Recommendations

The Yukon Hire Commission's recommendations meet the common interest in maximizing job opportunities for Yukon people, reducing unemployment, and increasing opportunities for Yukon businesses. Providing employment and business opportunities for Yukon people also helps strengthen and diversify the Yukon economy. The recommendations foster a high level of fairness and accountability, while respecting the need for competition and fiscal responsibility.

Maximize job opportunities for Yukon people

(a) Hiring for Yukon government jobs

Both the government and the public want good, qualified civil servants and teachers. The government also wants a workforce representative of the Yukon population. Women, aboriginal people, people with disabilities and other equity groups are not always present in the numbers they should be; the government relies on employment equity policies and programs when hiring to improve this situation. As the largest employer in the territory, the Yukon government has considerable impact on the labour force and on other employers. The Yukon Hire Commission recommendations support and complement existing government policies and practices respecting employment equity.

Yukon residents should have priority

Both the government and the public want qualified Yukon people to have priority over Outside qualified people. Yukon people bring to the workplace local knowledge as well as a commitment to their communities. Hiring Yukon people allows for advancement within the civil service, e.g. when senior staff retire or leave. However, it will sometimes not be possible to hire a Yukon person; sometimes there is no one here with the necessary skills. As well, there are occasions where a fresh perspective is needed. In general, both the Public Service Commission (PSC) and the Public Schools Branch already fill most positions locally, although the public seems unaware of this. While PSC and Public Schools Branch statistics show that all but two per cent of people hired are "Yukon residents," the public perception is that a far higher percentage is actually the case.

Recommendation #1

Ensure that hiring is at first limited to Yukon applicants; only if skills are not available, or if there are special circumstances, should Outside applicants be considered. Maintain existing PSC requirement for Ministerial approval of Outside hires. Review method(s) used to communicate information about PSC/Crown Corporation/Education hiring practices and statistics.

Implications: Hiring Yukon people makes fiscal sense because the government is not required to pay for relocation costs, or to fly people up for interviews. The recommended definition of a "Yukon resident" should be used when compiling hiring statistics.

Recommendation #2

Ensure that the Education Department maintains up-to-date inventories for each category of Education Act employees, e.g. administrators, teachers, remedial tutors, educational assistants, etc. These inventories are to be used in all hiring initiatives, supplemented if necessary by local advertising. Outside candidates would be considered only if suitable local candidates are not present.

Implications: Education currently lists Yukon people with teaching certificates and other teaching credentials in a "Teacher Inventory." (The list is not always up to date, however, and its use is not consistent throughout the department.) It is up to individuals to get their names into the inventory; ads should run twice a year inviting applications, especially in advance of the spring recruitment period. As in Recommendation #1, all hiring should first be limited to Yukon applicants, including returning Yukon students. Outside advertising and recruitment should only take place once all local options are explored and acceptable candidates not found. As well, Education is switching to a computerized applicant tracking system in 1998 that will enable all staff involved in hiring to easily assess potential applicants and increase accountability in the hiring process.

Definition of Yukon resident, local resident

If a key goal of the government is to improve job opportunities for Yukon people, it requires a definition of a "Yukon resident." This issue was surprisingly contentious when brought forward for public debate; what constitutes a "real" Yukoner is a matter close to peoples' hearts. Complicating the issue further is how the definition is to be used: there is a fear that Yukon Hire will exclude Outside people from work, rather than give preference to Yukon people. Exclusion is not the intent of the definition. However, if the government is to increase job opportunities for Yukon people, then Outside people will find themselves at some disadvantage simply because Yukon people will be going to the front of the line. The definition will only affect government hiring and government funded programs where explicit direction is to give priority to Yukon residents.

Recommendation #3

For all government hiring purposes except for hiring on construction contracts, a "Yukon Resident" is a person who holds a Yukon Health Insurance Plan card. (See Recommendation #5 for definition for hiring on construction contracts.)

Implications: A health card is obtained after three months of residency in the Yukon. This is easy to check compared with other methods. There is some concern that this is not a foolproof method because residency is not verified on a regular basis by the Department of Health and Social Services. If enforcement is stepped up, there would be additional costs to government. In those instances where a person chooses not to have a Yukon health card for religious reasons, other proof of residency for a minimum of three months can be used, e.g. utility bills, affidavit. Current students or returning graduates who were "Yukon Residents" before going to school should be considered "Yukon Residents" for all hiring purposes.

Young people need more job opportunities

Although not discussed in the Yukon Hire Commission consultation report, the lack of opportunities for young people (17-24 years old) was flagged by the public as a special priority in the last round of consultation. Statistics show a higher unemployment rate for young people than for the labour force overall. As well, people questioned the wisdom of investing government dollars in post-secondary education or apprenticeship training if lack of work in the Yukon forced young people to move Outside for employment.

Recommendation #4

The government should foster more job opportunities for young people by developing a youth hiring program including initiatives such as: establishing more entry-level and/or apprenticeship positions within government; ensuring that "required" qualifications in job descriptions--especially experience--are essential rather than desirable; enhancing its existing summer job program by developing pre-apprenticeship ("labourer") positions; allowing voluntary four-day work weeks with the savings used to hire young people; developing incentives for the private sector to hire young people for non-summer jobs.

Implications: This recommendation will partially address high unemployment faced by school leavers and returning graduates. The Public Service Commission (PSC) and Advanced Education would develop the program, in consultation with public sector unions. Individual departments would have the lead role in implementing the specific initiatives in consultation with the PSC and Advanced Education. The goal is not necessarily to add Full Time Equivalents, but to work with existing positions and opportunities. There might be costs associated with this recommendation depending on how it is carried out.

