NATIONAL

The gravy train is still out of control

Reforms to how Ottawa procures are being stalled or even ignored

COLIN CAMPBELL December 11 2006
NATIONAL

The gravy train is still out of control

Reforms to how Ottawa procures are being stalled or even ignored

COLIN CAMPBELL December 11 2006

The gravy train is still out of control

NATIONAL

Reforms to how Ottawa procures are being stalled or even ignored

COLIN CAMPBELL

In her annual report this week into government misspending and ethics breaches, Auditor General Sheila Fraser uncovered a whopper—a former correctional investigator who may have collected $325,000 in unearned salary and improper payments. But more importantly, Fraser’s report also touched on a systemic, not to mention costly problem—the awarding of government contracts. Fraser found that two contracts awarded in 2004 for $150 million to relocate members of the RCMP and Cana-

dian Forces had “serious shortcomings,” and that the winning bidder, Royal LePage Relocation Services, benefited over competitors through prior connections with the government. It was yet another black eye for the already bruised Public Works Department, the government’s spending arm.

When the Conservatives came to power last January, they vowed to do away with the kind of free-flowing, non-competitive contracts first uncovered by Fraser in her scathing review of the sponsorship scandal in 2004. But efforts over the past year to reform how Public Works buys goods and services have been stalled, frustrated or altogether ignored. The era of the large untendered contract appears to be alive and well in post-adscam Ottawa.

According to a review by Maclean’s of con-

tracts over one 12-month period, the government awarded 4,700 non-competitive contracts worth $1.9 billion—and those are only the largest ones, worth over $25,000 each. The contracts, which include a sampling from before and after last January’s federal election, range from the predictable to the obscure, awarded for everything from the purchase of missiles and bolts to opinion polls and underwear. Avis Rent A Car, for instance, holds a three-year, $5-million non-competitive contract to supply the military with cars at its secret base in Dubai. All in all, 10 per cent of the money spent on procurement by Ottawa in a typical year is handed out on a non-competitive basis.

Many of the thousands of non-competi-

tive contracts are legitimate, and meet government guidelines. Occasionally, only one company can provide exactly what’s needed by the government. Other times, companies are pre-approved to fulfill contracts awarded without competition to speed the procurement process along. But the sheer volume of noncompetitive contracts suggests rules are at times loosely followed.

In many cases, companies receive numerous back-to-back contracts on a non-competitive basis. That, says John Williamson, national director of the Canadian Taxpayers’ Association, is a sure sign we’re not getting value for our money. “It suggests there is a revolving-door mentality,” he says. This practice is most evident in contracts awarded for public opinion polling and research. The

majority of these contracts are handed to the same small coterie of companies on a competitive list of government-approved suppliers. “If you’re not on the list to poll you don’t get any of these contracts. But once you’re on the list it’s all gravy,” says Williamson.

Back in January, the Conservatives promised to review the use of public opinion polling contracts and eliminate government polls used for partisan purposes. Yet polling spiked in the two months following the election (with about 75 non-competitive opinion polls compared to 35 in the preceding two months); one of those polls, done for the Privy Council in March for $85,000, made headlines for appearing to serve partisan ends.

The government had estimated it could shave close to $2.5 billion from procurement spending, although that target has now been abandoned. Early efforts backfired. In 2005, consulting company A.T. Kearney Ltd. was contracted to recommend ways to reform the procurement process, but in September, Public Works Minister Michael Fortier was

forced to drop the company’s main recommendations following a backlash from suppliers. Many argued the recommendations would see contracts awarded based on the cheapest bids rather than ones providing the best value. To add to the Conservatives’ headaches, the A.T. Kearney contract was horribly over budget—the $1.7-million contract ended up costing $24 million. It wasn’t the first misstep. In April, the Tories were forced to cancel an untendered contract aimed at reforming the procurement process when it was discovered it was awarded to a consultant who had worked on Stephen Harper’s transition team. But the Conservatives appear to have at least learned one important lessonchanging the way business is done in Ottawa might just be easier said than done. M