‘LUCK IS FOR AMATEURS’
Emails offer inside look into hospital bidding process
The former head of construction projects at The Ottawa Hospital appears to have given advice to an electrical contractor on how to win an upcoming bid on a hospital job, planned trips and outings with him and joked that “luck is for amateurs” when talking about winning contracts to do hospital construction work.
The discussions between The Ottawa Hospital’s former director of capital projects, Frank Medwenitsch, and the head of Federal Electric, Larry St. Pierre, were contained in a series of emails obtained by the Citizen.
The emails detail a personal relationship between Medwenitsch and St. Pierre and their correspondence raises questions about how the hospital awarded contracts.
The emails included references to several hospital construction jobs as well as personal travel. In one exchange, St. Pierre informed Medwenitsch he had trips to “Vancouver, Bahamas, San Fran, naPpa (sic), Sonoma, ect (sic) hid in there.” The context was a discussion about bidding on a hospital project which the electrical contractor eventually won after first being told by Medwenitsch that he did not have the lowest bid.
The two frequently discussed possible upcoming trips and social get-togethers in their email conversations written over a period of months when St. Pierre bid and worked on hospital construction jobs and when Medwenitsch was in charge of capital projects. At times, discussions about bidding on upcoming construction work were embedded in conversations about social outings.
Medwenitsch’s emails were written on his Ottawa Hospital account.
Under generally accepted open tendering standards, purchases of goods or services over about $100,000 are done through a strictly regulated competitive bidding process in which sealed bids are submitted and publicly opened at specific times, and not before.
Both Medwenitsch and St. Pierre are named in a lawsuit filed by The Ottawa Hospital last year that alleged a fraud and kickback scheme involving construction projects at the hospital. They both deny the allegations, as do others named in the suit.
Mednewitsch left his job in October 2015 after the hospital began investigating the alleged scheme. In a statement of claim filed in Ontario Superior Court in January 2016, the hospital alleged that Medwenitsch oversaw the scheme and benefited in the form of payments, jobs for his daughters, work on his home and cottage, and trips, including a luxury fishing trip in British Columbia and a trip to Napa, Calif. One of his daughters, the suit alleged, worked at Federal Electric, headed by St. Pierre, and was paid with hospital funds.
Medwenitsch himself, the Citizen learned, went to work briefly for Federal Electric after leaving the hospital, where he had worked for 25 years.
In a statement of defence, Medwenitsch denied the allegations, noting that in 25 years no hospital audit had ever identified or raised questions about him or the portfolio under his responsibility. He denied taking any kickbacks, giving improper procurement advantages to contractors, or having improper influence over pricing. He acknowledged taking a fishing trip with St. Pierre and others, but denied that it was paid for by the contractors.
Medwenitsch’s lawyer Jennifer Duff said they would have no further comment “as the action continues to make its way through the (court) process.”
St. Pierre, in his statement of defence, denied any kickbacks or improper benefits were paid to Medwenitsch.
None of the allegations has been proven in court. Matthew Halpin, who represents St. Pierre and Federal Electric (1976) Limited, did not comment on the email exchanges.
“My clients have defended this action and vigorously deny all wrongdoing. My clients will fully respond in the appropriate manner in the court proceeding when the complete evidentiary record has been produced and not through the press,” Halpin said in an email.
The Ottawa Hospital also declined to comment on the story or on the progress of the lawsuit, saying: “The lawsuit is proceeding through the regular legal channels. At this point there is no update to provide.”
In one of the string of emails obtained by the Citizen, under the subject line: “Streak is over,” Medwenitsch first tells St. Pierre and another contractor that they were “not low” in their bids for a hospital construction project.
“Guys, it had to happen at some point and today was the day!” said Medwenitsch in the email.
“Unfortunately both of you were not low … thanks for bidding though. See you at the next closing.”
A few minutes later, St. Pierre responded directly to Medwenitsch’s Ottawa Hospital email, saying: “Shit, I had our Vancouver, Bahamas, San Fran, naPpa (sic), Sonoma ect (sic) hid in there. That now is a real pisser. How can I get it back?”
“I guess I’m not travelling,” St. Pierre added in a subsequent email.
