By Susan Doran
The relocation of Canadian armed forces, RCMP and government personnel to new postings is a highly lucrative business for the real estate companies awarded the contracts. It is a process that has long been riddled with problems and that needs to be managed with greater oversight and accountability by the government, says a recent report from the Auditor General.
Last year, the Ontario Superior Court found the federal government guilty of unfairly favouring the incumbent service provider – Royal LePage Relocation Services (now Brookfield Global Relocation Services) – in bids for government relocation contracts.
Losing bidder Envoy Relocation Services took the case to court, arguing that the government had geared the competition to ensure that Royal LePage won.
In the court’s decision, Justice Peter Annis denounces the government’s “biased selection formula” and criticizes the Crown for “coming to court concealing documents, not to mention being untruthful on critical elements” of the case.
“Information should be clear and intelligible to all bidders and in this case it was not,” he wrote.
Annis was “shocked” by the gravity of the misconduct and the degree of deception, particularly as the perpetrators were public servants whose job it is to defend public interest.
The Crown “acted in bad faith,” he says, characterizing this as “contemptuous” and “high-handed, arbitrary and highly reprehensible” behaviour.
His decision levelled accusations against the Crown of “blatant denial” and points to government bid rigging that lead to an outcome that “shouts unfairness” for Envoy. As a result, Envoy was awarded damages of $40 million.
Along with being a significant blow to taxpayers, this case sullied the integrity of the government procurement process, Annis says. The judge’s hard-hitting decision in the case was precedent setting and is expected to reshape Canada’s relocation industry.
“It examined important issues such as the government’s duty of fair and equal treatment of bidders, and significant issues dealing with the integrity, openness and transparency of the procurement process and the expenditure of taxpayers’ money,” says Gowlings, the law firm that represented Envoy Relocation Services. “The case will have a major impact on how the government conducts future contracting processes.”
But it appears that the government’s contentious Integrated Relocation Program (IRP) may still not be up to par.
A report released in May by Auditor General Michael Ferguson says that although some steps have been taken, these are “not sufficient” and there are still irregularities in the process. The combined effects of actions and decisions did not “facilitate access and encourage competition,” Ferguson says.
Among the issues he cites in the recent report:
“Key milestones were not met.”
“The evaluation team did not follow established processes.”
“There was no procurement plan to guide the process.”
There was a “lack of a risk management framework.”
The process “suffered from reactive decision making.”
Some of “the verification process” regarding business volumes was not completed.
The latter could be considered particularly notable, as according to Ferguson, “the subject of inaccurate (reporting of) business volumes in the previous IRP procurements was a significant factor in the Superior Court of Ontario judgement against the Crown” in the Envoy case, and the goal of the Auditor General’s recent report/audit was to determine if the government offices involved in the IRP program have learned from past mistakes. Regarding those 2002 and 2004 contract tender processes, court documents indicate that the numbers in the tender documents – which were prepared by the government – had led to dramatic overbidding by relocation firms other than Royal LePage, which being the incumbent, knew the actual numbers.
For the current contract, Brookfield was the only bidder and was again awarded the $300+ million-a-year relocation contract.
However, the Auditor General adds that the procurement being analysed in his recent report “began several years ago, before recent initiatives to improve procurement were implemented.”
Among the recent initiatives being put into play going forward are those mentioned by the Ministry of Public Works in its response to the Auditor General’s report. Public Works says it plans to look at options and to follow a new procurement process, which among other improvements will involve hiring impartial third parties for advice and ensuring that all bidders have sufficient time to prepare.
The procurement process for the next relocation contract is due to begin in December. Previously, one government office suggested that the massive contract be divided into chunks so that other, smaller relocation firms have a chance to bid on it, but there is no word on whether that is being considered. Brookfield is one of the largest firms of its kind in the world and in terms of the IRP contracts, it has the advantage of already having a system and suitable infrastructure up and running.