(b) Hiring for Yukon government contracts for construction

During the past four years, the Yukon government spent more than $250 million on construction contracts for buildings and highways, with about 30 per cent of the total spent on wages. In order to encourage contractors to hire Yukon workers, the government has a Business Incentive Program (BIP) that provides rebates when more than 80 per cent of the workers on payroll are "Yukon Residents." The Employment Standards Act contains the Fair Wage Schedule (FWS) which sets the basic wage to be paid for the construction trades; the Labour Services unit of the Department of Justice investigates complaints respecting wage rates and pay miscalculations.

Yukon people should have priority on construction contracts

The benefits of hiring Yukon workers extends beyond the workers and their families to all the Yukon businesses where they spend their income, and to the Yukon government which gets their taxes. It makes sense for the Yukon government to minimize "leakage" from our economy by supporting Yukon Hire, rather than seeing Outside workers leave at the end of the construction season to spend their savings and pay their taxes elsewhere. While many Yukon contractors do tend to hire locally, not all do. As well, Outside contractors usually bring in their own crews, even when qualified Yukon workers are available.

Existing incentives for increasing Yukon Hire have helped improve job opportunities for Yukon workers, but more can still be done. Other jurisdictions have used a hiring agency to ensure local and equity hiring took place on construction projects. This is admittedly a controversial approach to consider implementing in the Yukon, even though it explicitly addresses the public's interest in seeing Yukon people go to the front of the line for work, in addition to solving a number of other problems such as the enforcement of the Fair Wage Schedule.

Recommendation #5

For hiring on construction contracts, maintain the existing Business Incentive Program definition for "Yukon Resident," i.e. a person who has held a Yukon Health Insurance Plan card for three months.

Implications: Because a health card is obtained after three months of residency, this definition has the effect of requiring a worker to have lived in the Yukon for at least six months. This will provide less incentive to contractors to hire Outside workers, but only on projects valued in excess of $100,000; the Business Incentive Program does not apply to smaller projects. It is fairly simple to check residency using this method, although there are still some concerns about accuracy (see Recommendation #3 for more details). Further to this definition, a "Local Resident" is a person who lives within a prescribed distance from the work site. This distance should usually be 100 kilometres, but may be altered depending on circumstances.

Recommendation #6

The government should develop--on its own or with appropriate partners--a Hiring Agency, which contractors on Yukon Government projects would be required to use.

Implications: The Hiring Agency would ensure qualified Yukon workers would get priority on government contracts. In addition to workers hired through the agency, contractors would be able to retain a small core of their regular Yukon workers. As well, by handling payroll directly, the Hiring Agency would: ensure the Fair Wage Schedule is followed, minimize the use of labour contracts by contractors, promote employment equity goals, ensure local hire, and ensure apprentices are hired. The Yukon's small size will require a pilot project, since similar agencies established in other provinces were for very large projects. Although this initiative will require government funding to start, most expenses could be recovered by charging contractors a fair amount for the payroll services rendered. The new "Labour Unit" should have the lead role in initiating this project (see Recommendation #39 for more details about the functions of this unit). Until the new unit is established, ECO should have the lead role in co-ordinating the hiring agency. Note that this recommendation complements Recommendation #7, Recommendation #18, and Recommendation #36.

Labour contracts used to avoid intent of Fair Wage Schedule

The Yukon Hire Commission's research found that both workers and contractors consider labour contracts a problem. Rather than hiring workers directly and putting them on payroll--and subject to the Fair Wage Schedule, Workers Compensation, and tax deductions--contractors hire a worker as a "subcontractor." However, when the worker is under the primary direction and control of the contractor, s/he is not a legitimate subcontractor. Often people who work on a "labour contract" are paid at a rate lower than the Fair Wage Schedule. As well, they are responsible for all normal deductions for tax, compensation, pension, etc. Sometimes labour contracts are used to avoid paying taxes, to the detriment of law-abiding Yukon and Canadian taxpayers.

Recommendation #7

Amend the definition of "employee" in the Employment Standards Act so as to include "contract workers" who are subordinate to or dependent on the person they work for. Increase resources for Labour Services to perform more audits of construction contracts.

Implications: The Labour Services unit of Justice currently applies Common Law tests to determine whether an illegal labour contract or legitimate subcontract is in place. Expanding the definition of employees will help enforcement of the Act. Labour Services should be given resources to establish an education program to inform employers and workers about the risks of labour contracts. Any financial consequences of this recommendation will likely be positive, as less staff time will be needed to prove the existence of a labour contract in a specific complaint.

Increased incentive needed for hiring certified tradespeople

A certified tradesperson is one who has undertaken years of training under the direction of a journey-level worker and successfully completed the exams for that trade. After all this training and time, however, job opportunities can sometimes be few and far between. A certified tradesperson should be able to charge more than an uncertified tradesperson. When there is no incentive or requirement to hire a certified worker, a contractor may choose the less expensive route. Not only does this hurt the certified worker, but it could affect the quality and even the safety of a project. As well, the more certified tradespeople there are in the Yukon, the more there are to work on non-government projects such as residential construction, leading to better quality assurance for homeowners and contractors alike.

Recommendation #8

Require contractors on government construction projects to hire certified tradespeople, gradually increasing the number required to 100 per cent of the non-apprentice workforce within 10 years.

Implications: Compulsory trade certification is not possible in the short term due to a lack of trained workers--all that would be accomplished is creating new work opportunities for certified Outside workers. The Yukon Training Strategy is working on ways to increase apprenticeship and journey-level worker upgrading in the territory. Within a few years there should be enough certified workers to ensure Yukon workers can fill most, if not all, certified positions available. Uncertified workers who have many years of experience and the appropriate skills should be grandfathered through a simple affidavit stating their years of experience in the trade. With respect to ensuring contract criteria specify the use of certified tradespeople, Government Services (Contract Administration) should have the lead role. With respect to ensuring training is available to meet future demand for certified tradespeople, the new Labour Unit should have the lead role (see Recommendation #39 for more details) or, in the alternative, Advanced Education. This recommendation complements Recommendation #10, Recommendation #11, and Recommendation #12.

