The City of Vancouver says it will save taxpayers $2.7 million over the next five years after using a tendering process, for the first time in 25 years, to obtain contracts for employee group benefits.
Vancouver council voted unanimously October 16 to endorse three contracts totalling more than $9.4 million over five years to provide extended health and dental benefits, life insurance and critical illness insurance to city employees.
The winning bidders for the contracts are incumbent service providers Pacific Blue Cross and Sun Life Financial Inc.and new provider SSQ Life Insurance Co. Inc.
A city report estimated that, based on projected claims and salaries, the request for proposals process would yield $2.7 million in cost savings over five years. It also noted that the city had not put that area of service out to competitive tender for more than 25 years.
By press time, neither city staff nor Mayor Gregor Robertson had provided Business in Vancouver with an explanation as to why the city had taken 25 years to pursue a competitive tendering process for the service area.
Jordan Bateman, B.C. director for the Canadian Taxpayers Federation, said the city's switch to a tendering process for employee group benefits should have happened long ago.
"The fact they haven't done this for a quarter of a century is a bit shocking, especially given the size of the city's work force and the size of its human resources department," he said.
"One would have thought they'd be going out to tender on this more often or at least investigating other solutions."
Bateman said the total projected savings on the new contracts, averaging to more than $500,000 a year, indicate the important savings taxpayers can realize when municipalities use competitive tendering.
"I'd like to see more use of competitive bidding [for local government procurement]. Because when you pit businesses and companies against each other, they drive prices down. That's just basic economics."
According to the staff report, city staff distributed the RFP to 11 proponents on May 29 who had been prequalified under a request for expressions of interest process. •
