City opposition calls for tighter contracts law
Work going to offshoot of barred firm could have been stopped, Perez says
The city of Montreal could have prevented the spouse of a barred contractor from taking over some of her husband’s municipal contracts this month had the administration followed through on a motion presented by the official opposition last year to prohibit just that scenario, city hall opposition leader Lionel Perez says. The interim leader of Ensemble Montréal said he’s challenging a claim by the administration of Mayor Valérie Plante that it had no choice and was “extremely uncomfortable” with handing over some of the waste transportation work that was done by two Mélimax firms to a company that belongs to the wife of Mélimax’s owner after the province barred his firm from public contracts for five years over waste dumping allegations. The insurance company that provided the performance bond for Mélimax’s contracts chose the replacement firm, Conteneurs Rouville, which was created last fall and belongs to the wife of Mélimax’s owner, Plante’s assistant chief of staff, Guillaume Cloutier, said two weeks ago after the city executive committee approved the choice. Cloutier said the city had to accept the bond holder’s choice because nothing in the provincial law on public contracts allows the city to exclude a company just because it’s owned by a relative of a barred contractor. At the same time, the city sent a letter to Denis Gallant, the director of the Autorité des marchés publics (AMP), a newly created body that regulates the public procurement process in the province, to point out the shortcoming of the law, Cloutier said. However, Perez says the Plante administration is late in its request because it was mandated by city council last August to ask the government to amend the law to exclude family members of barred contractors, before the Mélimax case came up. The council resolution that was passed in August was presented by Ensemble Montréal after a different contractor, Kelly Sani-Vac Inc., was debarred by the province and the city wound up awarding one of its contracts to a numbered company that has directors and shareholders who are related to the shareholders and directors of Kelly Sani-Vac and that had bought Kelly Sani-Vac’s assets. “The city could have acted and should have acted previous to this,” Perez said of the Mélimax case. The Plante administration did not respond to the Montreal Gazette’s questions this week. And before the August resolution, Perez’s party tabled a motion in council in June calling for a similar amendment to the city’s contract-awarding bylaw that would have excluded family members of barred contractors from city contracts. Plante’s Projet Montréal majority defeated the motion. Meanwhile, the AMP said this week it’s concerned about the awarding of Mélimax’s contracts to a family member’s company. As of late January, Gallant’s agency is now responsible for the Quebec register of business that are barred from public contracts, known as the Registre des entreprises non admissibles aux contrats publics. What the AMP already knows about the situation with Mélimax’s contracts and has been told by the city “is sufficient to justify the AMP continuing its analysis and verifications,” AMP spokesperson René Bouchard wrote in an email to the Montreal Gazette. “The fact that a public contract, of which one of the parties loses its right to contract, may be transferred to another enterprise, one ... whose directors or officers have family ties with the directors involved in a judgment, raises serious questions for the AMP.” However, given the AMP’s ongoing examination of the Mélimax case, it’s premature to comment on whether the province’s law on public contracts should be amended, Bouchard said. Currently, the provincial law prohibits companies related to a barred firm from obtaining contracts, but it defines a “related” entity as a company in which an owner of the barred firm has at least a 50 per cent stake. Montreal’s contracts bylaw defines a related entity as a company in which an owner of a barred firm has at least a 10 per cent stake. Perez said the objective of his party’s resolutions last year was to extend the definition of a “related” entity in the provincial law and the city’s contracts bylaw to include companies started by a barred contractor’s relatives through blood or marriage. “That’s essentially the same anti-avoidance clauses that are in our tax laws,” he said. Even without a change at the provincial level, the city can tighten its contracts bylaw to exclude family members, Perez said. “There’s nothing from a contracts law perspective that prohibits us from asking and being more demanding (than the provincial law) as long as it’s justifiable,” he said. “And clearly it is justifiable if we want to avoid doing business with somebody who closes down one day and opens up under a new name the next day or has a spouse start a new company when we know it’s going to be the same employees, same equipment.”