Here’s an actual situation I welcome your opinion on.

It’s an issue of principle versus what some might call pragmatism.

Lawrence Yule, Chair of the Regional Sports Park Trust (yes, that’s Mayor Yule to most of us) sat down in his Trust capacity with Higgins Contractors, the folks who build so many roads around here.

They said: Give us the contract to build the roadwork in and around the sports park — a job worth $1.8 million — without having to go through competitive tender, and we’ll donate $500,000 to the sports park ($250k “unconditionally”).

Trust Chairman Yule brought this proposal to the Hastings Council, where it was discussed in public-excluded session and the deal was sanctioned by the Council.

The Trust awarded the contract, and with subsequent fanfare, the “gift” by Higgins to the sports park was welcomed and announced by the Trust.

Taking a principled approach, this might look like highly valuable and profitable public contracts, either directly or indirectly controlled by the Council, are “for sale” on the promise of “contributions” to the sports park. Forget competition, transparency, and public tenders … all of which are designed to protect the public interest.

In this case, one might wonder if Higgins only offered a $100,000 contribution, would that have been enough to secure the contract? Or conversely, maybe the Trust Chairman/Mayor should have struck a tougher deal, asking for $750,000!

And who does a potential vendor think they are negotiating with anyway … Trust Chairman Yule or Mayor Yule? Isn’t this role confusion itself problematic … at least sending an undesirable signal to those who hope to do business with the Council or the Trust?

Or is this simply a matter of pragmatism, as Chair/Mayor Yule argues? He says that the Trust/Council understands enough about roading costs to know that the amount proposed by Higgins to do the work was fair. And the $500,000 contribution was a nice bonus to the community.

Says Mayor Yule: “This is a win win sponsorship. Higgins will provide a very competitive price (tested against well known current pricing) and the Regional Sports Park has benefited from $500k from non ratepayer sources.”

But maybe another contractor would have offered a bigger bonus for the same favor.

And in any event, doesn’t this put the Council on a slippery slope? One might think that, by now, they know the “fair” price of everything and every service they procure. Why bother with competitive tenders at all?

And why discuss all this in public-excluded session? The Mayor says it was a “negotiating situation” that required confidentiality. But there wasn’t any negotiating going on … Higgins had said simply: Give us the contract without public tender and we’ll give you $500,000 … as generous corporate citizens.

In my view, it was debated in private because the whole arrangement might prove embarrassing. But maybe I’m a prude.

On Wednesday, to avoid future situations like this, Councillor Bradshaw attempted to pass a resolution simply requiring the Sports Trust to conduct its contracting and procurement according to the same groundrules as the Council itself. Those rules require contracts valued at over $50,000 to go to competitive public tender.

But this approach horrified Councillors Bowers and Speers, who led the opposition to this “bureaucratic” approach. Mayor Yule, speaking in his capacity as Trust Chairman, indicated the Trust would probably have a problem with being required to follow the Council’s rules. Bradshaw’s resolution failed.

Says Councillor Bradshaw: “Competitive tendering is the cornerstone to getting best value for the ratepayers and as such should have been one of the first conditions in the agreement for HDC to fund the RSP Trust. What is required is one consistent rule for all organisations being funded by the HDC. It was a shame that myself and only three of my fellow Councillors agreed.”

What do you think? Should principle or pragmatism have prevailed here? And what about going forward? For example, if a multi-million dollar velodrome is being built?

Should would-be vendors have the expectation that, with a bit of a bonus contribution, they can avoid competitive tendering?

Here is a two-question poll you can take to indicate your view (and comment further if you like).

Tom Belford

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9 Comments

  1. Conflict of interest? – there was a situation, up north, I think, where a tender that had been awarded was withdrawn because a council employee had received a ham from the tenderer.

    Maybe this was a good deal, but what happened to the process.

    THe HDC seems to love red tape when it comes to the general public.

    If it seems to good to be true, put the red flag up.

  2. If this sort of big business favortism is allowed to be conducted and concluded behind closed doors! So much for the Council abiding to the public "open competitive" tenderering process? If ever there was a need to warrant a complaint to the Office of the Auditor General -surely this must be it. This sort of behaviour is not a lot different to Napier City councillor Rodd Lutter' indiscretion regards breaching members "monetary conflict" of interest. Absolutely disgraceful Banana Republic goings on right here in The Bay. If these underhanded "closed shop sweetherat" sort of "done deals" is acceptable to the majority of our elected -peoples representitives -and mayors. All I can say is roll on October -for it's definitely overdue time for a change!

    David Bosley.

  3. I have to applaud and agree with Cr Bradshaws approach, all such process' should be open to citizen scrutiny and therefore the result is a robust and rigiorus decision making.

    Whilst I can understand Mayor Yule's approach and his desire to secure such sponsorship, it does send some concerning signals in that public contracts are literally up for 'sale'; which may not result in the best outcome for the ratepayer.

  4. Monday on National Radio, Lawrence, wearing his Chairman of Local Govt. hat, was critical of the democratic process applied to Auckland Super City – assets/core functions administered by CCO's who were appointees, unelected by 'the people.'

    In this Higgins case there are two obvious contradictions in the Mayor's/Chairman's/ defense of democracy.

    The Sports Park Trust is a CCO (or similar) and independent of the democratic process. And the tendering is financial democracy in the sense of that the most competitive/attractive bid wins.

    I'm sure Chairman/Mayor Yule thinks he's negotiating in our best interests but it would have been democratic, and smart, to invite Infracon, and others, to bid on the proposal: give us $500k -what can you do the job for?

    I like the concept. It's a hustle. Times are tough for all contractors. Make 'em fight for the jobs. Capitalism at it's best (and worse)

  5. The Higgins contribution raises the question of what other deal are being done out of sight of public scrutiny, and who is benefiting. Such activities can lead to those controlling the purse strings becoming benefactors in their own name. The Sports Park Chairman is heading out on a very slippery slope.

  6. I'm a a local architect and was wondering, if I "donated' 25% of my fee to the Sportspark, if the council would award me the contract to design the Velodrome? This way the balance of the fee also stays in Hawke's Bay and gets spent locally……..a 'win-win' for the council and the community!!??

  7. Simon, The Chairman always was on a slippery slope

    The word underhand springs to mind . The ease with which our nimble-footed mayor skips between being Mayor of HDC to becoming Chairman of the RSP Trust can only be admired. The possibilities for confusing the peasantry are endless. If the heat is on the council, you switch to the trust. And vice-versa. Particularly when the whole project begins to have increasingly ominous portent for ratepayer pockets.

    Watch out for the "spin" on this cosy deal.

  8. STOP!!! How long has this fantastic asset, Sports park been on the cards for our beautiful REGION (not just Hastings)? Considering this has been hold due to funding and Mr Yule not wanting to use just rate payers money… As a sports person and someone keen to see more people come to the bay and inject our economy, who really gives a stuff if a multi million dollar company has handed us cash? Would you prefer little roading companies who are struggling to make ends meet, not be able to finish the contract?? Thats when we as a region look like IDIOTS!!! Lets be realistic, they get a name on a street, so what, employ more people due to workload, fantastic!! How many of us know how the tender process works?? I think they will do the job and do it well. Less money out of my rates anyway………..

  9. so, andrea, i take it you're happy for NZ to become like eg Indonesia, where the only way anyone gets a contract is by bribing the officials? because, not to put too fine a point on it, what other name would you call this sort of deal?

    oh, maybe "kickback"… that's a little less blunt.

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