Within minutes, Medwenitsch sent this response to St. Pierre about the bid: “… we are now even, you’re low.”
“Thanks for the new job,” St. Pierre quickly replied.
St. Pierre was awarded a contract to work on the quarter-milliondollar hospital construction job they were discussing, the Citizen has learned.
In other emails, St. Pierre refers to booking trips with Medwenitsch and in one he asks the hospital manager whether he is “interested in possibly spending say 5 or 6 day (sic) after in SF and nappa?” There are also references to a trip to Costa Rica and other destinations in the email exchanges.
The hospital lawsuit alleges vendors and the principals paid Medwenitsch to attend “multiple fishing trips,” including a lavish trip to British Columbia with a second leg of the trip in San Francisco and Napa Valley.
In the string of emails under the subject heading “Price,” St. Pierre and Medwenitsch discussed an upcoming bid before the hospital manager appeared to advise the contractor how to get into “the winners circle” on the bid.
“Our price is 220k with condition,” St. Pierre wrote to Medwenitsch. “We can easily defend # if we are low.”
Medwenitsch responded: “Got an idea on the conditioner — as for the price I sent to you it did not include a conditioner if I am not mistaken.”
St. Pierre responded that a “conditioner” for the job would cost about $30,000. A power conditioner is a device aimed at improving the quality of power for sensitive equipment.
Medwenitsch said: “Here’s my thinking — Owner prepurchase directly the power conditioner — thumbs up or down?”
St. Pierre responded: “Let’s see how the pricing turns out with the job. We can then decide if you purchase direct with equipment or we do. Let’s wait for the results …”
After further emails in which the two discuss going out for drinks with their partners and vasectomies, among other things, Medwenitsch told St. Pierre that “if I buy the conditioner directly then your price just came down $30k make you a shoe win (sic) tomorrow I would think for being in the winners circle.” St. Pierre was awarded the job. In an April 16, 2010 email exchange under the subject line “Get your pencil sharpener out!” Medwenitsch wrote to St. Pierre and other contractors who have worked on hospital jobs to say he had just learned the Ministry of Health had approved a job to go to tender.
“I would wish you good luck,” Medwenitsch wrote to the contractors vying for hospital construction jobs, “but luck is for amateurs.”
Larry St. Pierre responded: “Now that makes me fell (sic) good. I will start drinking now!” The emails also contain: A reference to the new Civic Hospital, written long before a site was selected for the building. “Hey buds — check this out (sic) as the new Civic Campus — being presented to the Liberal caucus this morning!” Medwenitsch wrote to St. Pierre and other contractors. (The email viewed by the Citizen does not reveal what, specifically, the recipients were being asked to look at.) “There’s a few years of design and many years of work,” responded St. Pierre. “Let’s get started!”
A request from Medwenitsch asking St. Pierre to have electrical work done on a private home for him. In an email under the subject line “Kitchen,” Medwenitsch wrote to St. Pierre asking for a favour. “Larry are you able to accommodate this favor for me — part of the agreement when we split was that I would help out on the reno by providing a sparky and plumber. If you can’t, no sweat.” St. Pierre replied: “Let me know time and place and consider it done.”
Discussions about purchase orders. In one email, Medwenitsch said he talked to another contractor about “how to resolve quickly the changes by giving direct P.O.’s (purchase orders) — not everyday a contractor gets that tossed onto their lap!” St. Pierre responded: “You got that right! As a matter of fact I don’t know anyone to do so.” Purchase orders are documents sent from a buyer to a supplier with a request for an order including an agreed upon price.
The two men also talked about booking flights and referred to weekends at cottages, a trip to Vancouver, a possible trip to the Bahamas and other trips and dinners out.
While the emails between Medwenitsch and St. Pierre provide a picture of the dealings between the two, it’s impossible to know whether the two exchanged other emails not obtained by the Citizen or had other non-email communication.
The hospital did not name a dollar figure in what it alleges was a massive fraud scheme, but asked for an injunction restraining the defendants from disposing of any assets and $250,000 in punitive damages.
The allegations of fraud come at a time when the hospital is in the midst of planning for its biggest construction project ever — a new Civic campus, which is estimated to cost more than $2 billion and requires a community-raised share of up to $400 million.