these two homes ever since then.

Thank you, Mr. Beaulieu. Mr. Miltenberger.