Feds hit with $30M judgment for bid rigging (Brookfield)

[GAP]

Feds hit with $30M judgment for bid rigging
By Tony Spears, QMI Agency
http://cnews.canoe.ca/CNEWS/Politics/2013/04/08/20721351.html

OTTAWA — A scathing legal judgment has found the federal government improperly awarded multibillion-dollar contracts, turning a blind eye as the winning bidder used "insider knowledge" and a cozy relationship with evaluators to enrich itself.

Judge Peter Annis ordered the feds to pay losing bidder Envoy Relocation Services nearly $30 million in a decision released Saturday.

"Envoy should have been declared the winner," Annis found.

The case turned on the award of relocation contracts for members of the Canadian Forces, civil service and the RCMP.

Royal LePage Relocation Services had been hired to set up a pilot project in 1999 to facilitate the moves of itinerant federal employees.

The project was a success and in 2002 the contracts were publicly tendered.


Royal LePage won, but the victory didn't last long.
end

 

[PAdm]

I was going to go on a Brookfield rant, then thought it best to go with a "we did it to ourselves because we write the IRP policy that we pay Brookfield to implement on our behalf" rant, but got caught up with some self pity "it really was not that bad when our admin staff took care of the postings and perhaps we should have left well enough alone".  But I will simply state that the Government looks to Alternative Service Delivery (ASD) - we did it with CFHA, PSP, Brookfield, etc - as a means of civilianizing tasks and thus lowering the costs to the Dept.  In case you do not know, a contractor or public servant is less expensive than a uniform.  While not a bad idea per se, once the contract is awarded and we march down that path, there is no going back.  Equally, once entity X has the contract, they "have" the contract.  Can you imagine the turmoil if we changed contractors (e.g. Brookfield for relocations or Serco in Goose Bay) on a regular basis?  While the contract/charter/MOU/etc has to be written in painful detail then competed properly, the truth is that there is less work, turmoil, and upheaval if you just stick with the current "bidder".  Based on my experience with ASD, a devil you know is better than one you do not, so I am not surprised with any blind eye given to Brookfield. 

My personal opinion?  At least if the service is being given by a uniform, we can yell at it and change it when they are idiots.  No one ever completed a customer satisfaction survey in my orderly room....    Sorry...the self pity kicked in again.

 

[Bruce Monkhouse]

  In case you do not know, a contractor or public servant is less expensive than a uniform. 

There it is again....I keep hearing it,.............I've never been answered on my challenge to prove it. [with a real live example, not rhetoric]

 

[dapaterson]

There it is again....I keep hearing it,.............I've never been answered on my challenge to prove it. [with a real live example, not rhetoric]

Looking at roughly comparable positions:  CR-5 Max pay = $53 466 per year; Sgt RMS max pay (no spec pay) = $67 656 per year.  Military: +$14 190 per year.

Note that This excludes PLD or other allowances that a military member may receive - an RMS Sgt in a field unit in a place like Edmonton would receive $684 per month in PLD and at least $311 per month in LDA - that's an additional $995 per month or $11 940 per year for the Sgt in this example.

 

[PAdm]

There it is again....I keep hearing it,.............I've never been answered on my challenge to prove it. [with a real live example, not rhetoric]

You cannot get caught up with what an e.g. MCpl RMS Clk makes in pay vs what a CR 04 working along side makes.  It is more about the support tail to generate and maintain a CF mbr.  The CR04 is hired off the street, given rudimentary trg (relatively speaking) in the specific job, then spends 7.5 hrs a day doing that job.  The MCpl sitting next to him/her in the Orderly Room was recruited, trained, MOS trained and then posted to that location.  In addition, we built a dental clinic and MIR to support that MCpl, provide SQ and a kitchen, clothe the MCpl, and will again post him/her in a few years (which means a career management process).  Let's not forget overhead like the amount of time spent on PERs for the MCpl, and the MCpl is expected to go to the gym, be on parade, be the unit harassment person, etc, so we do not even get 7.5 hrs of admin work from the mil mbr.  I spent 2 hrs this afternoon first taking the FORCE fitness test, then encouraging others as they completed the test as this is my leadership role to do so.  I am making up for that 2 hrs by working on PERs tonight.  And I am a Cadet function all weekend - all at no extra cost to Her Majesty.  Ask your DND civ to do the same.  Just saying.

So every uniform you take out of the equation and replace by a DND civ is a savings in support costs when the numbers start to add up.  The PERIs were replaced by PSP and most of the Steward trade was also replaced by PSP.  While I love the PSP folks to death and yes they have an overhead, we do not post them, build MQ/SQ for them, take care of their medical, etc.  Obviously you need support pers in uniform to deploy, etc.  However given the demands of the pers budget for the CF, it is very attractive to look at your establishment and wonder what could a DND civ and/or contractor do that a uniform in an office do.  I am not saying I agree with this approach, I am just trying to explain the math. 

