MPs ask why Royal LePage unit only bidder on massive relocation contract
By Kathryn May , The Ottawa Citizen
September 21, 2009
OTTAWA — The biggest employee relocation contract of its kind in Canada went up for grabs this summer and attracted only one bidder.
That result concerns MPs who want to know why, after so much controversy and scrutiny, Royal LePage Relocation Services once again won the multimillion-dollar deal to relocate the 18,500 military, bureaucrats and RCMP moved to new posts every year.
It’s a question the Commons government operations committee is asking and has called Public Works Minister Christian Paradis to explain.
“It’s one of the largest contracts of its kind in North America so I am puzzled that the department, when it was forced to go through the bidding process again, allowed it to evolve in such a way that it had only one Canadian bidder,” said Liberal MP Derek Lee, who chairs the committee.
But some say the outcome shouldn’t be a surprise. Critics warned that Public Works’ April 29 tender call forced an impossibly tight bid deadline and an even tighter deadline to start delivering the service.
The most vocal critic was Brice Atyeo, president of Envoy Relocation Services, the firm that is suing Public Works for bungling the 2004 contract that he lost to Royal LePage. He warned that only Royal LePage, which already had a national service up and running, could meet the tight timelines.
Public Works, the government’s procurement arm, has been dogged by controversy over its handling of the contract for years. It has been at the centre of an internal investigation, lawsuits, and several Canadian International Trade Tribunal hearings.
The last furor erupted when Auditor General Sheila Fraser found Public Works bungled the 2004 tender call with wrong information that stacked the deal in favour of LePage. As a result, the government promised to re-tender the contract in 2009.
With that promise, the industry waited to get a crack at this massive contract, which one supplier called a “kingmaker” for any firm that lands it. The contract involves expenditures of $1 billion and fees worth about $148 million.
But when bidding closed June 22, Royal Lepage — now called Brookfield Global Relocation Services — was the only bidder. It was awarded the contract Aug. 18. It is the fourth time Royal LePage has won the contract since the relocation program began as a pilot project in 1998.
Companies in the relocation industry have a string of reasons they didn’t bid, from the huge start-up cost, including new technology, hiring and training staff, opening offices across Canada and fulfilling bilingual requirements. American firms were blocked because the data base containing the files of workers being transferred had to be housed in Canada.
But the biggest obstacle was time.
“I’m sure they all have their own reasons for not bidding but the most important reason is that if any of them had bid and won they would fall flat on their face because they would not have enough time to get set up. Public Works had total control over that aspect of the RFP (request for proposal) so we can only conclude that they did not want any bidders other than the incumbent to submit a bid,” says Atyeo.
Public Works had more than two years to re-tender the contract. It issued a request for information in August 2008, but didn’t go to tender until April 29 and set a deadline of June 22 for bids.
The winning bidder was required to start taking over 20,000 active files by September and be ready to begin assuming new files by December. The old contract expires Nov. 30.
Liberal MP Martha Hall-Findley has written to Public Works Minister Christian Paradis demanding an explanation about how a fair and open competition could yield only one bidder. She said the way it was handled has raised serious questions whether the contract was bungled or deliberately “tailored” to ensure it went to LePage.
“The participants in the process and indeed all Canadians must be satisfied that the process was open and fair. If not, a new contract awarding process must be undertaken,” she wrote Paradis.
The contract attracted notoriety long before Fraser’s report on the 2004 deal. The 2002 contract, also won by LePage, was also scrapped and re-tendered in part because a bureaucrat who oversaw the contract took a Caribbean cruise with a Royal LePage executive. At the same time, competing bidders took Public Works to the Canadian International Trade Tribunal over an unfair bidding process and eventually won.
Jon Hanson of Procurement Insights says the case is symptomatic of Public Works’ push for large, multi-year contracts.
Over time, Hanson argues bureaucrats get comfortable with a supplier and don’t want to rock the boat or worse, face glitches in today’s risk-averse government, by trying a new one. This erodes the base of suppliers, prices creep up, competition all but vanishes and monopolies develop.
In contrast, the U.S. government breaks up its relocation contracts to ensure it attracts multiple competitors for each bid and gets best value.
Graham Badun, CEO of sole bidder Brookfield, said the industry had plenty of time to prepare because it knew the deal was coming for two years. He said the RFP’s timelines were “as long or longer” as previous ones and the contract allowed room for extensions.
Public Works says, in a written response, that it went out of its way to ensure it ran a fair and open competition. Officials say the department sought industry input last August and considered 400 suggestions when designing the bid process and preparing the final tender. It argued the June 22 bid deadline was plenty of time and longer than its previous tenders. And it gave a six-month start-up period in two phases to accommodate a new supplier. The industry argued this six-month start-up was useless because firms had to be up and running for Sept. 1.
The department insisted it was receptive to concerns. It says it received 140 questions and suggestions during the bid, but since no one complained about the start-up period the department could not address the problem.
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