(c) Hiring for Yukon government contracts other than construction

A strong preference for incentives rather than mandatory requirements for Yukon Hire was evident throughout the Commission's consultation with the public and industry. The Business Incentive Policy (BIP) is an established incentive program operated by the government, which now applies to eligible construction contracts and goods and services contracts. BIP encourages businesses providing a service or product to the government to use Yukon labour and/or materials. Eligible purchase contracts are those for Yukon manufactured products, with each product worth at least $5,000. Changes to the BIP are now being drafted. These changes will allow manufacturers to accumulate sales eligible for the rebate. Eligible service contracts must also meet the $5,000 threshold; unfortunately, no services have been identified yet for BIP purposes.

Recommendation #9

Investigate extending the Business Incentive Program to other industries where behavioural change(s) are needed and achievable, e.g. trucking.

Implications: Cost-benefit analyses should determine whether an industry should be added to the BIP program or not. The BIP office should have the lead role in carrying out this recommendation. For the trucking industry, Government Services should work in co-operation with C&TS to develop a rebate system based on local employment and payroll. There will be a cost implication, because contractors do not reduce their bid prices by the full amount of the rebate.

(d) Training for trades

A lack of trained Yukon workers is frequently used to justify hiring Outside workers. The Yukon Training Strategy is now being revised to deal with current and future training needs in the Yukon. Currently there are not enough training opportunities, especially for people who live in rural communities. The current apprenticeship programs also do not serve rural communities well; apprentices in most trades have to go Outside to complete their course work and--in some cases--write their exams. Yet Yukon people recognize the importance of training, and its role in ensuring efficient, quality work takes place.

Recommendation #10

Require that Yukon government capital plans have links to skills and training requirements identified and acted upon.

Implications: With a lead time of up to five years for some projects, the government can maximize the benefits to the Yukon by ensuring that Yukon workers have the skills needed for the job with special training if necessary, e.g. duct work. A procedure for linking project managers with Yukon College and the new Labour unit will need to be developed and included in the Yukon Training Strategy. This may require changes to the Financial Administration Act. (See also Recommendation #12 and Recommendation #39)

More apprenticeship positions are needed

Apprentices generally have a great deal of difficulty maintaining their apprenticeships due to inconsistent work opportunities.

Recommendation #11

Ensure government construction contracts require Yukon apprentices to be hired, where it makes sense, e.g. set a minimum apprentice-to-journey worker ratio.

Implications: Incentives for hiring Yukon apprentices have not met government expectations, despite the overall success of the Business Incentive Program. Especially on larger work sites, it will not be onerous for contractors to have apprentices working, although it is recognized that apprentices will not be as efficient as certified workers. Requiring apprentices will ensure sufficient training opportunities exist to meet the future demand for certified tradespeople (see Recommendation #8). The government will not bear the costs of this recommendation directly; costs will be incorporated into bids submitted by contractors.

New approach to training would help rural Yukon

Rural communities sometimes have a shortage of qualified workers. It is important that projects in rural Yukon be required to have apprentices so that local people have the opportunity to acquire skills in a formal learning process (see Recommendation #11). As well, new approaches to training that would reduce the need for people to move to Whitehorse or Outside for long courses would greatly help rural workers.

Recommendation #12

The government--together with Yukon College, Human Resource Development Canada, unions, industry and other relevant agencies and organizations--should develop a modular training system which would complement the established apprenticeship system.

Implications: The modular training would feature short courses on specific skills. The courses would add up to recognized benchmarks in the apprenticeship program for that trade. Training would be offered at both apprentice and journey-level worker levels, as there are few opportunities for journey-level upgrading in the Yukon at present. It is essential that modular training does not undermine or devalue the existing 4-year apprenticeship program or the well-rounded skills of journey-level workers. The new Labour unit (see Recommendation #39) should have the lead implementing this recommendation; until the unit is established, Advanced Education should have the lead. Given the withdrawal of Human Resources Development Canada from funding apprenticeship training, there will be cost implications for the Yukon government, even with tuition.

(e) Other hiring

The Yukon government can hire people directly or influence the hiring of people indirectly, through its control over contract criteria. There is also the opportunity to influence hiring by businesses that have an interest in some service provided by the government. The best example of this can be found in the natural resource sector, where government services such as roads or power are used by mining and forestry companies. Yukon First Nations currently engage developers on their traditional territory in negotiations so as to maximize opportunities for their members in exchange for access or information.

Recommendation #13

Require companies involved in any natural resource development to carry out Yukon Hire and/or Yukon purchase where government funds are being used to assist the project directly or indirectly.

Implications: This recommendation complements existing government practice in many areas, and would ensure every effort is made to maximize work opportunities for Yukon people. A formal means of achieving this goal would be to incorporate into regulatory legislation a requirement for socio-economic impact benefit agreements, e.g. Yukon Oil and Gas Act. Economic Development would have the lead role in implementing this recommendation, in consultation with relevant departments, e.g. Renewable Resources for forestry. The agreements should include provisions for local hiring, hiring within the Yukon, training, and purchasing from Yukon suppliers. There might be costs associated with negotiations if several agreements need to be negotiated at the same time.

Maximize opportunities for Yukon businesses

Government spending that goes to Yukon businesses will re-circulate through the Yukon economy provided those businesses employ Yukon people and purchase supplies locally. The multiplier effect in turn fuels other Yukon businesses and jobs. Using local businesses can also ensure good quality work, since local businesses that do not perform well should not expect unhappy customers to continue using their services. The government wants a contracting system that will provide opportunities for Yukon businesses but that will also be fair, fiscally responsible, accountable and competitive. The government's interest in supporting Yukon businesses is to ensure the multiplier effect works to the benefit of all Yukon people. This is even more the case in rural Yukon, and the government's contract regulations allow for community preference when contracting for goods and services.

