The Office of Inspector General conducted an investigation upon receiving a two-part denunciation involving Beauregard Environnement Ltée (hereinafter “Beauregard”), a company that had been awarded ten (10) catch basin cleaning contracts (call for tenders 19-17453) and three (3) sewer cleaning contracts (call for tenders 19-17357).
According to the first part of the denunciation, Beauregard is actually headed by Michel Chalifoux, which would make it ineligible for public contracts, since Mr. Chalifoux and his company at the time, Chalifoux Sani-Laurentides, was on the list of ineligible businesses (hereinafter “RENA”) subsequent to an investigation by the Competition Bureau of Canada.
Despite the claims by Michel Chalifoux and his spouse, Dany Fréchette, that he was only a volunteer consultant to her, Beauregard’s president, there is an overabundance of facts showing that he was actually the company’s driving force in bidding on calls for tenders 19-17357 and 19-17453, and in performing the resulting contracts. In fact, the investigation conducted by the Office of Inspector General reveals that it was Michel Chalifoux who:
- Prepared Beauregard’s bids, in particular by developing the company’s bidding strategy and prices for call for tenders 19-17453;
- Was actively involved in the performance of the contracts related to calls for tenders 19-17357 and 19-17453;
- Served as contact person for Beauregard during the Office of Inspector General’s investigation; and
- Managed relations with Beauregard’s main subcontractor for the purpose of performing the contracts related to calls for tenders 19-17357 and 19-17453, namely 9108-4566 Québec inc., which transported the sludge collected in Ville de Montréal’s catch basins and sewers (hereinafter, “Entreprises Pesant”).Furthermore, it should be noted that under an agreement reached with the Prosecution, only Michel Chalifoux’s former company pleaded guilty. Consequently, the first part of the denunciation is unfounded given that Michel Chalifoux was not listed in RENA and was eligible for public contracts, as was Beauregard.According to the second part of the denunciation, the prices submitted by Beauregard in response to call for tenders 19-17453 were significantly lower than market prices due to its illicit disposal of sludge collected from the catch basins.Not knowing if the sludge was being disposed of by being dumped directly into Ville de Montréal’s sewers or elsewhere, the Office of Inspector General proceeded to follow Beauregard’s trucks performing the contracts related to call for tenders 19-17453. In addition, although the denunciation only pertained to contracts related to call for tenders 19-17453 for catch basin cleaning, information obtained during the investigation led the Office of Inspector General to also review other contracts awarded to Beauregard in a similar field, namely, those related to call for tenders 19-17357 for sewer cleaning.
The investigation revealed that Beauregard, through its transport subcontractor, Les Entreprises Pesant, was wrongfully dumping sludge on Pascal Pesant’s farmland, which had been collected after cleaning Montréal catch basins and sewers. In addition, the investigation led to the determination of several other contractual breaches in the performance of both catch basin and sewer cleaning contracts:
- Catch basins that were not cleaned were billed to the Pierrefonds-Roxboro borough;
- Catch basin flow tests, which had to be conducted systematically, were not done butstill billed to the Côte-des-Neiges—Notre-Dame-de-Grâce borough;
- The decanting period of thirty (30) minutes following the cleaning of the last catch basin, though explicitly required in the specifications, was not systematically performed, which had the effect of increasing the resulting weight when the sludge collected from the catch basins was weighed;
- Sludge weight was overbilled in several respects.The investigation also found that Beauregard, through Michel Chalifoux in particular, was aware that the sludge was being dumped on Pascal Pesant’s farmland. Based on this situation, which had been going on since 2016, it can be inferred that in submitting its bids, which had been prepared by Michel Chalifoux, Beauregard intended to use the same practices with Les Entreprises Pesant, which was not complying with the sludge disposal requirements set out in the specifications.In so doing, both Michel Chalifoux, Beauregard, Pascal Pesant and Les Entreprises Pesant committed a fraudulent act under Ville de Montréal’s by-law on contract management, in the version in effect at the time of the events. Similarly, by overbilling for the sludge resulting from catch basin and sewer cleaning on a periodic and repeated basis, Beauregard was committing a second type of fraudulent act. The same conclusion can be drawn for Michel Chalifoux, who reviewed Beauregard’s invoices before submitting them.Section 57.1.10 of the Charter of Ville de Montréal, metropolis of Québec provides two (2) cumulative conditions for intervention by the Inspector General. The Inspector General must have determined that one of the requirements in the call for tender documents or a contract was not observed. Second, she must be of the opinion that the seriousness of the breach observed justifies rescinding the contract.
The multiple contractual breaches observed following the investigation have been listed above. In terms of the severity of dumping sludge on farmland, there was clearly a flagrant violation by Beauregard of the mandatory and basic requirements in the specifications, whereas this was a key consideration in the specifications, and a separate price was involved for the first time for the disposal of the catch basin and sewer sludge.
With respect to the deliberate violation of Ville de Montréal’s decanting requirements, it is all the more serious given the importance given by Ville de Montréal to this contractual obligation that was clearly communicated in the specifications to potential co-contractors through highlighting, bold text and capital letters. The other violations revealed by the investigation are just as indicative of the company’s tendency to disregard its contractual commitments.
In short, the Inspector General believes that the two (2) conditions required by section 57.1.10 of the Charter of Ville de Montréal have been met in this case and, consequently, she is rescinding the ten (10) contracts related to call for tenders 19-17453 and two (2) of the three (3) contracts related to call for tenders19-17357 that were awarded to Beauregard.
Regarding the third contract related to call for tenders 19-17357, namely, the one awarded by the Plateau-Mont-Royal borough council, the Inspector General cannot rescind it. In fact, the contract for this borough is the only one that was started after the meetings between Beauregard and Les Entreprises Pesant employees began. Therefore, despite any doubts regarding the disposal of sludge in accordance with the specifications, the investigation is unable to determine non-compliance at this point in time.
However, the Inspector General believes that in acting as it did, Beauregard has irremediably undermined the relationship of trust contractually binding it to Ville de Montréal. Therefore, she recommends that the Plateau-Mont-Royal borough council rescind the contract it awarded to Beauregard subsequent to call for tenders 19-17357.
Furthermore, because of their aforementioned violations of the provisions of Ville de Montréal’s by-law on contract management in effect at the time of the events, and in light of the new penalty provisions adopted in 2020, the Inspector General believes that an ineligibility period of five (5) years would be appropriate for Michel Chalifoux and Beauregard, and three (3) years for Pascal Pesant and Les Entreprises Pesant.
Lastly, the investigation revealed certain issues related to Ville de Montréal’s general management of sludge disposal, which resulted in two (2) recommendations. The first recommendation is that Ville de Montréal obtain from the successful bidder a commitment letter from the disposal site indicated in its bid confirming acceptance of waste specifically generated through the performance of the contract.
With respect to the second recommendation, the Inspector General believes that in order to reduce travel, limit costs and curb illegal dumping, Ville de Montréal should look into the possibility of using its existing temporary storage sites or setting up new sites for the interim management of the sludge generated in the performance of its future catch basin and sewer cleaning contracts.