“I anticipate the bureau has pause to reflect on how it does these cases now both from an investigation and prosecution perspective,” says Peter Mantas, a partner with Fasken Martineau DuMoulin LLP who represented TPG Technology Consulting in the trial.
TPG was accused of colluding with other bidders selling IT services to the federal government. The Crown said the company and others were guilty of bid-rigging because they agreed to share contractors to fulfill a government IT job. They faced jail time and being barred from working with the government if convicted.
The trial ended April 27 in 60 not-guilty verdicts from the 11-member jury.
The Competition Act makes it a criminal offence for two or more bidders, in response to a call or request for bids or tenders, to secretly agree that one party will refrain from bidding, or to agree on the bids they will submit, without informing the party issuing the call for bids of these arrangements.
But the jury in this case decided sharing contractors was not the same as bid-rigging, in fact it is a pretty common practice in the IT services field.
Six years ago 14 individuals and seven computer companies were charged with rigging bids in connection with $60 million worth of contracts with the federal government. Six of the individuals and three companies elected trial by jury.
All of the accused were charged with bid-rigging under s. 47(2) of the Competition Act, conspiracy to bid-rig under s. 465(1)(c) of the Criminal Code, and counselling an individual to bid-rig under s. 464(a) of the Criminal Code.
The allegations concerned responses to 10 requests for proposals in 2005, for the Canada Border Services Agency, Public Works and Government Services Canada, and Transport Canada by several small and medium-sized companies in the Ottawa IT consulting industry. CBSA was the main agency in the case. In 2005 it had just split off from the Canada Revenue Agency and was setting up electronic passenger surveillance.
As the trial unfolded, it became apparent the practice of sharing information was well established and a normal part of the industry. The RFP also specifically allowed different companies to propose the same subcontractors.
After months of testimony Mantas says Ontario Superior Court judge Bonnie Warkentin asked prosecutors:
“Is it the Crown’s position that because the defendants were working together to gather resources . . . but each submitted their own pricing in their proposals, that that’s an offence of bid-rigging? Because I’m going to need some law on how that constitutes bid-rigging. That’s a pretty long shot for the Crown.”
After the jury delivered its verdict, Competition Bureau commissioner John Pecman issued a statement saying: “The Bureau and the Public Prosecution Service of Canada will take the time necessary to consider next steps, including whether to appeal the verdicts.”
Mantas says one of the most important lessons of this case for other businesses selling competitive services is that they shouldn’t be too quick to throw in the towel and settle when faced with such charges by the bureau.
“There had been so many settlements and so much rolling over by companies, and some smaller, poorer cases for the defence going to court and the bureau and prosecution services got to the point where they felt they weren’t going to lose,” he says. “This came along and I think it was a shocker for them.”
The real problem, says Faskens partner Patrick McCann, who represented TPG executive Philip McDonald, began with the manner in which the case was investigated.
“The investigators from the Competition Bureau were very inexperienced and really didn’t appear to understand the IT service business in contracting with the federal government,” he says.
“They never bothered to investigate anything from the government side they just grabbed hundreds of thousands of e-mails from the targets of the investigation and spent two to three years combing through them and came up with the theory there was agreement amongst them in responding to these RFPs, but the agreement they relied on largely were pretty obvious.”
The agreements were to share resources — the subcontracts proposed. The reason was the government, when it issued the RFPs, were making sure they got the people already working for them, back in place.
“It was at a critical stage for CBSA,” says McCann. “The requirements were so wired to the incumbents that unless you had the incumbents on your proposal you didn’t have a shot.”
When TPG decided to plead not guilty and fight the charges it faced the possibility it might be debarred for three years (10 years today since the bureau upped its penalties) if convicted and up to five years jail time. At the time the company relied heavily on government work.
“This was bet-the-company litigation,” says Mantas. “It had no choice but to fight.”
Warkentin presented a 300-page instruction to the jury, which became an exhibit at trial and Mantas says contained some “very useful guidance” on bid-rigging.
“There were some points that came up that really cut some new ground in the area of what constitutes bid-rigging,” says Mantas. “We were able to persuade the judge there should be a mistake-of-fact component — one of the questions for the jury to answer was whether or not the accused honestly believed that these were not calls for bids or tenders. We also persuaded the judge to put to the jury the issue of ‘made known.’”
The trial was groundbreaking in several ways. The courtroom was specially wired and designed for the trial. The case involved more than one million pages of documents and made use of the technology to manage the volume.
The Faskens team had seven computer monitors running with simultaneous transcription. Mantas used a Surface Pro 3 tablet for taking notes and doing cross-examination and submissions. Warkentin also made all of her notes on computer.
It also had numerous self-represented individuals who worked for the companies that had been charged. Therefore instead of using litigation support software all documents were in PDF format to make the information more accessible to those who were self-represented.
“It was the first time I had seen self reps be so effective in court,” says McCann. “Their cross-examinations were extremely well done.”
“This was a case we were told was being watched by the judiciary as a test case in terms of how it would be tried,” says Mantas.
“It was not your average trial,” says Mantas. “It was clearly a 21st-century trial.”