Reversal gives expressway paving contract to Dufferin
July 13, 2006

City council has accepted a $30.3 million bid from Dufferin Construction for the mainline paving of the Red Hill Creek Expressway, reversing an earlier indication that LaFarge Canada had been awarded the contract.

Red Hill project director Chris Murray told councillors on May 29 that "the tender for the paving contract closed, and a review of the bids was made, and the lowest acceptable bid is from LaFarge, and it's to the tune of $30.9 million."

At the time, the city's website showed the Lafarge bid, as well as one of $37.5 million from Aecon Construction, and a $0 bid from Dufferin which had been disqualified from the bidding process. However, Dufferin representatives complained, and city officials concluded that there were "similar bid irregularities found in all three submissions". As a result, the city re-opened the tender and "allowed each contractor an opportunity to either take no action, correct the irregularity in their current bid or submit a new bid."

Representatives from both Dufferin and Lafarge spoke at the June 21 meeting of the corporate administration committee. "In the case of Lafarge they were questioning the fairness of the approach and offered arbitration as a way to address apparent bid irregularities," says the report. "Committee considered this suggestion but concluded the process was fair and recommend awarding the paving contract to the lowest bidder."

Winning this bid means that Dufferin has now captured over 80% of the construction work associated with the valley expressway. Adding the paving work to what was reported up to the end of 2005 in a recent city document shows the company has won nine contracts worth $143.6 million - out of the total construction bill of $175.5 million for the city's portion of the valley road.

Dufferin is not an incorporated company, but instead is a business name used by St Lawrence Cement, one of the companies that recently acknowledged making illegal donations to the 2003 election campaign of Mayor Di Ianni.

The mayor received the maximum $750 from each of St. Lawrence, Dufferin and TCG Asphalt, a subsidary of St. Lawrence. Because of the association between the three, they are considered one donor under the Municipal Elections Act and only allowed a total of $750 in donations to a single candidate.

Di Ianni subsequently issued $750 refunds to each of St Lawrence and TCG. Under the terms of the court settlement both companies were required to make $2250 donations to the Hamilton Community Foundation.

The paving bill is $7.9 million higher than city staff expected. The staff report says "the increased costs are attributable to a number of factors which include the rising price of asphalt concrete, petroleum and its related products, and additional concrete and steel required for bridge works."

The price of asphalt has doubled in the last year to $500 a tonne according to a recent Globe and Mail story which also predicted further large increases. City rules allow a road contractor to pass on all asphalt cost increases to the city if they reach an upset limit of 15 percent.

On May 1, the Ontario Hot Mix Producers Association reported an "overnight" jump of 25 percent in the price of asphalt. In a bulletin to their members, the Association strongly recommended including price escalation clauses in all their tenders, warning that "price volatility is not going away."

The Globe reported the steep increases are tied to the price of oil and are wreaking havoc with muncipal road budgets. The story can be viewed at
http://www.theglobeandmail.com/servlet/story/LAC.20060626.RASPHALT26/
TPStory/Business.

The staff report on the Dufferin contract is available on the city's website at
http://www.myhamilton.ca/NR/rdonlyres/BE87C2A4-F9BE-4D79-92E9-
790AF95F7AE0/0/Jul12PW06087_FCS06075.pdf.