Government Operations Committee on Oct. 26th, 2010

[Tom Ring]

The second amendment was a reduction in the experience that you needed to supply as a masonry company. This second amendment advantaged the competitors of LM Sauvé, because LM Sauvé had met the requirement previously, and the first amendment was considered—

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Excuse me…

[Tom Ring]

I'll just provide the explanation, Madam Bourgeois.

The first amendment was considered on the basis of the criteria I outlined in my speaking points: was it a reasonable request? We looked at the request from LM Sauvé and found that it was reasonable, and in fact we had made a similar change in the criteria for the southeast towers. So there was no reason to not accept that request.

It was posted on MERX seven or eight days before the closing of qualification, and there were no questions and no complaints about that change. In fact, our view is, if we had not made that change, we would have left ourselves subject to legal review from LM Sauvé for making an unreasonable request and a more stringent requirement than was necessary and that we did for the southeast towers.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Do you have any evidence for that, Mr. Ring? Those were internal discussions, inside the department, I imagine. Were any documents requested or exchanged that you could provide to the committee?

[Tom Ring]

Yes, absolutely, I can provide you with documents.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Is it common to modify requests for qualification or tenders like these?

[Tom Ring]

Yes, it is, but I will ask my colleague to give you more details.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Please do it quickly, because we do not have much time.

[Jacques Leclerc, Senior Director, Real Property Contracting Directorate, Department of Public Works and Government Services]

Yes, it is very common.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Do you need approval from the minister, or just from people in the department?

[Jacques Leclerc]

We have absolutely no need for approval from the minister. Most of these requests are technical in nature. The project team and the contract management team make sure that things stay fair for everyone. Permission is granted and changes are made.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

According to the media, the contract amount was $2 million less than all the other competitors' bids. That is an unusually low figure.

Did that not raise a red flag? Did it not raise questions in your mind?

[Jacques Leclerc]

Yes, it raised several red flags.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Such as?

[Jacques Leclerc]

In situations like this, bids are opened in public. I imagine that LM Sauvé realized that its bid was much lower than the others. Actually, it was $1.7 million lower, not $2 million.

The project team and the people responsible for the contract asked Paul Sauvé to meet with them. Each detail of the bid was checked line by line to make sure that nothing had been left out or that no basic error had been made. The company's explanations were seen to be satisfactory because you have to remember that the company was its own masonry subcontractor, and was very competent in that area. That gave it a big advantage.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I would like to go back to my colleague's question. Did you check LM Sauve's history? I imagine that a company that does business with PWGSC must provide a bond or must be solid enough to hold up its end of the contract. Was LM Sauvé in a position to do that at the time?

[Jacques Leclerc]

At the time the contract was awarded, all indications were that the company was in a position to do it. I think you have almost answered your own question. They had a bond from an insurance company, just as required.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I find that strange. You say that they had a bond, you awarded the contract in 2008, and, in 2009, they went bankrupt. How can you explain that?

[Jacques Leclerc]

We have not yet received confirmation that the company really has gone bankrupt. But LM Sauvé was replaced because its performance was unsatisfactory. They were not working to the schedule and no progress was being made. When we asked for explanations, when we wanted to know their plans, how they proposed to make up for lost time and to manage all the subcontractors, they really had no convincing answer.

It is just a theory on my part, but I suspect that LM Sauvé was very busy with the city hall in Montreal. They were not making enough effort. For us, it was very simple: if a contractor does not perform, the responsibility for the work is taken away.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

As far as the risk management is concerned, we have the bond. But we are also managing the people in and around the company.

So I imagine you did your research. You went to see who was hanging around the company. Did you meet a person named Varin?

[Jacques Leclerc]

I have never met Mr. Varin and I have never spoken to Mr. Varin.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

That's your answer, but not other people's.

[The Chair, Liberal, John McKay]

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

Thank you, gentlemen, for coming this morning. We appreciate your testimony.

Further to the questioning that was undertaken previously by my colleague, I want to continue to follow that up.

Has Gilles Varin or any lobbyist ever contacted Public Works representatives to lobby on behalf of any organizations on this project?

[Pierre-Marc Mongeau]

Thank you.

Mr. Chair, as my colleague mentioned, when we first heard these allegations, we searched through all our e-mails, we questioned all our employees and we checked our documents to see whether Mr. Varin's name appeared. We found no indication that it did.