Major bid-rigging case proceeding to trial

Major bid-rigging case proceeding to trial
Peter Mantas says this bid-rigging case covers areas where there’s no precedent in Canadian law.
An Ontario judge ruled Oct. 5 that a case involving allegations of bid-rigging against several Ottawa-based IT companies will proceed to trial, possibly late next year.
The case, which involves several information technology companies that provide services to the federal government, goes back to 2005. The companies include TPG Technology Consulting Ltd., represented by Peter Mantas, a partner with Fasken Martineau DuMoulin LLP. “It’s one of the largest bid-rigging cases in Canadian history,” says Mantas.

Originally 17 co-accused were involved, but some of the parties were discharged as part of a 21-day preliminary hearing. The other companies include Spearhead Management Canada Ltd., Donna Cona, The Devon Group Inc., and Brainhunter.

The accused are charged with conspiracy and working together to obtain contracts with the federal government for the provision of IT services.

“We’re examining stuff we haven’t seen in bid-rigging cases before,” says Mantas. “It’s where a company has to sit back and say, ‘If I’m going to collaborate with other small and medium-size business to obtain a large contract, how do I do that without being investigated by the Competition Bureau?’”

Mantas says the case raises several key questions for business such as:
•    To what extent can companies and consultants bidding on federal government contracts collaborate without violating the Competition Act?
•    What should companies and consultants do if the Competition Bureau commences a bid-rigging investigation against them or if they are charged with a bid-rigging offence?

“These are issues that have little to no precedent in Canadian law. There are remarkably few bid-rigging cases that have happened in Canada,” says Mantas. “Our client thought it was doing the right thing. These charges are shocking and I think it’s fair to say all the accused were mystified.”

The case results from Public Works and Government Services Canada officials contacting the Competition Bureau in 2005 to voice concerns about certain bidding processes, spurring the bureau to begin an investigation.

In conducting its investigation, the bureau found evidence indicating that bidders, in response to calls for bids for the supply of IT services to Canada Border Services Agency, Transport Canada, and Public Works, agreed in advance on the technical and financial proposals they would submit.

The bureau’s investigation focused on 10 contracts — eight of which, worth $62 million, relate to IT services for CBSA. The one for Transport Canada was worth $4 million, and the one for Public Works, $1 million. The bidding processes for the CBSA and Public Works contracts were managed by Public Works, while Transport Canada managed its own contracting process.

Competition Bureau officers searched 10 locations, including head offices and homes, and seized more than 500,000 paper and electronic records.

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. Penalties for bid rigging include a fine at the discretion of the court and/or a prison sentence of up to five years.

Mantas says there is the possibility of appeal, adding this particular case pushes the boundaries of what has been understood as actionable conduct in Canada, until now.

“That’s where this case becomes very interesting to the average business in this area: How can I safely work with other companies that are pursuing some work, be it from the Canadian government or other large entity that has issued some request for proposal, and work together with other companies?”

He says his client’s, and others in similar situations, concern is that a conviction could result in being blacklisted from obtaining government work in the future.

“If you’re doing business with government of Canada, a conviction or plea bargain that results in a conviction can have an adverse impact on your ability to do business with the government of Canada. It can result in a catastrophe from a business perspective.”

To date, however, Mantas says TPG Technology continues to do work for the federal government.

“It shows you can fight with the Crown and still do business with them.”

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