AHS awards private laundry contract after months of lobbying by UCP donors

Yesterday, Alberta Health Services announced that they had selected a private company to take over public laundry services in the province.

According to the announcement, 68% of AHS’s laundry needs—primarily in Calgary and Edmonton—were covered already by private companies. The announcement indicated that this selection comes as a result of a request for proposal process that had launched in October.

The private company selected is K-Bro Linen Systems, a cross- country firm headquartered in Edmonton.

AHS didn’t say in the announcement how many vendors participated in the RFP process, only that it was “a competitive RFP process and evaluation”.

While the process may have been competitive, what the announcement doesn’t indicate is that K-Bro Linen Systems had a connection with the UCP government prior to this announcement.

According to documents in the Alberta lobbyist registry, K-Bro hired Canadian Strategy Group on 17 August 2020 to “raise awareness of K-Bros international reputation for excellence and dependability in providing the most highly-efficient, environmentally-conscious and cost-effective laundry and linen services”.

Lobbying would include “arranging one or more meetings, grassroots communication, informal communications, meetings, presentations, social media, telephone calls, written communication whether in hard copy or electronic format”.

CSG filed their lobbyist registration initial return on 25 August 2020, basically two months before the government announced their RFP process for private laundry services.

Listed on the initial return were 3 people:

• Gail Kelly, senior consultant
• Michael Lohner, partner
• Hal Danchilla, partner

Prior to joining CSG in 2013, Gail Kelly was director of field operations for the Alberta PC party for over 6 years.

In 2018, she donated nearly $600 to the United Conservative Party, including to 3 constituency associations: Edmonton–Glenora, Edmonton–Riverview, and St. Albert. She also donated over $1,000 to the Wildrose Party between 2012 and 2014, including to the Strathmore–Brooks constituency association.

Michael Lohner co-founded CSG in 2008. Prior to that, he served as executive assistant to the minister between 1998 and 2001, under the environment, agriculture, and infrastructure portfolios.

In the 22 years since starting CSG, Lohner has donated nearly $33,000 to either the UCP or its predecessor, the PCs, including to well-known politicians such as Fred Horne, who at one point served as minister of health.

Hal Danchilla was the other co-founder of CSG. Danchilla has over 6,000 filings (including notices of change) in the Alberta Lobbyist Registry, involving a wide range of clients he’s lobbied on behalf of. And that’s going back to only 2016.

Danchilla also has an extensive political donation history. Since 2004, he’s donated nearly $66,000 to the UCP and PC parties, including to election campaigns for Fred Horne. Interestingly, he donated nearly $1,000 to the NDP between 2015 and 2016, while they were in power.

He was also involved with the creation of the Alberta Can’t Wait political action committee, designed to unite the right in Alberta and ultimately create the UCP.

The agreement between CSG and K-Bro was to end on 31 December 2020.

Just 6 days after filing their initial return, CSG filed a notice of change, which added Melissa Caouette, CSG’s vice president of business development and government relations to the list of individuals who’d be lobbying the government. She had served as special assistant to Jim Prentice, while he was premier of Alberta.

CSG filed no further notices of change until 2 November 2020, when they included Holly Driscoll, another senior consultant, to the list of lobbyists. This was the first notice of change filed after the RFP announcement.

Driscoll worked for over 10 years in the Alberta public sector, including managerial positions in the ministries of energy, enterprise, advanced education, intergovernmental relations, environment, and economic development and trade, under both the PCs and NDP. Prior to consulting with CSG, Driscoll served for 2 years as director of government relations with Energy Efficiency Alberta.

Less than a month later, CSG filed yet another notice of change, adding yet another senior consultant: Colleen Potter.

That brought the total number of lobbyists listed by CSG to 6. Prior to joining CSG, Potter had been a community and government relations consultant. She was the director of community relations for the Calgary-Centre federal constituency briefly in 2015, leading up to the federal election, as well as a constituency assistant for the Calgary–Foothills constituency between 2002 and 2004.

A couple of weeks later—on 15 December 2020—CSG filed a fourth notice of change, its final one. However, it wasn’t to add any more consultants. This time, it was to extend their agreement with K-Bro by a year, until December 2021. The closing date for the RFP was 1 December 2020, two weeks before this most recent notice of change.

I should note that Mike Percy, one of K Bro’s directors, served on the UCP’s Blue Ribbon Panel, which reviewed the provincial finances (or more specifically, just its expenses) and provided recommendations to balance the budget.

Again, there’s no information on how many companies ultimately bid on the project; although there are about 100 people listed as interested vendors on Alberta Purchasing Connection. Granted, some of those are duplicates, AHS themselves, and members of the media.

According to a media release issued by K-Bro yesterday, they were the private contractor already providing laundry services to AHS in Calgary and Edmonton.

Yesterday’s government announcement indicated that the awarding of this contract means the government can cancel its plans to spend $100 million in capital funding to build a new system to replace the current laundry system.

It also stated that “fully contracting out laundry services province-wide will generate significant ongoing operating savings over the life of the contract.” Finally, it quoted Tyler Shandro, the health minister, who said that “the hundreds of millions of dollars in cost avoidance and savings will be reinvested into top health care priorities”.

That “cost avoidance and savings” is a fancy way of saying job cuts.

Here’s the thing: There’s no way to save “hundreds of millions of dollars” without job cuts. Even if you contract it out.

Contracting out a service that you’re already providing yourself doesn’t make the service go away. You’ll still need clean laundry. And so you’ll pay for it.

But if you plan to pay hundreds of millions of dollars less than you do now, then the private company providing the service must deliver that service for less than what you’re paying now. Except you’d be paying not only for the labour of those workers; you’d also be paying for the profits of the private company providing the service.

Unlike the public sector, private companies are motivated by profit, and that profit must be factored into the cost of the service provided.

It’s impossible to pay hundreds of millions of dollars less than what you’re paying now for the same service plus profit. And if the provincial government does end up paying less for this service, it’ll be because of one of 3 scenarios:

1. The same number of workers but with lower wages and fewer benefits
2. The same wages and benefits but fewer workers
3. A combination of the two.

Either way, tax cuts will be job cuts.

And speaking of job cuts, the announcement ended by saying that “this transition will impact approximately 428 full time, part time and casual employees”. It further stated, “AHS anticipates there will be some opportunities for employment with the new vendor”.

Notice the word “some”. Of course it’s not “all”. Or even “most”. It’s only “some”, because as I indicated, you can’t provide the same services for less cost—plus profit—without cutting jobs.

“AHS is committed to working with affected staff and their unions throughout this process.”

What does that even mean? Working with them how? How committed to helping these workers can you be if you’re already selling off their jobs to the private sector?