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JUNE 2016
Lack of Government Oversight: A Ticking Time Bomb
Faulty girders are slowly lowered onto a waiting truck by a crane on the Herb Gray Parkway project on December 18, 2013. (Photo republished with the express permission of Windsor Star, a division of Postmedia Network Inc.)
How close did we come to a disaster at the Herb Gray Parkway in Windsor? Only after months of construction, and with hundreds of substandard girders already installed, did the Ontario government become fully aware of the structural problems. The situation might easily have gone undetected for years. It might have remained a ‘ticking time bomb’ until a tragedy occurred.
 
For many, the government’s inadequate oversight of this highway project was shocking. For CCIL, the news confirmed what we have been warning for years – that there is a very real risk to public safety inherent in some of the new types of infrastructure contracts. Under these new arrangements, sometimes referred to as Alternative Financing and Procurement (AFP) contracts, there is often no requirement for the independent testing of construction materials and methods.
 
Various performance-based, design-build and P3 (public-private partnership) contracts leave testing and inspection to the prime contractors. This sets up a conflict of interest when the party with a financial interest in the outcome also manages all inspection and testing. If the contractor deliberately chooses not to follow the specifications, or not to report problems, how will the government know about the deficiencies?

Some argue that independent testing is unnecessary under these contracts if the contractor is made responsible for the performance of the asset for an extended period of time. But of course, the flaw in this logic is that the performance periods are typically much shorter than the expected life of the infrastructure. Bridges, transit systems, water treatment plants and other vital infrastructure should last 75 to 100 years and highways should last 20 years.
 
So what happens after the contractor's obligations expire? The government is on the hook. And because there was no independent testing to reveal any hidden problems, taxpayers may end up having to pay for remediation, and public safety may be at risk, years into the future.
 
How many other ‘ticking time bombs’ are out there? No one knows. What we do know is that some warranty-based highway projects in Ontario have ended up costing considerably more than traditional contracts, and some municipalities trying to save a few dollars by foregoing independent testing have been stuck with the added expenses associated with premature asphalt and concrete failure.
 
And now with billions of dollars of new infrastructure being planned across Canada, the concern becomes even more pressing. Governments need to carefully review their contract language. CCIL is available to advise specifying authorities on how to ensure proper oversight of these critically important projects.
An Interview with Allan Maynard
Allan Maynard co-founded ASL Analytical Service Laboratories in 1982 and helped build its reputation as one of Canada’s largest and most respected environmental laboratories. His company specialized in carrying out environmental analytical chemistry in support of projects such as environmental impact studies, contaminated sites projects, food safety and drinking water programs.
 
ALS Global acquired this successful company in 2001 and Allan retired from the business in 2004. He then became the Executive Director of CCIL where he served for the next eight years.
 
We recently caught up with Allan at his summer home on Salt Spring Island.
 
 
Q: How has the environmental testing business changed?
 
A: When I first entered the field, many of the tests considered standard today had not been developed, and for the tests we did do, the detection limits were not adequate. So in the early days, we had to work hard on developing methods and improving sensitivity.

I can remember my business partner Rob Deverall asking me if we could measure dichloroethane. “Why?” I asked. “Because there’s been a spill, the customer needs us out there urgently, and I said we could help,” he replied. And so we scrambled around and developed a method for both field work and within the lab.
 
ASL started in 1982 with just the three owners and after a year, we had a total of only eight employees. The more rapid expansion happened after 1986.
 
Now, of course, the labs across the country are very sophisticated and set up to do a wide array of tests at high volumes.
 
 
Q: What have been the major drivers of growth?
 
A: There have been at least three key developments. One was the need to do environmental baseline and environmental impact studies, in order to determine whether an industrial operation – a mine, for example – was having an impact. That kind of work required extremely low detection limits.
 
The next was a huge proliferation of parameters to be measured in effluent. The EPA in the U.S. published their ‘priority pollutant’ list and methods were developed for this full list. In Ontario, the Municipal Industrial Strategy for Abatement (MISA) program was introduced in the early 1980s. Every major industry had to monitor for a large list of parameters and the number of labs in Ontario grew rapidly.
 
And the third development that really created an expansion of labs was contaminated sites legislation.
 
Another development, which has been important is the creation of highly specialized labs that conduct testing for dioxins. A small number of Canadian labs are well known for their capability in this area and receive samples from all over the world.
 
Concurrent with all of this laboratory expansion was a very significant improvement in capabilities --- laboratory instrumentation, automation and data management and reporting systems.
 
 
Q: What is the state of the environmental testing industry today?
 
A: Well, rapid growth, the more complex and costly demands of the business, and the need for economies of scale have spurred consolidation. Starting in the 1990s, there have been many mergers and acquisitions. A handful of large companies now operate globally.
 
The other trend – the one that concerns many in the business – is the drift towards commoditization.  Increasingly, labs are trying to compete mostly on price, and this becomes a short-sighted strategy. It creates the impression in the marketplace that a lab service is the same anywhere, and that the only differentiator is cost. The result, of course, is relentless downward pressure on revenues and profits.
 
Competing solely on price is a race to the bottom, and that’s not the kind of approach that ultimately serves the best interests of customers. At CCIL, I always tried to advocate against this trend, and I continue to believe that the industry needs to promote value over the lowest bid.
 
The other problem with commoditization is that it restrains labs from paying competitive wages to their chemists, and over time they could end up losing their top people to other industries.
 
 
Q: How do labs compete on value?
 
A: I think many customers would rather hire a professional chemist or professional chemistry lab than buy a bunch of unit tests. I feel also a two-envelope bid model should be promoted – where the cost proposal is not opened until the bids are first evaluated on quality and professionalism.
 
Labs wanting to stand out from the pack need to consider what they can bring to customers beyond the delivery of a commodity service. It might be taking the time to explain the results, working with them as part of their team and providing personal attention.

Lab Watch is a quarterly newsletter produced by the Canadian Council of Independent Laboratories. By opening this ‘window’ on our sector, we hope to engage government, industry and other stakeholders in an informed discussion of the issues.


CCIL represents the independently-owned, private-sector testing laboratories in Canada. Operating more than 330 facilities across the country, our members help ensure the quality and safety of highways, bridges, buildings, other infrastructure, manufactured goods, water, food, soil, air and more.





NEWSLETTER CONTACT:
Megan Stephens

mstephens@ccil.com 
416-777-0368
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