(a) Definition of Yukon business

Finding consensus on a definition for a "Yukon Business" proved impossible. While almost all parties consulted agreed that the primary reason to give preference to a Yukon business is to ensure benefits flow to Yukon people, criteria which could easily capture this principle could not be found. Yet if the government goal of increasing opportunities for Yukon businesses is to be met, some definition must be used. Most value-driven and some price-driven contracts will not specify "Yukon Business" but rather set out criteria which require local knowledge, experience and/or employees who are "Yukon Residents." It is useful to have a common understanding of what constitutes a "Yukon Business," however.

Recommendation #14

A "Yukon Business", for the purpose of any Yukon government preference policy, is one that meets two or more of the following criteria: employs Yukon Resident(s); has real property in the Yukon; has an office in the Yukon; or is owned by a "Yukon Resident."

Implications: This definition would be used in applying Yukon preference recommendations such as sole sourcing, or invitational tenders that only go to Yukon businesses. For value-driven contracts other more specific criteria, such as local knowledge, would be used. The criteria do not include holding a business licence, or being duly registered as a Yukon company or extra-territorial corporation, since these are legally required and do little to indicate the benefits the business brings to the Yukon. Also, paying corporate income tax might simply indicate that a business made sales in the Yukon. Provided "Yukon preference" criteria are explicitly stated in government contracts, compliance should not be difficult; enforcement should rest with the relevant contracting authority. The contract enforcement authority (See Recommendation #33) should use this definition as a guide in disputes. There should be no costs associated with this recommendation.

(b) Price-driven contracts and purchase contracts

A price-driven contract is entered into as the result of a bid or quote. Provided all criteria are met, the key determinant for who gets the contract is price. A construction contract is a good example of a price-driven contract. A purchase contract involves the purchase of articles, commodities, equipment, goods, materials or supplies. A purchase contract is entered into as the result of either a bid or a proposal. More than 70 per cent of the government's spending on purchase contracts is currently paid to Yukon vendors, but there is still room for improvement. For example, significant contracts for computer equipment and for printing have been awarded to Outside vendors. These products and services may already be available in the Yukon, or could be developed.

Yukon businesses should have priority

Although the present contracting policy sometimes favours Yukon businesses, the Commission found contract specifications occasionally inadvertently exclude Yukon firms from bidding, e.g. requiring a brand-name product not available in the Yukon, although substitutes could be provided by local firms. As of September, 1997, architectural and engineering consultant Requests for Proposal require the consultant to specify Yukon-made products, and must justify why Yukon-made products are not specified. The timing of some contracts leaves too little time for locals to successfully bid, e.g. only a firm with a large stocked inventory can supply the product by the requested deadline. New Yukon businesses open up every month, but there is no formal means for government to find out about them. This sometimes leads to invitational tenders going only to Outside firms. While the onus is still on Yukon businesses to advertise their presence and actively seek government contracts, changes can be made to the existing system to increase opportunities for them.

Recommendation #15

Amend the contract regulations to require the contracting department to discuss contract specifications and tendering plans with industry in order to ensure all opportunities and efficiencies are taken into account and that potential Yukon vendors or manufacturers are not excluded. While this must include all price-driven tenders greater than $25,000, this should not exclude tenders of lower value that would benefit from the consultation. The discussions could take many forms ranging from regularly scheduled meetings with industry, to simple phone calls, to special meetings called to discuss one-of-a kind projects. Departments should initiate discussions with vendor industries to decide on the most appropriate form of consultation.

Implications: More communication between government and potential vendors often is the simplest way to address the problems identified by the Yukon Hire Commission. This recommendation is not intended to allow vendors to dictate to government what the criteria should be; the government, after all, is the client. The consultation is intended to identify concerns or problems, outline the rationale for choices made, and explore possible substitutions or alternative approaches that would benefit Yukon businesses. Some government departments already have a system of regular meetings set up with their main industries, and find this approach helpful. The discussions are also an opportunity for industry to learn about the contract regulations and how to meet government needs better. There will be a small cost to departments to hold these meetings, but this may be offset by a smoother contracting process. It is up to each contracting department to initiate these meetings, with Contract Administration providing advice upon request. This recommendation complements Recommendation #24 (Value-Driven Contracts).

Sole-sourcing important for local businesses

Price-driven and purchase contracts under $10,000 may be sole-sourced, i.e. a single company is asked to submit a price. For the purchase of goods, bids or proposals must be invited from at least three sources if the value of the contract is between $10,000 and $25,000; for other price-driven contracts, the invitational tender threshold is $50,000. Sole-sourcing is an efficient way for government to get smaller jobs done--especially if a Qualified Source List is used. However, many businesses feel sole-sourcing is abused by some government departments because only a few firms get the contracts rather than every qualified firm getting a turn.

Recommendation #16

Amend the contract regulations so that sole-sourcing to Outside firms is allowed only for contracts worth less than $1,000.

Implications: This recommendation would still allow some efficiencies on small contracts for goods not available in the Yukon. The total number of contracts sole-sourced Outside will drop. Requiring invitational tenders for goods/services valued over $1,000 will create more opportunities for Yukon businesses. This recommendation will reduce the ability of government to quickly carry out contracts between $1,000 and $10,000, but this is the range to which Yukon businesses feel they do not have fair access. Government would still be able to contract with Outside vendors, but only if the service/good is not available in the Yukon or available for a fair price. Contract Administration, which is currently responsible for administering the contract regulations, should have the lead role in drafting the amendments in consultation with Justice. Provisions preventing the break-up of contracts to circumvent this provision need to be developed.

