Coach muscled out of gym bids
Fitness expert can’t get shot at federal deals
Most people wouldn’t have bothered.
For 20 years off and on, Lorne Goldenberg has been pressing the federal government to open up the business of fitness programs. He’s nearly ready to throw in the towel.
The owner of Strength Tek Fitness since 1987 and a former strength and conditioning coach for the Ottawa Senators, Goldenberg initially saw the federal government as a potentially lucrative way of diversifying his business.
The largest federal departments sponsor fitness centres for employees, making it a $1 milliona-year opportunity. “I wanted to know how to compete for this business,” Goldenberg said.
He learned the answer most often is that you don’t.
For decades the gym services provider of choice in the federal government has been the Recreation Association of the Public Service of Canada, or RA Centre for short. Once part of government, the RA Centre has morphed into a not-for-profit organization that operates a 40-acre sports complex along Riverside Drive.
The organization also runs a number of satellite fitness facilities in the larger federal departments including Global Affairs, Heritage Canada, Employment and Social Development and Agriculture. In all, there are several thousand members who pay $20 plus per month for access to the gyms and trainers. This was the part of the RA Centre’s business Goldenberg wanted.
Just one problem: departments and agencies don’t have to issue public tenders for this type of service.
A small minority — including the federal agriculture and environment departments, and several Crown corporations — have held competitions for the right to run their gyms. Strength Tek has won several contracts from members of this group.
As for the other federal departments, it’s been a journey of disappointment and frustration for Goldenberg — one that offers rich insight into how certain parts of government do business.
Consider first the Liberal use of sole-source arrangements. The RA Centre has been running a gym in partnership with Global Affairs Canada employees at 125 Sussex Dr. since 1993 without tender. When the department opened another gym at 111 Sussex in 2010, Goldenberg pushed for the right to bid for the business. But the department determined that the new facility was to be twinned with the gym at 125 Sussex to give employees equal access to both facilities. “The suitable option was to extend the original contract,” the department noted in a 2010 email to Goldenberg.
The arrangement between the RA Centre and Global Affairs employees was sealed with a deal that expired in mid-2015. RA is still providing gym services.
“Global Affairs has renewed its memorandum of understanding,” said departmental spokesman Michael O’Shaughnessy, He declined to answer whether Global Affairs intended in future to rely on competitive contracts.
In the past 18 months, Goldenberg has moved more aggressively to try to open up the business. Late in 2015 he challenged the decision by Employment and Social Development not to issue a public tender in connection with fitness facilities at Place du Portage. The RA Centre has been the operator there since 1998.
After a year of email exchanges in which Goldenberg threatened legal action, the employment department said it would terminate its agreement with the RA Centre and would initiate an open tender for the management of the fitness facility. It doesn’t appear any of this happened. Goldenberg said he has not been invited to compete and the RA Centre confirmed it continues to manage the gym. Employment officials declined to comment.
Goldenberg also sought a judicial review of the gym services arrangement between the RA Centre and Indigenous and Northern Affairs Canada (INAC) involving a fitness centre at Les Terrasses de la Chaudière in Gatineau. INAC was the lead tenant among several that cosponsored the gym.
INAC told Goldenberg in March through a Justice Department lawyer that it would end its sponsorship, with the expectation the gym would close on May 31. INAC justified the move in part by noting that employees could use private fitness facilities nearby. Goldenberg stayed his legal action.
Recently, however, there was an apparent change of heart at INAC. “After an extensive assessment of the situation,” said INAC spokesperson Valerie Hache, “Canadian Heritage, in collaboration with INAC and other government entities, will manage the space available for the fitness centre.”
This is being done in partnership with the RA Centre.
Goldenberg said he no longer has the patience to pursue another lengthy litigation, so he let matters drop. “They are so insulated in there, it’s crazy.”
Goldenberg, 55, has tried a variety of ways to pry open the market, including submitting unsolicited proposals to run gyms in space controlled by Environment Canada and Public Services and Procurement Canada. He was turned down or offered arrangements that would have made it impossible to turn a profit.
So where does all this leave Goldenberg? His company is doing some business with the federal government, and he has small private contracts here and there — enough to generate half a million a year in revenue and support half a dozen trainers, mostly part-time.
It’s a far cry from the peak of the tech boom when he had billings of nearly $2 million and employed dozens of trainers. His main client then was Nortel Networks; Strength Tek ran five facilities for Nortel in Ottawa alone. After Nortel went bankrupt in 2009, Strength Tek submitted a claim for $280,000 in unpaid bills for services rendered. When a U.S. investor offered him 40 cents on the dollar for his claim, Goldenberg grabbed it. Even so, it was a big loss for a small company.
That, in part, is why he was anxious to diversify. He has learned that, with limited exceptions, this drive likely won’t take him through the federal government.