A cross-ministry-developed policy limits the use of cost-plus contracts for future procurement of construction and maintenance of building and transportation projects.
“Our government is committed to ensuring fiscal accountability and making prudent use of public money. Reducing unnecessary costs by limiting cost-plus contracts will provide value for Albertans.”
Infrastructure, Agriculture and Forestry, Environment and Parks, Seniors and Housing, and Transportation have initiated the policy to limit the use of cost-plus contracts in new capital project procurements.
The new policy fulfils a mandate to limit the use of cost-plus contracts for procurement of capital projects, given by Premier Kenney to the infrastructure minister on April 30, 2019.
The Limiting Cost-Plus Contracts Procurement policy only permits cost-plus contracts to address unforeseen circumstances when other contracting methods are not logistically or financially practical, for example an emergency repair for a water line break.
A cost-plus contract is one where a specified profit is built into the contract, such as an agreed-upon fixed fee or a percentage of the total or partial contract value. In a cost-plus contract, the contractor invoices government and is then paid for all costs, including labour, equipment and materials in addition to the agreed-upon fee.