Letter to the Editor: Contract Fairness
We need to eliminate procurement contract conditions that are unfair and get back to public contracts that are fair and balanced.
The basis of a contract is that there is a fair exchange. Usually, this is money for a service or product. When you order a coffee at your local coffee shop, there is an implied contract (that the coffee will be hot and fresh) that fairly represents the money you paid.
This is also true when hiring professional services. Fundamentally, the contract is expected to be fair to both parties. Yet that is not the case with many public entities contracting architectural services in Canada, including the City of Ottawa.
In 2012, the city released a series of supplementary conditions to standard contracts between architects and engineers and the city. Across 19 pages of dense legalese, the city redefines standard terms that have a long precedent and history in contract law.
Some of these changes do little other than redefine a standard term in a longer, more complex way with little or no benefit. Other conditions raise serious questions of legality and fairness. For example, the city expects to violate federal copyright law and denies architects the right to fair decisions by the courts, setting the city up as both judge and jury of disputes.
Architects, like lawyers and doctors, carry professional liability insurance because, despite the best of intentions, sometimes mistakes happen. Insurance is there to protect the public (the client) from these rare cases where there is an error or omission.
Where the city’s contract conditions set unrealistic levels of perfection, or place unreasonable demands on a professional, the insurance coverage may not be available because it is so extra-ordinary to normal professional services. Contracts with the construction industry may set unrealistic schedule expectations and impose unfair costs on contractors through punitive conditions.
Imagine you were going to have an operation and you asked the doctor to guarantee that there would be no side effects and that their insurance would cover any and all possible risks, including that you might suffer a seizure or die on the operating table. No doctor will guarantee this because there are no certainties. You, the patient, take some risk, based on the assumption that your doctor is competent and takes prudent actions to look after your interests.
It is the same for buildings. When the city hires an architect, they are expected to take reasonable care of the city, respect the public interest, and propose design solutions and ideas to achieve the stated goals of the project. It is impossible to remove all risks in a project, just like it is impossible to remove all risks in an operation.
The contract offered by the City of Ottawa is fundamentally unfair, and there is no evidence that these supplementary conditions remove the risks they are intended to. When the conditions seek to punish rather than to be fair, it creates an uneven playing field that drives away collaborative problem-solving.
For eight years, a small group of volunteers have been giving their time to come to city meetings and find a solution with (paid) city staff. Years of work finally resulted in a set of comments in March 2018. Since then, further discussions have stalled, while comments have gone back to the legal department for a response that has never materialized.
Similar contract conditions exist in construction contracts from the city, as well as school boards, provincial projects and Ottawa Community Housing RFPs for both design and construction. Thankfully, for Ottawa Community Housing, sometimes they have at least allowed interested bidders the opportunity to register concerns. And in construction, some of the most egregious can be beaten back by the local construction association, but it takes concerted effort and individual advocacy on a case-by-case basis. That advocacy restarts on every contract or RFP because there is no consistent application across the board.
This becomes a barrier to fair bidding practices. Smaller firms lack the in-house or external legal capacity to fight these issues one on one. Due to the complex nuances of some of this language, it takes significant skill to research and understand how it can affect a company. Fighting a larger-scale battle across the industry means significant effort to simply get to a fair and balanced contract. And when the city holds all the cards, they set all the rules.
Talented local firms who want to deliver good quality services read these contract conditions and self-select out of the process. They are unwilling to put themselves at risk with unfair contracts. While my firm registers concerns when that is possible, it’s rarely the case. Most times, the contract is provided in a “take it or leave it” approach—and that means I leave it. Effectively, I am prevented from bidding for government work because I can’t compete on a fair and level playing field because the contract conditions are unfair, inequitable, and punitive.
As a whole, if the city can impose unfair conditions on one sector, what’s to stop them from doing so on other sectors? Any contractual unfairness should be stopped. It’s against the public interest to limit the pool of bidders for public sector investment, forcing them to operate in a climate of unfair and punitive business practices.
This affects the design and construction of the social infrastructure we need in our communities; It affects design by driving out the talent needed to seek solutions early on, rewarding firms that are willing to take unfair risks that disadvantage the rest of the industry; It affects the construction industry, putting small and large businesses at risk. Together, this affects jobs, local communities, and the local economy.
The city plans to invest more in buildings. Last fall, the Auditor General released their report with 95 pages of horror stories—buildings that desperately need investment. Climate change and aging infrastructure; the new building planned for the ByWard Market; new community centres; accessibility upgrades and other repairs to city buildings—these are all social infrastructure issues that must be addressed. They need architects, engineers and contractors. Unfair contract language means we’re shutting the door to talented local firms.
We need a reset. We need to eliminate contract conditions that are unfair and get back to a contract that is fair and balanced.
We need to reset the way the city contracts, and invests, in the built environment to deliver on the promises of the safe, healthy, equitable, resilient city that we all aspire to live in.
This article was also published in Canadian Architect.
Toon Dreessen is president of Ottawa-based Architects DCA and past-president of the Ontario Association of Architects. For a sample of our projects, check out our portfolio here. Follow us @ArchitectsDCA on Twitter, Facebook, LinkedIn and Instagram.