‘ Loophole’ allows secrecy on sole source contracts

No disclosure requirement on work exceeding threshold of directive

New rules requiring public disclosure of government contracts that aren’t tendered contain an apparent “loophole” that allows the Tory government to keep details of large- dollar deals secret from taxpayers.

That would include last year’s $ 15- million agreement with a party- connected firm to rebuild Kananaskis Country Golf Course.

A Treasury Board directive announced by Premier Jim Prentice last fall limits when the province can sole source contracts for services worth less than $ 75,000 and more than $ 10,000, and requires specifics to be released quarterly.

But if the government decides not to have a competitive process to award work that exceeds that threshold, a government official confirms there is no requirement for proactive disclosure of specific agreements.

“It’s not part of the directive,” said Service Alberta spokeswoman Donna Babchishin, “but it was identified in the working procedures as best practice.”

Scott Hennig, vice- president of the Canadian Taxpayers Federation, expressed disbelief that large sole source deals could remain shrouded in secrecy, despite new government rules aimed at restoring public trust in the procurement process in the wake of recent spending controversies.

“I hope this is unintentional because otherwise that would be very disappointing,” Hennig said.

“We now have a loophole in place where you could get a sole source deal and the public will never know about it without a brown envelope being sent or someone stumbling upon it accidentally.”

The directive, which took effect April 1, was announced last fall after the auditor general found the government breached its own policies when it handed sole source contracts totalling $ 247,000 to a consulting firm with close ties to former premier Alison Redford, Prentice and the Progressive Conservative Party. The contracts were for providing communications advice in the aftermath of the 2013 floods.

New controversy about the province’s contracting process has erupted in recent weeks with revelations the government did not hold an open competition last summer before it inked a confidential agreement with the longtime operator of the Kananaskis Country Golf Course. The deal extended its lease for another 10 years and put the private company in charge of managing the rebuild of the 36- hold facility that was heavily damaged during the natural disaster.

Kan- Alta Golf Management Ltd. contributed more than $ 2,600 to the party in recent years, and its shareholders include friends and associates of former premier Don Getty.

Government ledgers reveal that in the first nine months of this fiscal year the company was paid more than $ 9.3 million for work repairing the course and compensation for losses while it’s shuttered.

While the rules are not retroactive, Babchishin was asked if disclosure would be necessary if a deal like Kan- Alta’s was signed today.

“I don’t believe it’s required,” she said.

Under procurement treaties such as the Agreement on Internal Trade that Alberta has signed with other provinces, sole source deals over set dollar thresholds must be reported each year to a Winnipegbased secretariat.

While AIT’s website links to aggregate numbers on how often each jurisdiction uses a treaty exception like an emergency purchase or security concerns to avoid open tendering, there is no online disclosure of specific contracts that are sole sourced.

For example, the data shows that in the 2011- 12 fiscal year Alberta sole- sourced about $ 151 million, or 3.3 per cent of its $ 4.6 billion in procurement, but there is no way of determining what companies got which work.

Still, Babchishin said in a subsequent written response that there is no loophole or oversight in the government’s new rules.

“The treasury board directive was specifically targeted to the items outside the trade agreement,” she said.

But Babchishin also hinted there may be changes to the directive in light of the Herald’s queries.

“While the new procurement rules have been developed, we continue to develop the mechanism, tools and protocols for reporting.”

During debate on the Accountability Act last December, opposition parties sought to have the proposed procurement rules enshrined in legislation rather than a treasury board directive that can be changed at the whim of a government committee.

The proposed amendment to the bill by then Wildrose MLA Rob Anderson was defeated.

Neither the Tory campaign nor Finance Minister Robin Campbell responded Wednesday to a request for comment on the seeming lacuna in the government’s procurement rules.

Hennig said the government’s rules restricting sole source deals is welcome, but they are no substitute for transparency about every instance when a competitive selection process is skipped.

“( U. S. Supreme Court) Justice Brandeis said ‘ sunlight is the best disinfectant,’ ” he noted.

“When politicians or bureaucrats know these deals will see the harsh light of day, they’re going to be extra diligent in ensuring it’s the best value for taxpayers.”