I hope this is a reasonable answer to your fair question.

 

[Bruce Monkhouse]

That's why I stroked 'public servant and left 'contractor'..............before the 'privatize everything" folks chimed in.

 

[dapaterson]

Several reasons why contractors may be cheaper:

(1) No benefits.  What you pay is what you pay, without Health, Dental or Pension benefits and future liabilities.

(2) No long-term commitment.  Contracts have set end-dates; once a public servant is indeterminate, it is more difficult to terminate them.

(3) No PS unions.  Most comparisons between the private sector and public sector show that there is wage inflation at the bottom of the wage scale in the public sector.  Outsourcing means the folks aren't getting the same wages as the PS.

(4) No training.  Contractors are hired with the appropriate skills already, or are responsible for all costs of getting trained.


It's not always cut and dried.

 

[Bruce Monkhouse]

Several reasons why contractors may be cheaper:

(1) No benefits.  What you pay is what you pay, without Health, Dental or Pension benefits and future liabilities.

(2) No long-term commitment.  Contracts have set end-dates; once a public servant is indeterminate, it is more difficult to terminate them.

(3) No PS unions.  Most comparisons between the private sector and public sector show that there is wage inflation at the bottom of the wage scale in the public sector.  Outsourcing means the folks aren't getting the same wages as the PS.

(4) No training.  Contractors are hired with the appropriate skills already, or are responsible for all costs of getting trained.


It's not always cut and dried.

...and yet with all those things no one has provided me with one example in years of asking.

 

[dapaterson]

...and yet with all those things no one has provided me with one example in years of asking.

Probably because the detailed bid information submitted is a commercial confidence, so anyone who's seen them isn't in a position to legally disclose them.


Another option would be to look at the NMSOs for Temp Help, and compare the rates to the salaries for similar positions in the public service.

 

[Colin Parkinson]

Always wondered about the Ryder travel contract in late 90 and early 2000. They seemed to always book the most expensive seats and we were forced to use their services. Another person I know complained to his higher ups about the poor service given by a company called "Group' Action" for advertising the Boating safety stuff. When he started looking around for an alternative supplier, he was told in no uncertain terms he must use that company, which ended up being smack in the middle of Adscam. I might be wrong but that travel contract always smelled bad to me.

 

[PAdm]

...and yet with all those things no one has provided me with one example in years of asking.

5 Wing Goose Bay.  Back in 1997/8, Goose was the first CFB to be offered up for ASD (alternative service delivery) of base support services including air traffic control, IT, CE, etc.  The concept made sense - you do not have to be a uniform or public servant to replace a fence post, sweep a runway, or do ATC.  And consider the Allies were paying the bulk of the costs, DND needed to seek a cheaper solution.

The support function went to tender, with DND being one of the bidders.  While technically compliant and the preferred bidder, we lost the bid.  Why?  Pers costs blew us out of the water.  Our mil pers and DND civilians all received a fed gov wage, northern allowance, and all the fed gov perks of the Isolated Post Directives.  As the contract for tender did not require the successful bidder to offer this, Serco (and the other non DND bidders) simply offered a reasonable compensation and benefit package commensurate for the area.  When the dust settled, Serco was successful.  Why?  Pers costs were so incredibly below the fed gov pers costs - not poverty by any means, but lower than the mandated fed gov benefit pkg we are required to pay.  I used to know the numbers as I was there and involved.  Serco executed the contract and I will tip my hat to them as they did indeed run base services including manning the command post at 0200 hrs when an inbound jumbo jet with a potential bomb on board was enroute.  And they did it for millions cheaper.  This much cheaper cost to run Goose was passed along to the Allies who were pleased.

It all went to crapola when the newly hired Serco employees realized that the bid was supposed to offer compensation based on the fed gov compensation package.  Shocker, but DND screwed up the bid criteria.  One strike later and DND had to foot the bill to elevate Serco employees to the same compensation package as they had when they were DND civs.  This new cost for the support of Goose was again passed on to the Allies who were not pleased.  And subsequent contract amendments kept increasing the costs.  Goose ultimately priced itself out of the Allied training business.

So a contractor was becoming more expensive as the original DND structure.  Why?  Simply because they had a fed gov civ wage/compensation pkg forced upon them.  Left to their own devices, they would have remained millions cheaper.  Companies like Serco do not pay to fly your family out of Goose Bay once a year, but the fed gov does do this for their employees.  Anyone is cheaper when it comes to pers costs than the Fed Gov.

 

[Bruce Monkhouse]

So,...bottom line is, once again, 'failure'.

 

[PAdm]

Epic...  We do it to ourselves.

 

[AliG]

Looking at roughly comparable positions:  CR-5 Max pay = $53 466 per year; Sgt RMS max pay (no spec pay) = $67 656 per year.  Military: +$14 190 per year.

