2019-05-10

Rescinding of a contract to propose finishes for the refurbishment of the La Fontaine Park chalet-restaurant (contract no. 18-1922), decision issued May 10, 2019

Summary

The contract of interior design firm Desjardins Bherer was rescinded due to its failure to include in its bid a declaration of personal ties with a person involved in the development of the bid documents, in this case, the spouse of the firm’s president.

SUMMARY STATEMENT

The Office of Inspector General conducted an investigation after receiving denunciations that an employee of the Parks, Mount Royal and Sports Department (Service des grands parcs, du Mont-Royal et des sports, “SGPMRS”) had drafted a contract for interior design and that this contract had been subsequently awarded to her spouse’s company. The contract was said to have been awarded at the very end of the project’s design process and to have resulted in significant costs and delays.

The project in question was the refurbishment of La Fontaine Park chalet-restaurant, including renovation of the building’s public bathrooms and skaters’ locker room. In the fall of 2017, the project was at the stage of selection of the finishes for these rooms for the purpose of the upcoming publication of call for tenders 5939 for construction work. A landscape architect from the SGPMRS expressed her disagreement with the concept proposed by the architecture firm in the file. In her opinion, the proposal did not respect the heritage character of the building and needed to be reviewed.

Both the architecture firm and the external project manager responsible for the file objected to such a revision. The publication of call for tenders 5939 was planned less than a month later and they argued that it would be impossible to implement the scope of the changes requested by the landscape architect while respecting this deadline.

Interpreting this position as a refusal to cooperate, the landscape architect suggested to her division manager that they include interior designers in the project to review the concept of the rooms’ layout, which he accepted. When the landscape architect shared this idea with the external project manager, he again disagreed because of schedule related constraints. Ultimately, the landscape architect, the SGPMRS division manager and the external project manager agreed to wait until spring 2018 to include interior designers, i.e. after the award of the construction work contract resulting from call for tenders 5939.

In late March 2018, the division manager reminded the landscape architect of this agreement and she initiated the steps required for the award of a contract (contract No. 18-1922). The value of such a contract was estimated to be less than $ 25,000 and they decided to solicit four (4) interior design firms. After drafting the invitation letters detailing the mandate to be fulfilled and establishing the criteria used to identify relevant firms, the landscape architect made her choice. Among the firms invited was Desjardins Bherer, the firm owned by the landscape architect’s spouse.

The SGPMRS division manager approved this selection but indicated that the landscape architect should disclose the situation to the Office of Comptroller General. She therefore completed the appropriate disclosure form the day before the invitation letters were to be sent. Her statement indicated that she had played a secondary or peripheral role in the contractual process by simply taking part in it, whereas the facts show that she was at the heart and in charge of it.

A commitment was made by the SGPMRS division manager and the landscape architect that she would withdraw from the project if Desjardins Bherer were to win contract No. 18-1922. However, even though the contract was ultimately awarded to her spouse’s firm, the facts show that she was involved in the execution of said contract, including participating in a meeting at which her spouse was also present.

The contractual process was marked by other irregularities, which did not prevent Desjardins Bherer from winning contract No. 18-1922. Amongst these irregularities, it is noted that, as the landscape architect and the SGPMRS division manager themselves both admitted, none of  the four (4) firms invited were specialised in institutional and public projects even though they had themselves required such a specialisation in the invitation letters.

In addition, by signing the addendum published during the tendering period, which was to be considered as part of the tender documents, the landscape architect then appeared as having participated in the drafting of these documents. Pursuant to Section 5 of the City’s by-law on contract management (Règlement sur la gestion contractuelle, “RGC”) in force at the time, Desjardins Bherer thus had to include a statement disclosing the personal connection between the firm’s president and the landscape architect in its tender. The president of Desjardins Bherer admitted that such a statement was not included.

Lastly, the president of Desjardins Bherer told the Office of Inspector General’s investigating officers that his spouse, i.e. the landscape architect, had disclosed to him that an addendum would be published, as well as its content before its publication.

In the end, Desjardins Bherer was included in the chalet-restaurant refurbishment project as of May 28, 2018. Despite delivery by Desjardins Bherer of their own proposal for the layout and choice of finishes within about a six (6)-week period, approval of some of their recommendations by the SGPMRS division manager, combined with the time and cost involved in issuing and carrying out change orders to the construction work, contributed to a rise in costs and postponing work completion by almost seven (7) months. According to a decision-making summary presented to the municipal elected officials, the costs associated with the inclusion of an interior designer in the project amounted to more than $ 340,000.

Section 57.1.10 of the Charter of Ville de Montréal, metropolis of Québec states two (2) cumulative conditions for the Inspector General to intervene. She must find non-compliance with one of the requirements specified in the tender documents or contract, and she must be  of the opinion that the seriousness of the breaches observed justifies rescinding of the contract.

As mentioned above, the president of Desjardins Bherer himself admitted that he failed to include a declaration disclosing his personal connection to the landscape architect as required by Section 5 of the RGC in force then. With respect to the seriousness of the breach, the consequences set out in the RGC for such a breach, i.e. granting a discretionary power to the City to rescind the contract as well to exclude the contracting party from all City contracts for one (1) year, indicate clear disapproval of such a conduct by the municipal administration. Indeed, it can not be tolerated that a bidder or a contracting party benefit from an unfair advantage compared to its competitors by virtue of an existing personal connection with a person who participated in drafting of the tender documents.

Thus, the Inspector General is of the opinion that the conditions set out in Section 57.1.10 of the Charter of Ville de Montréal, metropolis of Québec are established, and she rescinds contract No. 18-1922 awarded to Desjardins Bherer. In accordance with the provisions of the RGC in force then, the Inspector General recommends that Desjardins Bherer be added to the Register of Ineligible Persons (Registre des personnes inadmissibles) for a period of one (1) year from the date of this decision.

The investigation also revealed that the SGPMRS landscape architect breached her obligation of confidentiality under the RGC in force at the time.

Finally, it follows from the facts gathered that the municipal employees concerned adopted a somewhat casual demeanor with regard to their disclosure of a conflict of interest to the Office of Comptroller General. The landscape architect produced a statement that was not  completely frank and gave a misleading view of the situation to the Office of Comptroller General. Furthermore, despite the commitments made to the later and its recommendations, the landscape architect did not withdraw completely from the file and the division manager did not fully ensure that she did. In doing so, they left the impression of, at the very least, an appearance of a conflict of interest in the carrying out of contract No. 18-1922.

Their  actions  also  give  the  impression  that,  due  to  the  low  monetary   value   of   contract No. 18-1922, the situation did not require the same level of ethical concern on their part and that the mere disclosure of a personal connection on an administrative form was enough to eliminate any conflict of interest. Far from it.

On the contrary, the Code of Conduct for City employees requires ongoing attention on their part in order to maintain the high standards of integrity expected of them by citizens of the City.

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Rescinding of a contract to propose finishes for the refurbishment of the La Fontaine Park chalet-restaurant (contract no. 18-1922), decision issued May 10, 2019