One of the federal government’s biggest suppliers of real-estate consultants and experts engaged in bid rigging to keep a near monopoly on the lucrative work, the Competition Bureau alleges in new court documents.
From 2004 to 2007, an Ottawa-based consultancy called the Corporate Research Group (CRG) got $31.8-million worth of work from Public Works and Government Services Canada, or almost all of the department’s real-estate business.
When the tenders came up for renewal in 2007, the department decided to split the work among three companies to foster competition in the industry. The winner of the bidding process would receive 50 per cent of the work and the second-place company 30 per cent, with the remaining 20 per cent for the third-place bidder.
Court documents obtained by The Globe and Mail say that the Corporate Research Group initially lobbied the government to stick to the old practice, in which the winner of the competition had the right to claim all of the business. When that didn’t work, according to a search warrant the Competition Bureau executed last month, the company and one of its consultants collaborated on a plan that would effectively get 80 per cent of a $5.25-million financial analysis contract.
In an investigation, the Competition Bureau analyzed distinct bids submitted by the Corporate Research Group and a firm called First Porter, owned by long-time CRG senior consultant Louis Facchini.
The tables of contents in the two bids were the same, many parts of the documents were identical and both contained some of the same grammatical mistakes and other elements that led investigators to conclude the same people worked on both bids, the warrant said.
For example, the CRG bid correctly pointed out that the company had 15 years of experience in the consultancy business. However, the document said, First Porter also claimed to have 15 years of experience, even though the company was created in 2001.
“I believe that CRG and Louis Facchini intended to circumvent the new distribution model in order to obtain a greater share of the work than otherwise available under the 50 per cent-30 per cent-20 per cent distribution model,” lead Competition Bureau investigator Daniel Ikonomow said in the search warrant.
CRG officials have not responded to requests for comment.
Public Works officials were aware of the similarities in 2007, when both bids were evaluated, with bureaucrat Jim Graham saying he had never seen anything like it.
“I get the impression that a couple of these kids did their homework together,” the court document quoted Mr. Graham as telling the Competition Bureau.
It is unclear in the search warrant why Public Works allowed both CRG and First Porter to qualify for the contract despite the concern, and there is no indication of the reaction at Public Works when First Porter submitted invoices on documents with the CRG logo and address. CRG and First Porter received a total of $1.1-million between 2007 and 2010 as part of the contract under investigation, or 85 per cent of the total amount of $1.34-million that has been disbursed.
Under the Competition Act, bid-rigging infractions can be punished by an unspecified fine or up to five years imprisonment.
The Competition Bureau was called in to investigate the matter in 2009 after an internal investigation at Public Works. The department had received a complaint under Ottawa's whistleblower legislation that Tim McGrath, who was an assistant deputy minister at the time, was in a conflict of interest because of his friendship with CRG president Brian Card.
The allegation was deemed to be “founded,” and Mr. McGrath left the government after “disciplinary measures were invoked,” Public Works said in a statement.
The department also conducted an audit of CRG’s work as part of that investigation. The audit examined 25 contracts, and found a total “overpayment” to the CRG of $303,000. The company repaid the money after acknowledging that it was unable to provide records to substantiate the hours of work that were recorded on timesheets and billed to the government.