2017-09-13

Rescinding of the contract for the reconstruction of lookouts, footbridges and paths in the Bois-de-l’Île-Bizard Nature Park (call for tenders 16-6853), decision filed on September 13, 2017

Summary

The rescinding of the contract with Construction Généphi Inc. is justified by the filing of false information concerning the actual identity of the City’s contracting party. Given the value of the contract, authorization from the AMF is required. Genéphi holds such authorization and submitted a bid in its own name. It did not reveal the existence of a joint venture agreement with Congeres Inc., which does not have AMF authorization but which did, in fact, carry out the contract. By not filing a bid in the name of the Généphi-Congeres joint venture, Généphi allowed Congeres to avoid the obligation of having authorization from the AMF. Généphi is thereby preventing the City and public from ensuring the integrity of the actual winning bidder.

SUMMARY

The Office of Inspector General (OIG) initiated an investigation after receiving complaints that a company other than the winning bidder of the contract awarded following call for tenders 16-6853 was performing work on the site. The complainants asked how this was possible, particularly since criminal charges were pending against the president of this company.

Call for tenders 16-6853 was launched by Montréal’s Large Parks, Greening and Mount-Royal Department (Service des grands parcs, du verdissement et du Mont-Royal) for the reconstruction of lookouts, footbridges and paths in the Bois-de-l’Île-Bizard nature park. The contract, for $11,284,767.25, was awarded to the lowest compliant bidder, Construction Généphi Inc. Given the nature and value of the contract, all bidders were required to have authorization to enter into public contracts from the Autorité des marchés financiers (“AMF”). Généphi holds such an authorization.

The investigation revealed that Généphi had previously concluded a joint venture agreement with Congeres Inc. