Region’s $14M biosolids contract raises a stink
Company takes issue with lack of competitive bidding process
The phrase “sole-sourced contract” is not sitting well with a Burlington-based environmental services company.
Representatives of Terrapure Environmental Solutions used the words and cried foul at Niagara Region’s public works committee meeting Tuesday.
The complaint was over a recommendation from staff to renew a contract to manage Niagara’s biosolids with Hamilton-based rival Thomas Nutrient Solutions for an estimated $14 million over three years.
“We believe there are hundreds of thousands of dollars the region could save in a competitive rate situation,” said Doug Legge, vice-president of organics for Terrapure.
“I believe a look at the numbers in a competitive process would serve the region, and its taxpayers well and result in some cash savings.”
Sole-source contracts are non-competitive procurements with a single supplier fulfilling a contract.
As an alternative, the region often uses a bidding process that asks companies to submit business proposals, and then makes a choice based on the lowest bid with the best service.
Biosolids are nutrient-rich organic material that’s produced by the treatment of wastewater at regional facilities.
This particular contract is for the loading, transportation, lagoon management and land application of biosolids generated by Niagara Region.
After dewatering, biosolids are used as fertilizer on local farms, or sent to thirdparty Enviro Systems Canada Inc. for processing into “a soil amendment product” called N-Rich.
Bart Menage, director of procurement for the region, said staff went public with a non-binding pre-qualification process for handling the biosolids. Based on results and submissions in pre-qualifications — and the fact the contract was to expire Dec. 31 — staff decided it would be best to extend the current agreement with Thomas Nutrients.
Since the process had so far been nonbinding, there was no harm and no foul.
Legge said not quite. He told the committee the contract had been extended once, and there was no legal provision for another extension.
“Five years ago, when the contract was initially given to the incumbent, the number which they won at was $2.7 million,” Legge said.
“If you forecast that out to 2022 with the extension, you are looking at $5 million per year in contract value, and that’s almost eight per cent compounded annually on that contract.
“That’s completely unprecedented in our industry. No biosolids program has seen rates anywhere near that.”
And to further muddy the water, the procurement department mistakenly told Terrapure no one had satisfied the pre-qualification criteria.
“There is no way we should be doing business like this,” Port Colborne Mayor Bill Steele said. “What we are being asked to do is pass this without knowing what competition is out there.
“It really bothers me that we are renewing a contract without going to market. Let’s see if there is a better deal out there.”
After a closed-door session to get legal advice, the committee voted to extend the agreement with Thomas Nutrient Solutions for up to nine months, while staff set up and execute a plan for a competitive bidding process.