Recommendation #17

Where sufficient competition is present, issue only invitational tenders/proposals to Yukon businesses. Any invitational tender must include Yukon vendors if they exist. Review and revise, if necessary, the mechanism for ensuring Yukon businesses have equitable access to government contracts (sole source and invitational).

Implications: With respect to invitational tenders, it is important for the government to set an upset price, i.e. the upper limit for bids, as determined by research. The public made it very clear that as much as they support opportunities for Yukon businesses, the interests of the taxpayer must also be met. Provisions preventing the break-up of contracts to circumvent this provision need to be developed.

Construction contractors need level playing field

On price-driven contracts, the key determinant is price. In addition to ensuring a decent wage for workers, the Fair Wage Schedule (FWS) provides a standard rate for non-union contractors to base their bids upon. In theory, contractors compete on the basis of efficiency and innovation. Construction contractors who can pay their workers less than the rates set by the Fair Wage Schedule have an unfair (and illegal) advantage. More often it is Outside contractors who use labour contracts or other arrangements to pay less than the FWS. Yukon contractors and workers alike have an interest in ensuring the FWS is upheld.

Recommendation #18

Amend the Employment Standards Act as follows: (a) Add a $500 fine per incorrect employment record; (b) Add an administrative penalty of 10 per cent of the amount owed to an employee, to be paid to the employee; (c) Add the option of third-party complaints, when reasonable grounds are provided. As well, design and implement a complementary education program to increase public awareness of the right to file a complaint with Labour Services about violations of the Fair Wage Schedule or any provision of the Employment Standards Act.

Implications: Increasing the penalty for breaching the FWS is consistent with the comments of industry and workers, and is already being pursued by the Labour Services unit. Although Labour Services will act on third-party complaints when proof is present, this is not well known or formally recognized. (Proof is required in order to minimize frivolous or malicious complaints.) As well, Labour Services currently provides some public education about labour standards, including an annual visit to each Yukon high school to brief students. Labour Services would welcome the opportunity to increase its public awareness work (see also Recommendation #7). Justice would have the lead role in drafting legislation to amend the Employment Standards Act, and would also bear the cost of enhancing the public awareness programs offered by Labour Services. This recommendation would also require additional resources to meet the need for increased education and enforcement.

Recommendation #19

Ensure that construction bids list subcontractors. Reduce the opportunity for bid shopping by enforcing the provision that subcontractors listed in a bid do in fact carry out the work; require any change in subcontractors to be approved by Yukon government.

Implications: This recommendation would make it more difficult for general contractors to engage in bid shopping and might discourage some unfair competition based on labour contracts and underground work.

Recommendation #20

Raise the Fair Wage so that it is closer to the union scale. Review the Fair Wage Schedule every three years in consultation with employers and unions.

Implications: The Fair Wage Schedule has not been revised since 1990. Raising the Fair Wage closer to the union scale would simply base it on a freely-negotiated market wage rate. A number of non-union contractors say they already pay more than the fair wage. This recommendation would benefit non-union workers as well as making the playing field more level between unionized and non-union contractors. While it would not affect bids by union contractors, it would raise the costs of contracts awarded to non-union contractors who base their bids on lower labour costs.

Recommendation #21

Include employee benefits such as employer costs for supplementary health care and employee-controlled pensions when calculating BIP rebate.

Implications: This would raise the cost of BIP somewhat, but it would recognize the long-term social benefits of workers being covered by pensions and supplementary benefit plans. This in turn reduces long-term social and health costs to government. Employee-controlled pension plans are normally administered by unions and are much more secure than employer controlled pension plans, given the great turnover and high level of bankruptcies in the construction industry. This recommendation would also make the playing field more level between unionized and non-union contractors.

Government requires cost-effective, efficient system

The government has an interest in ensuring as many Yukon people are employed as possible, since this has positive economic and social consequences. The government also needs an efficient and open system for contracting, which puts the onus on business rather than government to access the information once it is published.

Recommendation #22

Publish, at least annually, in Yukon newspapers a list of the items/services purchased from Outside businesses, including purchase price and relevant contract details. Immediately publish the Contract Registry on the government public web site.

Implications: Would alert Yukon businesses to opportunities and strengthen the accountability of the public service for Yukon Hire and Yukon Purchase. Contract Administration would be responsible for publishing this list, which essentially is a subset of the Contract Registry it already publishes. Government Services plans to publish the Contract Registry on the government public web site shortly.

Recommendation #23

Require general contractors on construction contracts to invite Yukon and/or local companies to bid on subcontracts.

Implications: Would increase opportunities for Yukon businesses that might not normally be considered by Outside general contractors. Shifts responsibility for subcontractors to general contractor, rather than to government. Construction representatives do not consider this an onerous requirement and there should be few, if any, cost implications.

(c) Value-Driven Contracts

Value-driven contracts can be for consulting or for services. Value-driven contracts are entered into as the result of a proposal. There are two types of consulting contracts: general and engineering. General consulting contracts are for services provided by a qualified person, such as conducting studies, or designing publications, or providing artwork. Engineering consulting contracts are for technical services by accredited professionals, e.g. architects, engineers. Service contracts are those in which the contractor provides resources to accomplish tasks or rents facilities or equipment, e.g. janitorial services, repairs. Value-driven contracts do not necessarily go to the lowest bidder; when awarding the contract, the government evaluates the entire service the contractor will provide--outlined in a proposal submitted by the contractor--with price as just one consideration.

Because price is not the key determinant in value-driven contracts, some of the issues identified by consultants and businesses do not apply to businesses involved with price-driven contracts. The criteria contained in a value-driven contract can be very specific, which is helpful in meeting Yukon Hire goals.

