TPG says bid-rigging charges ‘a cover-up’

One of the seven Ottawa area IT firms charged with bid-rigging by the federal Competition Bureau on Tuesday is calling the accusation a “cover-up.”

TPG Technology Consulting Ltd. spokesperson Serge Buy said the Conservative government is using the charges to pressure the company and its president Donald Powell to drop a $250-million lawsuit launched against the federal government and Public Works and Government Services Canada (PWGSC) last March.

“It’s clear that these charges will be thrown out of court fairly quickly. We’ve got no doubt about that,” Buy said. “For the government to do this, it’s absolutely ridiculous.”

“The government is putting their big boots and suits on and trying to force people to do things that are not right. They are putting pressure on Powell to drop his ongoing lawsuit,” he added.

The $250-million lawsuit – which Buy said is currently in the discovery process – stems from a TPG grievance filed in April 2007 with the Canadian International Trade Tribunal. The company alleged that the federal government deliberately altered the technical evaluation on a $428-million bid for computer support services with the PWGSC.

The contract was awarded to Montreal-based CGI Group Inc., who did not respond to a request for an interview.

In its lawsuit, the IT services firm also claims that former public works minister Michael Fortier – who had previously worked for CGI as an investment banker – was in conflict of interest over the bidding process.

“Before initiating the lawsuit, we tried to get a public inquiry,” Buy said. “Political parties supported it, newspapers wanted to see one, but the government said no.”

Buy added that the government’s actions – during its involvement in TPG’s lawsuit and with this week’s Competition Bureau charges – will cost the taxpayers significant legal costs. The link between these charges and the company’s ongoing lawsuit is “obvious” and it underscores the way the government has operated in recent years, Buy said.

In addition to TPG, the Competition Bureau has also charged Brainhunter Inc., Donna Cona Inc., Nortak Software Ltd., Tipacimowin Technology Inc., The Devon Group Ltd. and Spearhead Management Canada Ltd. for their alleged roles in rigging bids for $67 million worth of federal government IT contracts.

The bureau, an independent federal agency that enforces the Competition Act, said its investigation into the bid-rigging began in 2005, after being tipped off by PWGSC officials. The investigation focused on 10 contracts, eight of which totaled $62 million in IT services for the Canada Border Services Agency (CBSA).

The other two contracts were $4 million for services at Transport Canada and $1 million for services at the PWGSC.

The bureau alleges that the bidders’ objective was to collectively win and divide the contracts they were awarded and block other competitors from winning the bids.

The 14 individuals charged from these companies – including former and current employees – are scheduled to appear before the Ontario Court of Justice on March 17. Individuals found guilty of bid-rigging could face up to five years of jail time.

None of the above allegations has been proven in court.

Donald Plouffe, the acting assistant deputy commissioner at the Competition Bureau, told ComputerWorld Canada that PWGSC procurement officials suspected the bid-rigging in 2005, after noticing that the same spelling mistakes were appearing in bids from competing companies.

“Typos, suppliers that would usually tender and fail to do so, identical bids, or the same terminology – these are signs that you would typically see in bid-rigging,” he said.

Plouffe also denied any link between TPG’s lawsuit and the recently laid charges. He indicated that the investigation began two years prior to TPG’s civil suit and search warrants were executed in the fall of 2006.

In addition to attempting to pressure its company president, TPG said the charges will also negatively affect small and mid-sized IT service providers in their future dealings with the government and actually prevent good competition from occurring.

“Companies will be more afraid to look at consortiums in order to respond to large contracts,” Buy said. “On one side, the government is bundling contracts in order to give them to large companies and they’re telling us that we need to create consortiums to bid on them, which is a falsehood because you can’t bid without references and new consortiums don’t typically have references.”

“And on the other hand, they’re going to the Competition Bureau and saying that consortiums are bad.”

Buy added that the government has potentially created a chilling effect for smaller IT service firms through the charges.

But Bernard Courtois, president and CEO at the Information Technology Association of Canada (ITAC), disagreed with Buy, saying that the charges will not have a significant impact on how smaller IT service firms deal with the government.

“When you work together, you disclose that to the government. With bid-rigging, you don’t disclose it,” he said. “This shouldn’t change small firms’ ability to partner with other firms or anything like that.”

“It should absolutely be business as usual and shouldn’t have a chilling effect at all,” he added.

TPG, while certainly the most vocal, isn’t the only company crying foul over the charges.

Brainhunter Inc. said the Competition Bureau charges stem from a joint venture bid submitted in October 2005 to Transport Canada. The company claims it was one of several sub-tier vendors in the joint venture.

“Brainhunter’s primary involvement was the submission of approximately nine resumes to the joint venture,” the company said in a press release Tuesday. “The bid was never won by any member of the joint venture.”

Brainhunter Inc. CEO John McKimm said in a statement that the company is taking the allegations very seriously and has conducted its own internal investigation into the matter. He stated that Brainhunter is “confident neither the company nor its employees are guilty of any wrongdoing.”

Plouffe would not comment on the validity of Brainhunter’s claim or whether it disclosed its joint venture to procurement officials.

Plouffe said as long as smaller companies declare their joint ventures and present only one bid, they will be fine when dealing with government agencies.

“If you make this aware to the person calling for the tender, that’s not going to be an issue under section 47 of the Competition Act,” he said. “You may create a joint venture, but if you don’t declare it, it may create an issue.”

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