UPDATE 2: Seven tech firms accused of contract rigging

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At least one of the local tech firms accused of bid rigging on government contracts in 2005 - as outlined by a Competition Bureau announcement on Tuesday afternoon - claims that it did not successfully win any of the bids it submitted to the government.

"The company has conducted its own internal investigations since it became aware of the allegations," read a statement from Brainhunter Inc. attributed to chairman and CEO John McKimm.

"(Brainhunter) is confident neither the company nor its employees are guilty of any wrongdoing."

Mr. McKimm was not named in the criminal charges, but other employees of his firm were. Brainhunter is one of seven firms - and 14 individuals within those firms - that Canada's Competition Bureau laid criminal charges against on allegations that the companies engaged in bid rigging on 10 government contracts in 2005.

Also cited was TPG Technology Consulting, which launched a $250 million lawsuit against the federal government last March. It was a bidder in all 10 contracts under investigation, and its president Donald Powell was named in the charges.

TPG claimed the charges were a "cover-up" in a strongly worded press release sent late Tuesday afternoon, pointing out it was only three weeks after Mr. Powell's testimony in the TPG lawsuit when he was named in the Competition Bureau case.

"There's absolutely no doubt the two (events) are related, " added Serge Buy, a TPG spokesperson, in a separate interview.

TPG filed a grievance in April 2007 alleging the government altered a competitive bid for computer support services to favour CGI Group, which is based in Montreal.

The firm's officials had claimed the government deliberately changed the $428 million contract's technical evaluation.

The Competition Bureau said it was unable to comment directly on the matter since that lawsuit is still before the court, but spokesperson John Pecman pointed to the timelines of both investigations as something to consider.

"Our investigation - we conducted search warrants in October of 2006, or at least that's the information I had - predated the dispute concerning Public Works on the other issue. That's all I can comment on, " said Mr. Pecman, who is the acting senior deputy commissioner, criminal matters branch of the Competition Bureau.

Public Works added in a statement that officials informed the bureau in September 2005 about wrongdoing, but provided no other details. The department said it would maintain all business agreements with the companies involved until the conclusion of the investigation.

The other companies named in the criminal charges are:

  • Spearhead Management Canada Ltd.;

  • Tipacimowin Technology Inc.;

  • Donna Cona Inc.;

  • Nortak Software Ltd.;

  • The Devon Group Ltd.;

The 14 individuals charged from these companies will appear before the Ontario Court of Justice on March 17 to submit a plea.

"The department has already undertaken an administrative review to determine if administrative measures in respect of these companies and individuals are warranted, " Public Works added in its statement.

At the Devon Group, Ron Walker - the director of business development - said he had little information beyond the press release, and was waiting for more details from the government before commenting extensively.

"We believe that the information that was collected by the Competition Bureau was misinterpreted, and we intend to defend ourselves vigorously, " he said, but declined to elaborate further.

In a statement, Spearhead said it was "disappointed " in bureau's decision to lay charges against the company. Two of its former vice-presidents face criminal charges.

"(Spearhead) is in the process of reviewing the charges and determining how to respond, and what course of actions to take, " the statement read.

"Sue McGregor and Marina Mancini are no longer associated with Spearhead and they haven't been since August 2006. "

Tracking down bid rigging is an extremely complex process given that all agreements are made in secret. In this case, though, a Public Works official caught some irregularities in the contracts and notified the Competition Bureau, Mr. Pecman added.

"Generally, irregularities include things such as similar typographic errors (and) using the same language, " he says.

"Often there's a rotation scheme; you're seeing a rotation of successful bidders. So, patterns or similarities in the various bids that cause suspicion. "

All seven contracts were collectively worth about $67 million. Of that number, $62 million was related to IT services for the Canada Border Services Agency.

The remaining $5 million were for IT services for Public Works and Transport Canada.

Spokesperson Patrick Charette said the five bidders under investigation for Transport Canada procurements never actually won a bid - at least for that particular year. Some of them have contracts that are ongoing right now, he said.

"None of the companies charged today were successfully bidders in the 2005 process," he added.

At least two of the firms - Donna Cona Inc., as well as Tipacimowin Technology Inc. - fall under special rules for aboriginal procurement since their employees include aboriginals.

Under the Procurement Strategy for Aboriginal Business, the federal government is working to bump up the number of aboriginal bidders and winners for federal contracts.

Among other things, the government sets aside certain contracts for aboriginals only and encourages aboriginal firms to partner with other aboriginal firms - or non-aboriginal firms, as the case may be.

Officials from Donna Cona and Tipacimowin Technology were not immediately available for comment.

Mr. Pecman pointed out that the bid rigging is a lot like price fixing - with the aim of secretly agreeing to get as much money as possible out of each contract. The bureau says it can inflate prices by as much as 20 per cent.

Officers from the bureau searched 10 head offices and homes, taking away 125,000 paper and electronic records, during the investigation.

Since 1990, Mr. Pecman added, the bureau has caught 21 cases of bid rigging and levied $7.2 million in fines. The most recent case was involved bids for the Chicoutimi Hospital and Alcan a few months ago.

Under the Competition Act, bidders cannot come to an agreement to refrain from bidding or agree how much to submit for a bid without informing the contract tenderer first.

Some of the named companies continued to do business with the federal government after the alleged offences took place.

A cursory scan of Public Works' proactive disclosure of contracts database shows Spearhead received 11 federal contracts registered between April and June 2008 worth just over $1 million for IT consultants.

In the same time period, Brainhunter received 154 federal contracts worth more than $8 million.

The description of work includes information technology consultant to managing consultant and temporary help services.

More recently, Brainhunter received nine contracts between October and December 2008, the most recent quarter for which data is available, worth slightly less than $1.1 million.

In the same quarter, Donna Cona Inc. received a $24,800 contract for information technology consultants.

With files from Peter Kovessy

Organizations: Brainhunter Inc., Competition Bureau, TPG Public Works Donna Cona Tipacimowin Technology CGI Group Canada Nortak Software Devon Group Ontario Court Transport Canada Canada Border Services Agency Procurement Strategy for Aboriginal Business Chicoutimi Hospital Alcan

Geographic location: Montreal

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