Thank you, Mr. Speaker. Earlier this afternoon I did a Member's statement on some challenges that we see with infrastructure in contracts, so I have questions for the Minister of Infrastructure about big projects and the process the department uses. Can the Minister explain why the Business Incentive Policy was developed by the Government of the Northwest Territories in the first place? Thank you, Mr. Speaker.
Masi. Minister of Infrastructure.
Thank you, Mr. Speaker. The intent of the Business Incentive Policy when it was created was always to support the creation and growth of a competitive business sector in the Northwest Territories. As I have said in the House before, this is probably one of the best policies the Government of the Northwest Territories ever created. The policy recognizes the additional costs that northern operators experience in the Northwest Territories, and what this policy does is allow businesses to adjust their bids by 20 percent versus southern bidders, and it leverages our government in our procurement projects for investment in our business communities across the Northwest Territories.
I have been advised that previously, with the Business Incentive Policy, it was for the whole contract, and now I have been advised that it's only based on a few million dollars, and I am a little bit confused. Can the Minister advise this House what the cap is when it comes to northern contractors bidding on projects using BIP?
There is no cap for northern contractors bidding on projects. We welcome bids from northern contractors on all projects, but I think what the Member is referring to is the BIP adjustment within the BIP policy, which adds up the contracts to up to $1 million and over $1 million. I will read it all in verbatim, just for the public.
Section 8:
(8) Application of Bid Adjustment
Contracts Less than $25,000
Whenever possible, goods, services and construction valued at less than $25,000 should be purchased directly from BIP Businesses in the Local Community, but no bid adjustment will be applied.
Contracts equal to or more Than $25,000 and Less Than $1,000,000
(i) A 15 percent Bid Adjustment will be applied to the NWT Content. An additional 5 percent Bid Adjustment will be applied to any Local Content.
Contracts Equal to or More Than $1,000,000
(i) For the first $1,000,000, a 15 percent Bid Adjustment will be applied to the NWT Content and an additional 5 percent Bid Adjustment will be applied to any Local Content.
(ii) For that portion of the contract above $1,000,000, up to the maximum allowable bid adjustment:
a. 1.5 percent Bid Adjustment will be applied to the NWT Content;
b. an additional 0.5 percent Bid Adjustment will be applied to the Local Content.
The maximum bid adjustment for all bidders on northern or local content is $500,000. So that the Member is also aware, in 2018-2019, the GNWT had contracts of 1,501 contracts, and only 46 of them were above $1 million. Thank you, Mr. Speaker.
So this policy has changed, from my understanding, and maybe the Minister can correct me if I am wrong, but what was the rationale for the department using this new process to up to a maximum of a half a million dollars?
First, let's be clear. We are not limiting the contracts that NWT businesses can bid on. There is a limit in place on the dollar amount of the total adjustment that can be applied, and that is $500,000. While the intent of the Business Incentive Policy is to support northern businesses and recognize the higher costs of doing business in the North, we also have a public responsibility to ensure effective and appropriate expenditure of public resources. In a review that was taken a number of years ago, it was determined that the total bid adjustment of $500,000 was a fair amount and would offset any higher costs of maintaining a business in the Northwest Territories, regardless of what the overall value of the contract was.
Masi. Oral questions. Member for Nahendeh.
Thank you, Mr. Speaker, and I thank the Minister for the clarification. I guess his definition of fair and my definition of fair is a little bit different. When I see a whole bunch of money going down south, it's a bit of a challenge. I know in BC they actually have a policy in place that, you know, gives incentives to businesses in their province to just keep the contracts there, and it's making it more of a challenge. Can the Minister advise the House here why doesn't the department have similar policies in place so it makes it harder for southern companies to come and take contracts from us, to go down and take the money down there?
I think the BIP policy is more than fair. That is a $500,000 adjustment to a contract over a million dollars. That is a significant amount of money. As the Member is referring to the policy in BC, Infrastructure follows the BIP policy to the letter of the law, and we do that, and that is for NWT-owned and -operated businesses in the Northwest Territories, and that is what the BIP adjustment is for. What he is referring to, what BC is trying to do, I am not even sure if they are doing it. I have to double check it, but we cannot put restrictions on people bidding on contracts in the Northwest Territories, because this would breach our obligations under the Canadian Free Trade Act. I have had lots of opportunities to speak to different people about BIP and how things are working in the Northwest Territories, and a lot of people do not understand our BIP adjustment is subject to all of these Canadian free trade agreements and international trade agreements. Thank you, Mr. Speaker.
Masi. Oral questions. Member for Tu Nedhe-Wiilideh.