Higher cost of operation should be recognized

Recommendation #24

Ensure the government's contract regulations continue to recognize the importance of buying from "Yukon Businesses" by making best efforts to contract for services in the community in which they are used or, in the alternative, from Yukon vendors. Amend the contract regulations to:

  1. require a minimum of 20 per cent of total points assigned in value-driven contracts to reflect Yukon preference criteria, e.g. "local staff, office and knowledge;" and
  2. require the contracting department to discuss request for proposal criteria with industry to ensure all opportunities and efficiencies are taken into account and that potential Yukon suppliers are not excluded. The discussions could take many forms ranging from regularly scheduled meetings with industry, to simple phone calls, to special meetings called to discuss one-of-a kind projects. Departments should initiate discussions with vendor industries to decide on the most appropriate form of consultation.

Implications: Most of this recommendation parallels Recommendation #15 (Price-driven contracts), but is applied to value-driven contracts. By requiring that a minimum of 20 per cent of points assigned in evaluating a proposal are generated by Yukon Hire criteria, businesses that employ Yukon people and have local offices will gain significant advantages over businesses that do not benefit the Yukon as much. It is recognized that the higher costs experienced by Yukon businesses (rent, fuel, etc.) will be reflected in the overall price, but it is difficult to quantify the result. Present contract regulations allow departments to place a high premium on Yukon content, but do not require a minimum level.

Sole-sourcing is a concern

Many of the problems identified with respect to sole-sourcing price-driven and purchase contracts were raised when value-driven contracts were discussed with industry and the public, but the issues of fairness and consistency were of more concern. The provision in Recommendation #17 that calls for the government to "review and revise, if necessary, the mechanism for ensuring businesses have equitable access to government contracts ..." would address this concern directly.

Recommendation #25

Ensure government departments understand and use the Source List. Review the structure and content of the Source List with the goal of improving its utility to government contracting authorities.

Implications: The Source List is published by Contract Administration. It is simply a directory of businesses, outlining the types of services provided. It is not a Qualified Source List, which is a list established for a specific project that essentially pre-qualifies businesses to bid on contracts associated with the project. The Source List is not well understood by government staff; rightly or wrongly, people feel it contains inaccurate, old information. Yet the Source List is the best tool for determining which businesses might be approached for sole source or invitational proposals. This recommendation is designed to improve the use of an existing tool; there should be no cost implications.

Recommendation #26

Create a mechanism whereby, on formal request by industry representative associations, the government, in consultation with industry, evaluates whether sole-source limits should be adjusted (up or down) for particular industries.

Implications: In some fields, such as engineering, there is virtually no sole-sourcing because most jobs exceed the $25,000 threshold. Many straightforward projects still require proposals to be written as a result. Some industry representatives feel there could be significant savings to government if the sole-source limit were raised to $50,000, because simple jobs would no longer require proposals. Government needs to determine if this is really the case, and if there are issues of competition, safety, or fairness that might arise if the threshold were to be changed. Sole-source limits should not change more often than once a year, since this must be done by amending the regulations. Contract Administration should have the lead role in co-ordinating these evaluations, in consultation with the relevant department(s).

Effective Requests for Proposals lead to better work

The strong public concern over fairness and consistency is not limited to sole source contracting procedures. With individual government departments assuming responsibility for contracts, industry representatives said they felt that bids/proposals were too often vague or poorly thought out. Instances were given of departments "splitting" a contract so it could be sole sourced rather than put out for invitational tender. Yet it is in the government's interest to ensure Request for Proposal (RFP) documents are comprehensive and precise, because they in turn will lead to better proposals, fewer change orders, lower costs, and better products.

Recommendation #27

Ensure clear evaluation criteria and comprehensive terms of reference in all government proposals. Ensure all government departments apply contract regulations consistently.

Implications: There is presently no central clearing house that could be charged with monitoring contract bids/proposals, although this function could be returned to Contract Administration. The new Labour Unit could also assume this function, as it would be responsible for monitoring and evaluating government practices affecting employment. This recommendation complements Recommendation #25, and Recommendation #28.

Important to support skills transfer to the Yukon

Earlier in this report it was noted that businesses often cite the shortage of trained people in the Yukon as justification for hiring Outside. This is true of many industries, not just the construction trades. In some cases, formal training is not required, only the opportunity to acquire skills on-the-job from a trained practitioner. This is particularly true of computer skills, and some advertising-related skills required for value-driven contracts. While it may be necessary to involve Outside businesses or individuals to ensure a government project is carried out properly, it is in the government's interest to help "grow" needed skills in the Yukon workforce.

Recommendation #28

Where appropriate, ensure proposal evaluation criteria include points to give incentive to Outside firms to develop partnerships with Yukon firms, and/or Yukon firms to hire Outside experts for skills transfer and expertise.

Implications: It is important to ensure that businesses are able to prove skills transfer will take place for this recommendation to achieve the desired effect. Contract Administration should develop guidelines for departments to follow when drafting criteria for contracts that could call for skills transfer.

(d) Yukon businesses have common interests

Yukon businesses are all interested in obtaining work. When it comes to government contracts, they want an easy-to-understand and fair system. They want to be able to offer steady work to their employees, and offer good wages and working conditions.

Government planning process must be thorough, timely

The present financial system seems to work against the government when it comes to contracting. Tenders cannot be let until the budget is approved; operations and maintenance funds must be spent by the end of the fiscal year (March 31). This leads to booms and busts for contracts. During a boom, government staff is hard pressed to stay on top of its workload and tenders/request for proposals are rushed through the system. Businesses must also rush through preparing their bids/proposals, and mistakes can lead to losses or change orders or worse. Sometimes so many construction projects occur simultaneously that not enough Yukon workers are available, and Outside workers must be used.

Recommendation #29

Develop a mechanism to increase the flexibility of operations and maintenance funding.

