The province is moving away from an old methodology on telecom procurement
By Ahmad Hathout
VANCOUVER – Telus Corp. CEO Darren Entwistle sent a seven-page letter to British Columbia premier John Horgan in March expressing concern the province’s move toward a price-focused approach to the purchase of telecommunications services would jeopardize the company’s future investments in the province and possibly force the company to move its headquarters out of Vancouver.
Telus is currently on a 12-year, $1.6-billion “strategic” deal – signed in 2011 and expiring next July – that sees it provide telecommunications services to the provincial government, with stipulations requiring it to make certain investments in the province, such as building cell towers along highways and upgrading its existing networks.
But the province has since changed its general procurement strategy to emphasize “best value” when shopping for government services. A 2017 mandate letter to Jinny Sims, then-minister of telecom ministry Citizens’ Services, said she would need to “Institute a cap on the value and the length of government IT contracts to save money, increase innovation, improve competition and help our technology sector grow.” The province has about $7 billion to spend on all types of services.
“The subject matter represents the most important considerations [sic] in TELUS’ 120-year history in the province of BC,” said Entwistle’s mailed letter to the premier, obtained by Cartt.ca. “The current [agreement] represents an important manifestation of the relationship between TELUS and the province,” adding the strategic partnership has “advanced our investment in BC’s telecommunication infrastructure by at least five years, as compared to the potential outcome in the absence of the [Telecommunications Services Master Agreement].”
Entwistle said he agrees with the new strategy’s focus on using procurement “strategically” to advance social and economic objectives and to “prioritize value,” but said it is “disconcerting and difficult to comprehend” why it would base its decision “simply on price.”
“It is my strong and sincere recommendation that your government consider pursuing a new, competitively procured telecommunications services agreement based on maximizing the strategic value required by your government and the citizens of the province over the next decade and beyond” – Telus CEO Darren Entwistle
Emphasizing Telus’s contributions to B.C. – including being the largest private sector employer in the province and plowing some $300 million of investments beyond the services to the government – Entwistle said if the province goes ahead with a telecommunications procurement strategy based on price alone, it will negatively impact the 20-times investment it has made. He added Telus would be forced to take a “similar approach” to its business by making “decisions based on cost economics alone.
“By way of example, given the significant costs associated with being headquartered in BC as compared to other jurisdictions, after 120 years on the same Vancouver city block, we may be forced to relocate our corporate headquarters to a more supportive geographic location,” he said in the letter.
He added that a price-based procurement strategy will jeopardize Telus’s “ongoing ability” to invest $2 billion to the social and economic success of the province on an annual basis; continue to hire its 8,000 employees; progress the $30 million worth of venture investments supporting companies and provide financial support to entrepreneurs and socially responsible business through its Pollinator Fund; continue connecting more Indigenous communities in B.C.; deliver healthcare services through its health division; support farmers through its agriculture division; and connect low-income, minority, Indigenous women at risk, and homeless people.
“TELUS’ concerns that a commodity-based telecom procurement will dissuade respondents from infrastructure, social and economic investments is unfounded” – Citizens’ Services briefing note
“It is my strong and sincere recommendation that your government consider pursuing a new, competitively procured telecommunications services agreement based on maximizing the strategic value required by your government and the citizens of the province over the next decade and beyond,” he wrote in his concluding remarks.
But in an undated Citizens’ Services briefing note to discuss Entwistle’s letter, also obtained by Cartt.ca, the province appears to not be budging.
“The telecom environment has significantly changed since 2011,” the note said. “TELUS’ concerns that a commodity-based telecom procurement will dissuade respondents from infrastructure, social and economic investments is unfounded. Today, the Province has a national connectivity strategy with $830M in provincial and federal funding available to expand connectivity across the province including in Indigenous communities.
“Over the last several years, Rogers, TELUS and Shaw have all invested significantly in the province and have assisted the Province with our COVID response,” it said, adding the approved procurement approach is a result of “2.5 years of consultations, multiple independent studies, and reflects the Province’s platform commitments.”
The note also said that the new procurement strategy is in-line with other Canadian jurisdictions and international public sector organizations.
An email to a Telus representative asking for comment was not returned.
The current contract does not bar other service providers from offering services to government employees. BC Hydro, for example, has used Rogers cell service, with Rogers having lost out on both a mobile application management project and truck WiFi services for the utility company to Telus, according to 2020 emails seen by Cartt.ca. BC Hydro has complained, according to the emails, that Rogers, at the time and despite improvements, did not have full-service coverage in remote locations, calling coverage “spotty.”
“We Continue to rely on TELUS for key operational requirements (e.g. PLT phones, truck WiFi) because of coverage issues,” said the email from BC Hydro’s Kip Morison, which came ahead of a meeting with Rogers in 2020.
Telus is already under competitive pressure as Rogers looks to make more of a splash in its home court by acquiring Shaw, Telus’s west coast rival.
