Big victory for TPG Technology president
Appeal court overturns decision that stopped company’s $250-million suit over lost contract
Powell can now proceed with $250M lawsuit against government,
TPG Technology president Don Powell has won a significant legal victory, allowing him to proceed with a $250-million civil lawsuit against the federal government.
“We were dead in the water if we didn’t win this one,” Powell said in an interview. “I am very happy with the result.”
Powell launched his suit in 2008 after his company lost a multi-year contract to CGI Group of Montreal for the right to run the government’s computer networks.
The 64-year-old businessman alleges Public Works evaluated the bids unfairly, depriving him and his firm of an estimated $428 million in gross billings.
The Federal Court of Appeal on Monday overturned a lower court decision from 2011 that had stopped the suit in its tracks.
This week’s judgment maintained that the lower court had “misapplied” the appropriate yardsticks that determine when a suit can be dismissed before trial.
“Although the Crown (brought forward) considerable evidence in an attempt to establish the integrity of (Public Works’) evaluation process,” the judgment noted, “that evidence did not squarely answer all questions about the fairness of the bid evaluations.”
The Federal Court of Appeal also noted there is evidence suggesting there may be something to TPG’s allegation that there was a lack of fair play. Most notably, the court noted, this involved the surprisingly low technical scores awarded TPG.
The sub-standard ranking was a puzzle because TPG had been managing the contract for years without evident difficulty.
“The only reasonable conclusion,” Madam Justice Karen Sharlow wrote, “is that there is sufficient evidence to establish the existence of a genuine issue for trial on the allegation of an unfair bid evaluation.”
Superficially, the case resembles that of Envoy Relocation Services, the company that lost a five-year contract in 2004 to help 18,000 military and other personnel each year move to new postings.
Following protracted legal proceedings, the Ontario Superior Court recently ordered the federal government to pay Envoy nearly $30 million to help compensate it for lost profits — this, the court ruled, after bureaucrats improperly steered the contract to a preferred bidder, Royal LePage Relocation Services.
TPG and Envoy are both run by wealthy entrepreneurs prepared to sacrifice a fortune in legal fees to correct perceived wrongs at the hands of procurement officials.
Envoy partners Bruce Atyeo and Pierre Titley estimate they spent close to $10 million on legal battles.
Powell says he has so far invested “a few million dollars” in a variety of legal fights, civil and criminal. However, he is still some distance from establishing in court that Public Works bureaucrats improperly directed the $428 million engineering and technical services contract to CGI Group.
For starters, the Crown has a couple of months to decide whether or not to seek leave to appeal this week’s decision to the Supreme Court of Canada.
Even if the Crown decides not to seek leave, Powell still has to make his case in what is likely to be a lengthy and complex civil trial. The proceeding will almost certainly not begin before next spring. Powell’s personal situation is also more complicated than what faced the Envoy partners.
Powell maintains it was his complaints about the ETS contract that led the federal Competition Bureau in 2009 to levy criminal bid-rigging charges against him and more than a dozen other defendants, many of them close business colleagues. The charges involve contracts awarded in 2005 by Transport, the Canada Border Services Agency and Public Works.
Powell alleges the bureau pushed ahead with its investigation of these contracts shortly after he testified at a House of Commons committee about the unfairness of bidding practices at Public Works. It was government retribution, he says.
The Crown contends the civil and criminal proceedings against Powell are separate and that Powell’s effort to establish “animus” on the part of bureaucrats amounts to a fishing expedition.
The bid-rigging trial has been set for September 2014. It had originally been set for last fall but things were delayed when TPG, Donna Cona and other defendants appealed the ruling of the preliminary inquiry, which held that the Crown had sufficient grounds to take things to trial. The appeals centre on the question of what, exactly, constitutes a bid — TPG and its allies contend they were responding to a request for proposals designed to create a standing offer for the potential provision of information technology services. Bureaucrats were under no obligation to buy the services, in other words.
Powell had hoped the criminal proceeding might be dismissed on the grounds that no bid-rigging could have occurred because there was no actual contract for services.
However, two levels of court determined that the judge presiding at the preliminary inquiry was within her rights in allowing things to proceed to trial and let the matter be decided there. TPG and other defendants last month sought leave to appeal to the Supreme Court of Canada, which is under no obligation to consider the matter. A trial, in other words, seems likely.
Powell is also suing the Competition Bureau for defamation. The Crown succeeded initially in staying that action. But Powell won an appeal last year that will allow the defamation suit to proceed.
“It’s a bit of juggling act to keep all this going,” Powell says. With this week’s ruling in his favour on the ETS contract, the juggling act continues.