Implications: There will always be a need to hold some funds back until the end of the fiscal year in order to meet emergency expenses--this is good management. There is a problem with funds not spent until the end of the year because of poor planning, however. The Department of Finance should have the lead role in implementing this recommendation. Implementing this recommendation, as it might require amendments to the Financial Administration Act. Implementing this recommendation should allow departments to engage in multi-year purchase contracts to create new industries with a secure market for three to five years. This type of contract should be engaged in only after a competitive tendering process. There should not be any costs to government as a result of this amendment, aside from the time spent by staff on drawing up the amendment.

Recommendation #30

Develop realistic three-year government capital budgets to replace the present one-year system. Develop mechanisms to ensure tenders and requests for proposals are issued earlier and are more evenly spread out during the year. Examples are: establish a group including industry and government representatives to review tendering timeline; pass capital budget in the fall; issue tenders early with caveat "subject to appropriation."

Implications: Multi-year budgets would not only address the boom-bust problems affecting government contracting, but could also meet government need for accurate longer-term fiscal planning. Better planning processes are essential to avoid boom and bust, ensure sufficient competition, and allow the maximum number of Yukon firms to bid on projects. Establishing a government-wide tendering timeline, especially for smaller projects, would help eliminate the boom bust problem. Better timelines could result in lower costs to government by increasing competition while giving locals a better ability to bid on projects.

Public needs more information about contract process

The Contract Administration unit of the Department of Government Services currently publishes the Source List, the Contract Registry, tender forecasts, and a variety of pamphlets outlining key services as well as the Contract Regulations and Contracting Directive. The same is true of the Business Incentive office. Both offices also provide seminars on request. Despite all this information, it became clear during the consultation process that industry, labour and the general public do not understand the basic principles of the government's contracting system, or even how to access the information designed for public use.

As well, the Final Agreements signed by Yukon First Nations require the government to provide them with information on bidding processes and contracts. The government must ensure that First Nations are not prevented from bidding.

Recommendation #31

Develop new methods to increase public awareness of contract regulations, appeal mechanisms and government tendering procedures, especially in rural Yukon. Publish the Contract Registry more frequently than once a year and publish it immediately on the government public web site.

Implications: In December, Contract Administration started publishing the Contract Registry more frequently; because the document is updated weekly, it can only be viewed at the Contract Administration office. This will change shortly when the updated registry is published on the government internet site. As well, copies of the annual summary of contracts issued by the government are available. New methods might include more advertising of services, placing information on the government's internet web site, mail-outs to industry, etc. Contract Administration should have the lead role in co-ordinating an enhanced public awareness campaign, working with Territorial Agents and industry where appropriate.

Importance of consistent, detailed tenders

There is strong public and industry support for training government staff to ensure consistent, high quality requests for bids/proposals.

Recommendation #32

Require training be taken by Yukon government employees who write or evaluate bids/proposals to ensure consistency, full understanding of the contract regulations, etc.

Implications: Training will ensure all staff has the same background in contract practices, and the same approach to detail and content. Contract Administration already offers this type of training to a limited extent; this recommendation simply reinforces the need to have all staff involved in contracting up to a set standard. Departments should revise job descriptions to include this requirement; when PSC reviews job classifications, it should check to ensure this requirement is included where appropriate.

Enhance opportunities for appeals, challenges

Some mistrust of the government's contracting practices was voiced during the Yukon Hire Commission's meetings with business people and the public. Although those familiar with the contract regulations felt they are quite comprehensive, people are concerned that few, if any, means exist to ensure the regulations are followed. As well, several recent incidents involving contracts worth hundreds of thousands of dollars led some to believe that government staff who do not follow the regulations are not disciplined, and have no incentive to follow the regulations in the future.

Recommendation #33

Amend the contract regulations to re-establish an authority reporting directly to a Minister to handle appeals, complaints and suggestions from the public and from government employees concerning contracting and hiring practices and decisions. The authority would have the power to review and, if necessary, intervene in government contracting and hiring practices.

Implications: The current remedies are not considered adequate by the public, although government staff feels the Bid Challenge Process is sufficient. The function of the authority could be assumed by Contract Administration, which used to have a similar role, or alternatively by a Fair Practices Advocate independent of contracting departments. The purpose of this authority is to act as a one-stop centre for investigating complaints before as well as after contracts are awarded. The authority would only act on complaints rather than reviewing every government contract. The authority would have the power to intervene and even stop the contracting process if necessary. These powers and responsibilities would also extend to government hiring. The authority would ensure a mechanism is in place to discourage frivolous or malicious complaints. The authority would also ensure that appropriate disciplinary measures are taken in the event of a breach of the regulations. (See also Recommendation #39 concerning a new Labour Unit.)

Applying Yukon Hire policies creatively

The recommendations of the Yukon Hire Commission focus, for the most part, on increasing the ability of government policies and practices to increase employment in the Yukon and to increase opportunities for Yukon businesses. Yukon Hire policies would be followed by the government and all of its Crown Corporations.

(a) Application of the Yukon Hire Policy could extend beyond the government itself

Through its spending power, the Yukon government has the ability to influence hiring and contracting practices in the territory to a significant extent. This can be done not just through direct hiring or through contracting practices, but also by attaching conditions to funds it provides to other organizations. For example, Health & Social Services ensures services it is responsible for are delivered by organizations funded through contribution agreements. As well, municipalities may receive conditional funding for special projects, in addition to block funding provided for core services. All non-government organizations (NGOs) funded by the Yukon government are funded through conditional funding, e.g. Yukon Hospital Corporation.

Recommendation #34

Yukon Hire practices and policies should apply to all organizations using government conditional funds, with terms explicitly set out in funding agreements.

Implications: Yukon Hire conditions would not be tied to municipal block funding. Most Yukon municipalities currently practices some form of local hire, and are answerable to their residents for choices made. As for NGOs and other organizations receiving conditional funds, adding Yukon Hire as another condition should not present problems; if there are conflicts, these can be resolved through the negotiations leading to the contribution or funding agreement.

