Top court’s refusal to hear federal contracts case prompts call for new laws

Top court won't hear federal bidding case

TORONTO — A company that argued the fairness and integrity of Canada’s public-procurement process has been compromised is calling on the government to legislate changes now that the country’s top court has refused to get involved in the case.

In a decision this week, the Supreme Court of Canada refused to hear an appeal from Ottawa-based TPG Technology, which lost a $428-million federal contract in 2007.

TPG had maintained that the winning bidder for the contract to run the main computer networks at the Public Works department was unable to deliver what it had promised. Rather than disqualify the company, the government instead helped it become compliant by way of a new contract, TPG alleged in a $250-million lawsuit its president, Don Powell, filed against Ottawa.

Lower courts, however, rejected the lawsuit despite one judge’s finding that the government had indeed been unfair to TPG. The company turned to the Supreme Court, which declined to hear the appeal.

Powell said the court had missed an opportunity to clarify and improve Canadian procurement law. He urged the government to do so given that it spends almost $20 billion a year on competitive procurements.

“Problems of unfairness in procurement procedures would automatically constitute a matter of national importance,” Powell said in an email Friday. “Since these issues will now remain unresolved, I believe that the federal government should introduce specific legislation that will ensure that future procurements are conducted fairly.”

The decision means TPG must pay the government more than $600,000 in legal costs as originally awarded by Federal Court and upheld by the Federal Court of Appeal.

Powell said he had already given the money to his lawyers to be held in trust, and they would hand the funds to the government now that he had exhausted his legal options.

In arguing against granting leave to appeal, the federal government said TPG was trying to get the Supreme Court to weigh in on factual matters particular to a specific case that had already been decided and which had no wider bearing. The government also maintained relevant procurement law was already well settled.

The case arose when TPG Technology was shut out in 2007 from running the Public Works computers, something it had done since the late 1990s. Instead, the seven-year contract, which called for delivery of a team of more than 100 qualified IT professionals, went to a Montreal-based company.

Allan Cutler, an Ottawa-based consultant and procurement expert, said cases such as these exposed a “loophole” in current law that the Supreme Court should have closed. The current approach, he said, allows a firm to bid dishonestly for a public-sector contract and then rely on an amended contract to correct the dishonesty.

Cutler has said he knows of a case in which a limousine company lost a contract, but then discovered the winning bidder did not have the needed licences. However, the government helped the competitor repair its bid and keep the contract, he said.

“This means that procurement corruption will continue,” Cutler said Friday of the top court’s refusal to hear the case.

Colin Perkel, The Canadian Press

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