The federal ArriveCAN project put a fresh spotlight on conflict of interest in Canadian public procurement. As this article discusses, the new scandal is symptomatic of a broader pattern of weak conflict controls within multiple public sector institutions across all levels of government in Canada.
In its February 2024 ArriveCAN report, Canada’s Auditor General found a surprising lack of records documenting “how and why GC Strategies was awarded the initial ArriveCAN contract through a non-competitive process”. After its $2.35 million sole-source award, the audit found that GC Strategies “was subsequently involved in the development of the requirements” that were included in a downstream bid solicitation for further project work. The Auditor General concluded that the “requirements placed on bidders were restrictive and likely limited competition”. In fact, in its parallel January 2024 audit entitled Procurement Practice Review of ArrivCAN, Canada’s Procurement Ombud found that the bid solicitation included seven specific instances of overly restrictive requirements that favoured the incumbent. While 40 prequalified suppliers were invited to bid, no-one else did. GC Strategies was the only bidder and was awarded a new $25 million deal. While conflict issues at the federal level, including multiple rulings against members of the federal cabinet, have been well documented, provincial and municipal institutions also face challenges in enforcing conflict rules.
For example, in its November 2022 report entitled COVID-19 Contracts and Procurement, Ontario’s Auditor General recommended that the province update its procurement directive to better clarify conflict screening procedures for provincial sole-source awards. Ongoing bid-rigging involving provincial procurement was previously documented in the May 2020 decision in R. v. Charpentier, where the defendant admitted that he colluded with other contractors in an ongoing price-fixing scheme on 43 provincial road construction projects tendered by Ontario’s Ministry of Transportation.
More recently, in its January 2023 audit entitled Metropolitan Regional Housing Authority – Examination of Service Contract Awards, Nova Scotia’s Auditor General found that the top official at a regional housing agency failed to disclose multiple conflicts of interest. That senior official was involved in a series of personal transactions with a contractor while concurrently participating in the agency’s award of a tendered security services contract to that same contractor. The audit found that the tendering rules for that bidding process, as well as ten other projects sampled across five different regional housing authorities, had no conflict disclosure requirements for bidders. Further, in its subsequent February 2024 report entitled Value for Money: Development of Transitional Care Facilities, Nova Scotia’s Auditor General found that neither the agency officials who approved alternative procurement projects for health care facilities nor the evaluation team members who awarded the resulting contracts were required to provide conflict declarations.
Conflict and collusion concerns are also well-documented in Canada’s municipal sector. For example, in its July 2021 report entitled Roads Value for Money Audit, Hamilton’s City Auditor found multiple warning signs of bidder collusion in road paving tenders, findings that were strikingly similar to those contained in the Toronto Auditor General’s March 2017 report entitled Detection of Warning Signs for Potential Bid Rigging Should be Strengthened.
Similar to the ArriveCAN scandal, Montreal’s Inspector General has also raised conflict concerns involving biased bid specifications. In its September 2020 report entitled Recommendation Report on Contract Management Related to Generator Set Calls, the Inspector General determined that there was improper collaboration between the engineers who were retained by the municipality to design specifications for building generators and the distributors of the required products. While that report recommended remedial measures across the organization, in its June 2023 Rehabilitation of the Roussin Centre report, the Inspector General found no records that the consultant retained to draft the tender call requirements had even attempted to prepare neutral specifications before adopting specific brands and models that improperly restricted competition.
Finally, in its July 2023 decision in Winnipeg (City) v. Caspian Projects Inc., the Manitoba Court of Appeal upheld a summary trial decision which found Winnipeg’s former chief administrative officer liable for accepting bribes in relation to a contract award to build a new police headquarters. While a police investigation did not result in criminal charges, the municipality brought a successful civil claim for financial compensation based on the tort of bribery against its former top administrative official.
The fact that these case studies are a small selection from a much deeper vault of reported conflict findings at all levels of government across Canada should serve as a wake-up call to all public institutions of the need to strengthen their conflict governance practices.
