October 24, 2002

Ambulatory Care Centre - Objectives, Costs, Benefits, Risks

An unusually short notice on the government purchasing commission website says that for $200 you can get the bidding documents for the Public-Private Partnership Ambulatory Care Centre, a $90 million construction project with a competition date in the spring of 2005 (just before the May 17th election no doubt). The brief Request for Expressions of Interest and a wordy but empty government news release are all the hard information the public can see for free on what looks like a health mega-project.

According to the Request for Expressions of Interest, the Centre is expected to be 365,000 square feet. The Vancouver Coast Health Authority will compile a short list of three respondents who will be invited to complete the next step. When giving the expected construction costs, the Request document uses the unusual notation "Cdn$90 million". A BC bid document would not normally have to specify Canadian dollars. That could be an indication of US involvement in the project.

Given the implications of NAFTA once we allow US interests to operate a Canadian health facility, the hint of possible US involvement in the bid is very troublesome. The Private-Public Partnership appears to be philosophically driven. Perhaps government thinks this approach will produce lower wages but a lot of organizing can happen over 30 years. It could be that private sector involvement might offer some advantages, but that should be proven before entering into a 30 year contract that involves $90 million in construction costs and hundreds of millions in operating costs. Where could one look for potential advantages? Government might think that the deal will allow it to keep the debt off its books and to avoid its reporting responsibilities for a major capital project. If that is the case, it should think again.

Consider how the Auditor General treats government leases on automobiles. The following accounting note appeared in the "Notes to the Summary Financial Statements for the Fiscal Year Ended March 31, 2002":

In the case of vehicle leases the government was required to treat the leases as a debt of $45 million. It is hard to believe that the Vancouver Coastal Health Authority will be able to enter into a "Public- Private Partnership relating to the design, construction, long-term operation and management of an Academic Ambulatory Care Centre (AACC)" without the $90 million estimated cost for the building appearing on the government's books as increased debt. In fact, since the contract will also call for the "long-term operation and management" of the facility, there may be other contractual obligations that will have to be capitalized (appear as debt) on the government's books. The provincial government must fully comply with Generally Accepted Accounting Principles by 2005 so it will not get away with Enron style, off-book accounting.

The question of how the costs are "booked" is important in determining the application of the Budget Transparency and Accountability Act. That Act lays out special rules for "major capital projects" where the government directly or indirectly makes commitments exceeding $50 million. The Ambulatory Care Centre is clearly a major capital project so Section 14 of the Act applies. Within one month after commitments have been made the Act requires that "the responsible minister in relation to the project must make public a major capital project plan stating:

There are provisions in the Act that could allow the government to escape its responsibilities to report objectives, costs and risks but a truly open and transparent government wouldn't attempt to deny those responsibilities, would it?

A project that is "expected to support several hundred medical students, over 580 medical and allied professionals, and an estimated 600,000 patient visits annually" is a mega-project. All the care and attention that is necessary for a major capital project must be applied to the Ambulatory Care Centre.