Is B.C. Giving Community Benefits Agreements a Bad Name?

July 26, 2020

 

Tim Runge, Partner

Gray Hammond, Associate

 

The construction industry is taking the British Columbia government to court. A coalition of construction associations is asking the court to reverse a lower court decision that referred part of their case on the government’s labour rules to the Labour Relations Board (LRB) and to return the entire case to B.C. Supreme Court.

Background

British Columbia’s Community Benefits Agreement (CBA) requires employers to hire locally, provide apprenticeship training, and give Indigenous people and women new opportunities. Any contractor in the construction industry can bid on and perform project work. The agreement includes:

  • A commitment to hire workers within a 100-kilometre radius of the construction site.
  • Indigenous people will have first priority for hiring and training.
  • Women in trades and other disadvantaged groups will have priority in all hiring and training on government-funded projects.
  • Projects will target an apprenticeship ratio of 25 per cent, variable on a trade-by-trade basis.
  • Every worker will be paid union wages.
  • Wages and benefits will be increased by 2% each year to 2024.
  • A no-strike, no-lockout clause.

The government created a Crown Corporation to handle hiring and paying workers, BC Infrastructure Benefits Inc. (BCIB), which is the Employer of all employees working under the CBA. BCIB also handles union dues deductions.

Open-shop companies can bid on projects, but their employees are required to join a designated union, the new Allied Infrastructure and Related Construction Council of BC, after 30 days on the job.

Assessment

BC’s “Community Benefits Agreement” is not a CBA in the standard sense, since it applies to many projects across an entire province, while CBAs are typically project- and locality-specific. Its labour requirements make it closer to a Project Labour Agreement (PLA), which is essentially an agreement to use only union labour on a job site. Also known as a Community Workforce Agreement, a PLA is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. PLAs often accompany CBAs in the USA, but again are project specific.

An analysis by the Canadian Federation of Independent Business indicates that this CBA could add from $2.4 to $4.8 billion more to the cost of public projects in BC. For the Pattullo Bridge replacement project, the Minister of Transportation originally announced the CBA would add seven per cent to the cost, or about $100 million, but a subsequent ministry statement said there had been no change to the project budget of $1.38 billion. However, the cost for the Trans-Canada Highway widening project increased 35%, due partly to escalating costs of materials, labour and the complexity of work.

In our experience on defence and civil procurements by governments around the world, reinforced by a McKinsey global assessment of infrastructure projects, local socio-economic advancement “asks” should add no more than three percent to base project costs.

Perhaps BC should have created a Community Benefits Framework (CBF) as was done in Ontario provincially and Toronto municipally, or a CBA Policy as was done in Vancouver. These inform or direct subsequent public CBAs.

The key difference between a Community Benefits Framework or CBA Policy and a Community Benefits Agreement is that a CBA is legally binding: if the agreement’s terms are not met, legal recourse can be made. A CBF or CBA Policy is a set of guidelines, which can be enacted by a government for public procurement projects.

In 2018, the City of Vancouver was the first Canadian municipality to adopt a Community Benefits Agreement Policy. Under this policy, developer applications for rezoning that exceed 500 thousand square feet are subject to community benefits requirements of 10% local employment and 10% local procurement. The City planned to engage a third party organization to fulfil the employment liaison role between local job seekers and Community Benefits Agreement employers.

Toronto had experience with CBAs before instituting a social procurement policy in 2016, and then a CBF in 2019. City Council adopted the Social Procurement Policy and Program to leverage the City's purchasing power by achieving socio-economic impacts for Indigenous peoples and equity-seeking residents.

Metrolinx, Ontario’s regional transit agency, negotiated a CBF with the Toronto Community Benefits Network for the Eglinton Crosstown LRT project. It outlines the roles and responsibilities of four partners in implementing targeted workforce and economic development goals: Metrolinx; the Ministry of Advanced Education and Skills Development; the builder (Crosslinx Transit Solutions); and the Toronto Community Benefits Network, representing the community-labour partnership. The Province finalized this agreement to support people from historically disadvantaged communities and equity-seeking groups along the Crosstown route, setting a goal of 10 percent of all trade and craft working hours needed for the project will be performed by apprentices and journeypersons who are historically disadvantaged in the job market.

Through the CBF, close to 200 people had been hired from local communities in construction and Professional-Administrative-Technical (PAT) jobs by 2019, and more than $6 million spent on purchasing from local SMEs. Partners are ensuring outreach efforts to communities not traditionally represented in the trades. Job seekers can join training programs, get the certifications needed, and start their new careers on the job.

Concluding comments

Since every community has different profiles and needs, and every infrastructure project has basic specifications, room for creativity and negotiation is required in any policy, framework, or agreement that asks for local socio-economic advancement. The community or public sector needs to ensure that a realistic community profile is available. The scoring of this “ask” in a proposal has to have a worthwhile weight – at least 10 per cent – to ensure serious consideration by all bidders. Yet the assessment of this piece needs to be flexible, allowing open-ended creativity rather than strictly prescriptive boxes to check.