Red flag for how city contracts are awarded
Gazette examination shows little or no Competition for many Bids
When Montreal needed to buy five mobile stages to host outdoor cultural events in four boroughs, only one company presented a bid for the nearly $1-million contract, which was awarded this past January.
When the city went looking for horizontal double-suction centrifugal pumps for the Atwater water treatment plant, four bidders responded to the call for tenders. However, all but one were disqualified and the $9.9-million contract was awarded in August to the last standing bidder.
And when the city needed security guards to patrol various municipal buildings, only one of the private security companies that presented a bid on two contracts mustered a passing grade on the qualitative criteria and had its price envelopes opened.
The company won both renewable three-year contracts, worth $13.45 million combined, in March.
They are a few of the municipal contracts that have elicited little or no competition since the arrival of the new administration of Mayor Valérie Plante, an examination by the Montreal Gazette shows.
About 40 per cent of the contracts that were approved by Montreal’s city executive committee between January and late August for all types of goods, consulting services and construction work received two bids or less, the examination found.
In fact, 20 per cent of the contracts involved a single bid — either one bidder responding to the call for tenders, one bidder remaining after the others were disqualified or a sole-source provider who got the contract through one-on-one negotiation.
“Montreal is not getting the benefit of multiple responsive bidders,” said Courtenay Thompson, a procurement consultant based in Dallas, Texas, when he was told of The Montreal Gazette’s findings.
“Just because there’s only one bidder doesn’t mean there’s a problem. Just because there are two bidders doesn’t mean there’s a problem. But where you would expect more, it’s worth looking into from a management perspective.”
The city may not be getting the best possible price, he said. Little competition may also be a sign of “contamination” of the bidding, he added.
“With today’s technology, it’s a whole lot easier to look at patterns in bidding and awarding than ever before because the data is captured, usually, and should be available to look at it electronically,” said Thompson, who gives contract auditing seminars to government auditors.
For example, receiving two bids may give the appearance of competition, but the losing bid may be frivolous, he said. “If you have a bidder and a nonsensical bid, that’s not competition.”
Thompson said a report in The Montreal Gazette last week about the bidding results for 16 Montreal snow-clearing contracts awarded in August merits closer examination, notably because of the high number of rejected bids. All were disqualified for the same reason — the bidders didn’t provide a required service guarantee with their offer.
“That is truly a remarkable occurrence,” he said.
“How many people got fired for leaving these things out? Vendors don’t do that. If bidders leave something out and get disqualified, someone gets fired.”
Ever since Montreal’s ill-fated $356-million water-management contract that was cancelled in 2009 after the city auditor general found irregularities and conditions that limited competition, municipal politicians have talked about finding ways to elicit more competitive bids on Montreal contracts.
Yet nearly a decade later, it appears the city hasn’t tracked how competition has evolved.
“Considering that there are a variety of sectors in which the city awards contracts, it’s difficult to draw general conclusions in connection with the percentage of approved contracts that received less than two compliant bids,” Youssef Amane, the director of media relations for the mayor and executive committee, wrote in response to The Montreal Gazette’s questions
about its findings.
The mayor’s office, he said, is “looking into best practices” to apply in Montreal, though he added it doesn’t plan to issue a report.
There are safeguards in place, Amane added. When a large contract elicits a single bid, it’s submitted to city council’s contracts committee for examination to ensure the proper contract-awarding process was followed, he said.
As well, the Plante administration decided in May to postpone the start of a project to revitalize Ste-Catherine St. W. so it could redo a call for tenders after the city received one bid that was higher than expected, Amane said.
However, the opposition at city hall contends the situation is worrisome.
“The number of bidders is getting lower,” Lionel Perez, interim leader of Ensemble Montréal, said. The party, previously led by former mayor Denis Coderre, was defeated by Plante’s Projet Montréal in last November’s election.
“As we’ve seen over the last several months, there’s definitely a trend of having more contracts with only one bidder or only one bidder that’s in conformity with the bid documents, and we’re having less bidders on other contracts,” Perez said.
Under the Coderre administration, the number of bidders averaged seven to eight per contract, he said, and went as high as 10 to 15. Perez was a member of the executive committee responsible for infrastructure at the time.
Besides the snow-clearing contracts, other recent contract tenders have raised alarm bells, he said.
In May, city council postponed a vote to award a $2.2-million contract to the only company that had bid to supply the city with a sensor system to detect vehicles at traffic lights. That was because a rival firm had complained the tender specifications were restrictive. The call for tenders requested a particular brand of camera with characteristics that are specific to the other supplier, the rival wrote in a letter to the city.
The contract was examined by the city comptroller general’s office, and was returned to council without changes last month. It was approved, although Perez’s party voted against it.
Perez said construction prices have been driven up because of high demand from municipalities and the province for infrastructure work.
“But we also believe that many of the contract bids were launched much too late in the season,” he said of the Plante administration. Under the previous administration, the city began launching calls for tenders for infrastructure work in the fall for the following summer, Perez said, before companies filled their work orders.
The opposition, Amane countered, “doesn’t know what it’s talking about.”
The Montreal Gazette’s analysis found that a broad range of contracts, and not just construction, drew little or no competition.
The highest number of bids on any single contract was 12. One contract between January and August elicited that many.
The number of bidders indicated in executive committee resolutions was sometimes misleading because a single call for tenders would be used to award multiple contracts among the pool of bidders.
For example, a resolution in January said there were four bidders on a call for tenders to award two contracts to supply the city with water meters over the next two years.
However, the civil service report revealed that one of the four bids was rejected because the company didn’t submit a standard bid guarantee with its offer.
And so the competition for the two contracts, worth $870,418 combined, actually looked like this: three companies bid on one of them and two companies bid on the other. Only two of the firms bid on both contracts, and one of them won both.