(b) Encourage other governments to adopt Yukon Government policies, procedures

The Yukon government does not have jurisdiction over how contracting and hiring is handled by other governments. Recommendation #34 would ensure that Yukon Hire policies would apply to conditional funding, but not core or block funding transferred to other levels of governments. However, as the largest employer in the territory, the Yukon government is in a position to lead by example in setting standards and expectations for performance.

Recommendation #35

Ensure that training offered to Yukon government staff for tender writing, project management, etc. continues to be made available to municipal and First Nations government staff.

Implications: The Yukon government already extends training invitations to municipal staff. By promoting greater familiarity with territorial contract regulations and their rationale, the likelihood of municipalities adopting or adapting the territorial system increases. There would be minor cost implications, based on past experience.

Recommendation #36

Ensure that municipalities continue to have the opportunity to utilize Yukon government resources for capital project management, tender writing, and tender review--on a cost-recovery basis--with the goal of enhancing the consistency and quality of municipal contracts and contracting practices.

Implications: Small municipalities, with infrequent contracts, often do not have the staff resources to handle big projects. Some municipalities choose to contract these services out, often to businesses that do not have Yukon experience and knowledge. Yukon government staff have these skills, as well as extensive experience, and can help municipalities adopt or adapt Yukon Hire policies appropriate to the project in question. As long as municipalities are invoiced for the service(s) provided, there should be no cost to the Yukon government in adopting this recommendation.

(c) More attention to all government projects is needed

Yukon businesses want the opportunity to bid on government contracts and to have steady work. The government wants good quality work for a fair price. The contracting system has booms and busts, tied to the end of the fiscal year, the date the capital budget is approved, and the length of the construction season. Compounding this is the fact that it is not just the Yukon government that encounters these pressures, but all governments in the territory and all major utilities. The potential for one government's project to inadvertently cause problems for another organization's project is significant. Advance knowledge of major projects by all governments and utilities could not only minimize conflicts but foster useful efficiencies and help reduce boom and bust cycles in rural communities and the Yukon as a whole.

Recommendation #37

Improve communication among the four levels of government and major utilities on capital projects, with the goal of increasing efficiency by making maximum use of local workers.

Implications: Municipalities already inform the Yukon government of their capital projects as they are legally required to file their five-year capital plans with Community & Transportation Services. Most First Nations still work closely with Indian and Northern Affairs Canada on their capital plans. Government Services should have the lead role in developing a process that incorporates existing communications and establishes the links needed to ensure all governments and utilities such as NorthwesTel and Yukon Energy Corporation are apprised of all major capital projects. This recommendation complements Recommendation #6 and Recommendation #10.

Simple and straightforward system valued

Despite its small size compared to other provincial and territorial governments, the Yukon government is still large compared to other Yukon businesses. Functions related to labour, training, employment standards and contract administration are not grouped together but assigned to different departments. This seems to have compromised the government's ability to take co-ordinated action on Yukon Hire. Another complicating factor is the different ways different governments in the Yukon handle contracting and hiring. For the worker and businessperson alike, the system may seem confusing.

Recommendation #38

Ensure better planning and communications within the Yukon government with respect to contracting so that individual departments are aware of all significant activities.

Implications: Since contracting was devolved to individual departments to administer--pursuant to the Contract Regulations--the central co-ordination function of Contract Administration has become much weaker. Departments value their autonomy and would not welcome a return to a centralized approach. Improving planning and communications among departments would deal with the public's interest in a more consistent and coherent government approach while respecting departmental priorities and styles. The planning/communications process should be facilitated by Contract Administration. There should be few, if any, cost implications.

(a) Efficient Yukon government structure will aid Yukon Hire implementation

The government's commitment to implementing Yukon Hire recommendations will require greater communication and co-operation among the various units and branches already involved in contracting, hiring, and labour issues. The Yukon is also assuming more responsibility for labour issues as the federal government withdraws from employment programs and labour market policy making. As well, the federal government is devolving several provincial-type powers to the territory over the next couple of years, e.g. mining, forestry. With little increase in spending possible for the foreseeable future, the Yukon government will be striving to ensure it operates as efficiently and effectively as possible.

Recommendation #39

The Yukon government should consolidate those functions related to contracting and labour, either by enhancing an existing government unit or by creating a new branch/department (e.g. Department of Advanced Education and Labour). The consolidated unit would co-ordinate and/or provide analysis of government-funded training, labour market policy and labour market planning. An important responsibility would be monitoring and evaluating contracting and hiring practices across government. Functions best suited for the new department include work now undertaken by: Labour Services Unit (Justice), Advanced Education Division (Education). Other areas that could be considered include Workers' Advocate (Justice), Occupational Health and Safety (WCB), Contract Administration (Government Services), and Staff Development (PSC).

Implications: With its commitment to Yukon Hire, the government should be prepared to increase the ability of the affected branches/divisions to carry out their work. All but one provincial government has consolidated these types of functions into a Department of Labour (see Appendix C). The Executive Council Office should have the lead role in implementing this recommendation. There should be little change to operating costs once the physical consolidation has taken place. A new Labour Code would not be required to support the consolidation of functions. This recommendation was not identified during the public consultation, but based on the issues and interests raised the Commission brings it forward as a logical solution. The external advisory committee supported a re-organization of functions if it would increase effectiveness; the internal advisory committee felt structural changes are not needed. (See also Recommendation #40.)

Recommendation #40

The Yukon government should review the organization of government. The main reason for this review is to ensure efficient and co-ordinated delivery of devolved or newly-assumed responsibilities formerly handled by the Government of Canada.

Implications: Any new responsibilities assumed by the Yukon government will affect hiring and contracting, e.g. increase in volume. An effective government structure will be necessary if the new functions are to be carried out with minimal increases in resources. A formal assessment of the Yukon government's organizational structure has not been undertaken for some time. This recommendation complements Recommendation #39.