Note that This excludes PLD or other allowances that a military member may receive - an RMS Sgt in a field unit in a place like Edmonton would receive $684 per month in PLD and at least $311 per month in LDA - that's an additional $995 per month or $11 940 per year for the Sgt in this example.

Silly me, there I thought that RMS Sgts had a few other duties in addition to moving people. I wonder if someone was to add up all the tasks that our good RMS Sgt was doing and compare that with the single tasked CR-5 if the cost comparison would still apply.

 

[Remius]

Comparing a CR-5 to Sgt RMS is way off.  A CR-5 is more comparable to Cpl.  A more accurate example might be an AS-03 or AS-04.  Upper pay scale is about 67,000.  So comparable.  Tasks are also comaparable.

Tasks that CR-5 do are on par with what our Cpl types do.

 

[dapaterson]

Comparing a CR-5 to Sgt RMS is way off.  A CR-5 is more comparable to Cpl.  A more accurate example might be an AS-03 or AS-04.  Upper pay scale is about 67,000.  So comparable.  Tasks are also comaparable.

Tasks that CR-5 do are on par with what our Cpl types do.

No.  A CR-3 is Cpl level.  AS-3/4 is more like a Lt.

If your AS3s and 4s are doing Sgt work then their positions have been over-classified (not that that's unknown in government)

 

[DAA]

I am think more along the lines of the following:

CR 2 or 3 - Pte
CR 4 - Cpl
CR 5 - MCpl or Sgt (depending on the duties assigned)

AS - now your getting into the Officer levels

Nevertheless and as far as I understand things, public servants do not have "officer" status unless it is, somehow some way, granted to them.  I have only ever come across one such scenario, where a B Comd issued a letter to that effect.

Anyhow, I have seen a CR 5 from an OGD go on assignment and because of the position, they were temporarily upgraded to an AS 1.

 

[Colin Parkinson]

I'm a EG-6, which in the CCG wears the equivalent to a Major when in uniform, at same level now in TC which is an Inspector, which the military seems to treat as an officer rank. The first thing I notice when dealing with serving military types confronted with a host of Federal PS types not connected to DND is that they automatically sort them in roughly NCM, NCO, officer categories and treat them accordingly.   

 

[GAP]

Judge awards $10M more to victim of ‘outrageous’ Canadian government misconduct
By Kathryn May, OTTAWA CITIZEN May 7, 2013
Article Link

OTTAWA — An Ontario Superior Court judge awarded an additional $10 million in lost profits, interest and costs to the losing bidder of a relocation contract, chastising the “reprehensible,” “outrageous” and “shocking” misconduct of the federal government for rigging the deal and trying to deceive the court.

In a hard-hitting decision, Justice Peter Annis took the extraordinary step of awarding Envoy Relocation Services full costs in its legal battle to prove bureaucrats intentionally turned a blind eye to the rigging of the 2004 contract, which helped give Royal LePage Relocation Services a monopoly on moving thousands of military, RCMP and bureaucrats to new postings.

All told, the government has been ordered to pay Envoy $40 million.

“(The) court reaction expressed in terms of its shock or intensity of feeling caused by the misconduct of the party is a factor in the award costs on an elevated scale,” Annis wrote.

“As indicated, I have no difficulty concluding that the defendant’s conduct was outrageous, reprehensible and worthy of chastisement. Indeed, I would have ordered punitive damages but for the overriding factor of concluding that such an award would have served the purpose of denunciation or deterrence.”

On the heels of Annis’ latest ruling on costs, the government filed Monday a notice to appeal his original decision, which dealt a devastating blow to the integrity of the government’s procurement system.

Last month, Annis concluded Envoy should have won the five-year deal in 2004 that bureaucrats rigged to go to RLRS, their preferred supplier.

For Envoy’s Bruce Atyeo, the judge’s ruling on costs was another victory in a legal dispute that has wound its way through channels of hearings, investigations and audits before unfolding in last year’s lengthy trial. The government’s decision to appeal, however, could add years and millions of dollars more to the fight.

“An appeal doesn’t change the evidence that’s on the table. It will never go away and people can draw their own conclusions,” Atyeo said. “The decision on costs is even more important because he identified the egregious conduct and distilled what he considered reprehensible conduct.”

Envoy sued the government for $62 million in lost profits and damages over its handling of the 2002 and 2004 contracts after a bombshell report in 2006 by then-auditor general Sheila Fraser concluded the 2004 bidding process favoured RLRS.
More on link

 

[McG]

I'm a EG-6, which in the CCG wears the equivalent to a Major when in uniform …

I believe most civilian LCMM in ADM(Mat) are EG06 while the military are typically MWO.

On the topic of contractors being cheaper than service personnel, does the equation change if the contractor is collecting a CF pension and qualified because the CF trained him or her?  If we are going to consider training as part of the cost for using a CF mbr, then we should also consider it a cost when contracting for military skills that eventually are provided by ex-service members.