TPG fires back at Competition Bureau with $125M defamation lawsuit

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Peter Kovessy
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Company still waiting for previous $250-million lawsuit, filed in March 2008, to be heard

An Ottawa-based IT consulting firm embroiled in a lengthy legal battle with the federal government has filed a $125-million lawsuit against the Competition Bureau, accusing it of defamation when the agency charged the company and its president with bid rigging.

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In recently released documents, TPG Technology Consulting president Donald Powell suggests the bid-rigging charges, laid in February 2009, are punishment for airing complaints about the procurement process as a parliamentary committee witness and for launching a lawsuit over a massive IT services contract several years ago.

“There was a clear and malicious attempt to defame me and my company,” Mr. Powell said in a statement.

“The justice system should not be used for political games and attempts to defame respectable citizens just because they have a complaint against a government agency.”

Friction between TPG and the Conservative government flared up in April 2007 when Mr. Powell alleged Public Works deliberately altered its technical evaluation in a way that favoured a bid submitted by a competing firm, Montreal-based CGI Group, a year earlier.

At stake was a multiyear contract, ultimately worth $428 million, to supply support services for the computers and networks that run large government programs, such as the Canada Pension Plan and Old Age Security.

TPG had won the contract in 1999, but Mr. Powell said in 2007 that Public Works changed the specifications to require bidders to show reference accounts of a certain size, effectively excluding TPG from qualifying.

The company was ultimately allowed to submit a joint bid with IBM, but still lost the contract to CGI. Citing records obtained through an Access-to-Information request, TPG alleged there were irregularities with the scoring used to evaluate its bid.

(In a 2007 letter, Mr. Powell wrote to CGI founder Serge Godin to clarify that he was not suggesting that CGI had done anything improper with respect to the procurement. CGI forwarded a copy of that letter to OBJ on Tuesday.)

After unsuccessfully filing a grievance against Public Works and calling for a public inquiry, TPG upped the stakes in 2008 when it launched a $250-million lawsuit against the department for breach of contract and “failing to honour its duty of fairness to bidders in evaluating the (request for proposals).”

That lawsuit has since languished under a series of government delays, according to Serge Buy, a lobbyist working for TPG.

Mr. Buy said the government’s latest manoeuvre is a motion to dismiss the case, which is scheduled for spring 2011. He added he expects the government to appeal that decision, further delaying the lawsuit, which is now scheduled for 2012.

Prior to the IT contract dust-up, the Competition Bureau had quietly launched an investigation in 2005 into bid-rigging allegations involving TPG and a handful of other local companies.

The investigation had been dormant for a more than a year, with TPG even receiving a letter in April 2007 from the then deputy-minister of Public Works, David Marshall, praising TPG’s “provision of engineering technical services.

“(TPG) is also a firm in good standing with our department.”

But the case was seemingly reactivated after Mr. Powell appeared before the House of Commons government operations and estimates committee in June 2008 to discuss the IT contract that was ultimately awarded to CGI.

Mr. Buy said documents show that two weeks later, bureaucrats were asking the Competition Bureau where things stood with the investigation, and that bureau officials were downloading information from TPG’s website.

In February 2009, the Competition Bureau laid criminal charges against seven companies and 14 individuals within those firms on allegations the companies engaged in bid rigging on 10 government IT services contracts in 2005.

TPG’s defamation lawsuit, filed this past September, alleges the Competition Bureau knowingly made false and defamatory statements against the company.

Specifically, TPG took exception to comments made by the Competition Bureau that alleged the bidders were able to inflate their prices as a result of their agreement.

TPG said government documents contradict this claim.

In a statement, TPG cites an internal Competition Bureau document containing the question, “Has the Government of Canada been defrauded, or otherwise lost money as a result of the activities of these firms?”

The answer: “All preliminary indications are that the work was adequately performed by these suppliers.”

Another government document cited by TPG concluded “the highest daily rate among the winning bidders was often less than the ‘competitive’ daily wage...”

Two months after charges were laid, Veritaaq Consulting’s Shannon Lambert admitted she participated in rigging an IT contract for Transport Canada and fingered TPG, the Devon Group Ltd. and Donna Cona Inc. as the ringleaders of the bid-rigging conspiracy.

Then, in June, the former head of TRM Technologies, Theodore Martin, also admitted to the bureau’s bid-rigging charges.

Mr. Buy notes Mr. Martin was in the midst of organizing a sale of the company and would have had to weigh paying large sums in legal fees and having the case dragging on for years, or paying a fine and moving on.

He also said he believes that by pleading guilty as an individual, Ms. Lambert “took the fall” and effectively allowed Veritaaq to continue doing business with the government as a company.

Organizations: TPG, Competition Bureau, Public Works CGI Canada Pension Plan IBM House of Commons Transport Canada Devon Group Donna Cona TRM Technologies

Geographic location: Canada

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