2017-09-25

Recommendation report concerning the awarding of a contract for the supply of vehicle storage batteries (call for tenders 15-14023 and 16-15500), filed on September 25, 2017

Summary

Several serious breaches were noted by City representatives when the contract was awarded after two calls for tenders. However, at no time did the companies involved commit any wrongdoings. The Procurement Department failed to meet its good faith obligations toward the lowest bidder on the first tender, initially notified of a recommendation to award the contract in its favour. This supplier was not informed of the discontinuation of the process and was not informed of the parallel launch of a new call for tenders while two extensions of the validity of its prices were obtained from it. It was recommended that the framework agreement reached after the second call for tenders be rescinded and the tendering process restarted.

SUMMARY

This investigation by the Inspector General of Montréal (the City) concerns the procedure followed by the City which resulted in the awarding of a three (3) -year framework agreement to Uni-Select Québec Inc. (Centre de pièces Gagnon) for the supply of motor vehicle and equipment storage batteries in an amount not to exceed $1,143,199.11, including taxes (resolution CG16 0706).

The investigation revealed several serious breaches by City representatives when awarding the contract. However, at no time did the companies involved commit any reprehensible acts.

The City’s Procurement Department (Service de l’approvisionnement de la Ville de Montréal) launched an initial call for tenders (1514023) on November 25, 2015, for which the lowest compliant bidder was Power Battery Sales Ltd. (East Penn). As early as January 2016, the Procurement Department informed the East Penn representative that the company would be recommended as the winning bidder and, with the company’s agreement, entered into a temporary procurement agreement enabling the City to source batteries from East Penn pending the official awarding of the contract by the decisionmaking bodies.

However, in February 2016, representatives from the Municipal Shops and Rolling Stock Department (Service du matériel roulant et des ateliers) – the requesting department – indicated that they had reservations about the technical specifications of the call for tenders and the tender submitted by East Penn. They contended that the specifications did not meet their department’s needs, although they did articulate them to the Procurement Department representatives while the call for tender documents were being prepared.

A conference call was held with representatives from the City’s Municipal Shops and Rolling Stock Department and the Procurement Department in midApril 2016. At the end of this conference call, it was unanimously decided to terminate call for tenders 15-14023 and to restart the bidding process.

Yet, the investigation showed that the Procurement Department did not cancel call for tenders 1514023 and decided instead to launch in parallel a new call for tenders (1615500), without informing East Penn. In fact, East Penn remained awaiting a contract pursuant to call for tenders 1514023. The Procurement Department led the East Penn representative to believe that the decision-making bodies would award the contract to the company, and, on two occasions, requested an extension of the tendered bid validity period and renewed the temporary procurement agreement. East Penn bid, which was originally valid for a period of one hundred and twenty (120) days, to midApril 2016, would ultimately be maintained for more than nine (9) months—to September 30, 2016—without the East Penn representative ever being informed that the tendering process had been interrupted.

When questioned as to why call for tenders 1514023 was not cancelled, the Procurement Department section head stated that, upon discussing the matter with his director, it was deemed preferable to maintain the option of awarding the contract to East Penn in case the lowest price tendered in response to call for tenders 1615500 was too high and did not suit the requesting department.

Moreover, the investigation revealed that even when East Penn’s representative contacted the Procurement Department to inquire about the file’s progress, he was misled and kept in the dark about the situation until November 4, 2016, while call for tenders 1615500 had been launched on August 3, 2016. East Penn’s representative was still not aware of the true extent of the situation on November 4, 2016. It was not until December 12, 2016, that the Procurement Department section head informed him that the decision-making bodies had decided to proceed with call for tenders 1615500.

The facts show that the Procurement Department misled East Penn in its legitimate expectations. The Inspector General concluded that the Procurement Department had acted contrary to the most fundamental requirements of good faith and had failed in its obligation to inform by not keeping the bidder

apprised of major developments concerning the file, thereby permanently compromising the awarding of the contract.

The Inspector General notes that the Procurement Department never indicated the fact that the City had already published call for tenders 1514023 in the decision summary for call for tenders 1615500. Thus, the elected officials—the ultimate overseers of contracting process’ compliance —were never informed of the situation.

The Inspector General does not believe that free rein can be given to the framework agreement stemming from call for tenders 1615500, as the circumstances in which it was launched seriously undermine the integrity of tendering process 1514023 and are not commensurate with the behaviour expected of a municipality.

The Inspector General therefore recommends the termination of the framework agreement entered into with Centre de pièces Gagnon for the supply of storage batteries and the launch of a new tendering process by the Procurement Department.

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Recommendation report concerning the awarding of a contract for the supply of vehicle storage batteries (call for tenders 15-14023 and 16-15500), filed on September 25, 2017