Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Monday, April 22, 2013

Relocation contract would not have gone to trial if bureaucrats had told the truth: judge

OTTAWA — Former auditor general Sheila Fraser’s report could have stopped the relocation contract dispute from escalating into a trial that will cost Canadian taxpayers more than $30 million to compensate a losing bidder if bureaucrats had told the truth during an earlier investigation, said the judge who presided over the trial.

“The importance of the Office of the Auditor-General in this matter cannot be underestimated. If the whole story had been told... my sense is that this matter might not have reached the courts, except perhaps on issues of damages,” wrote Ontario Superior Court Justice Peter Annis in his ruling.

It was Fraser’s 2006 audit that Annis said opened “Pandora’s box” and triggered the lawsuit. She found the 2004 contract to move Canada’s 18,000 military, RCMP and public servants to new postings every year was unfair and favoured Royal LePage Relocation Services (RLRS), which has had the contract since 1999.

That report hardened the resolve of losing bidder Envoy Relocation Services, which had already exhausted all other legal avenues, to sue the government for $62 million..

The government did not agree with Fraser’s findings at the time, while RLRS argued that she got it wrong and didn’t understand the deal.

But Fraser was vindicated when Annis found Envoy should have won the 2004 contract that was rigged by bureaucrats to favour RLRS. Annis awarded the Oakville firm nearly $30 million in lost profits, plus interest and costs.

In his lengthy decision, the judge praised Fraser and her office’s “brilliant” work in uncovering the “egregiously” inflated business volumes for property management, buried in bid documents, which gave RLRS the advantage.

Fraser’s audit found the volumes were 250 times higher than what was ever actually used. This allowed RLRS, which as the incumbent knew only a handful of transferees would use the service, to bid zero while Envoy bid $48 million on the volumes asked for in the bid.

Fraser’s bombshell report also found that, despite bidding zero, RLRS charged transferees for the property management services it promised for free. She found the same thing happened for the 2002 contract as well — the bid documents asked for highly inflated volumes, RLRS bid zero, won the contract and then turned around charged transferees.

“It would have remained undetected, but for what can only be described as the brilliant intervention of the OAG. Not only did the OAG staff pick this item out of the haystack of issues on their desk, they also pointed out to Public Works and Government Services Canada (“PWGSC”) and its client agencies that RLRS had been charging transferees for these services.”

At the time, bureaucrats from all the key departments — Treasury Board, Public Works and Government Services, RCMP, and National Defence — claimed that until Fraser’s report they had no idea that RLRS had charged for a service it promised to provide for free. The government immediately scrambled to get RLRS to repay transferees.

But evidence produced at the trial turned those claims upside down. Internal documents that Annis ordered the government to turn over showed Public Works and Treasury Board bureaucrats not only knew about the “sham” bidding process, but they “authorized” it.

Within weeks of RLRS winning the 2002 deal, RLRS executive Ray Belair sent David Pyett, the Public Works’ Public bureaucrat doing the contracting, a letter saying RLRS was going to charge transferees for the property management services for which it bid zero. Pyett testified that he thought this contradicted a zero bid price a but he filed the letter and told no one about it.

RLRS also sent copies to the key bureaucrats of what its third party contractors were going to charge for their services, which included property management, within six weeks of winning the contract in both 2002 and 2004. They clearly showed RLRS was charging for property management.

Annis said it’s still a mystery how far up the bureaucratic chain the knowledge of RLRS charging went, but argued it’s an issue that should be investigated. He rebuked the government at various times in the judgement for failing turn over documents or to call senior management as witnesses to answer that question.

“I leave it to others to determine if, how, when, and what happened to the information that RLRS was charging transferees for PMS within the governmental hierarchy. I do say however, that it is imperative that a thorough investigation be carried out of this matter. It is particularly important for the purposes of ensuring the integrity of the objectives of OAG,” wrote Annis.

Annis concludes “this matter might not have reached the courts” if Fraser knew that bureaucrats overseeing the process knew about RLRS charging transferees, or that the government was quietly being sued by RLRS over cancelling the 2002 contract while preparing the bidding process for the replacement 2004 contract.

He concluded this lawsuit RLRS initiated to “mitigate” its losses put the government in conflict with the other bidders because it was in the interest of both the government and RLRS that RLRS win the 2004 contract. That would reduce the amount of damages the government would have to pay and RLRS could lower its bid price to win and recover the amount in a settlement. The crown eventually paid RLRS $4.5 million to settle.

Annis also found this preference for RLRS to win 2004 was behind selection criteria that heavily weighted technical merit over price, which favoured RLRS as the incumbent with a system already up and running.

“I am satisfied that one of the unspoken and purposely concealed factors underlying the emphasis on technical merit in the selection formula was to assist RLRS win the tender in order to mitigate damages in the claim that it knew RLRS would pursue against the Crown regardless of outcome of the 2004 process.”

The government has said little about the ruling, which was released while Parliament was not sitting, other to say the fiasco happened under the Liberals’ watch. The government has 30 days to appeal.

“The incidents occurred in 2002 and 2004 under a Liberal government,” said Amber Irwin, spokesperson for Public Works Minister Rona Ambrose. “The auditor general made recommendations to fix the process and those have been implemented by our government. Our government awarded a new contract in 2009.”

The Auditor-General’s office is reviewing Annis decision, but officials say it has no plans for a follow-up audit or to bring the issue of being previously misled to parliamentary committee.

“We were pleased the judge agreed with our audit conclusions,” said spokesperson Ghislain Desjardins.

But Bruce Atyeo, an Envoy partner, said Fraser would never have got to the bottom of things unless her mandate included the 2002 contract, because it set the stage for the rigging of the 2004 contract. He also argued MPs on the public accounts committee could have done more probing.

“I feel like we did public accounts committee’s job for them by going to court to get to the bottom of it,” said Atyeo. “If we wanted the truth we had to go to court because it is the only place bureaucrats can’t hide and manipulate.”

Original Article
Source: canada.com
Author: Kathryn May

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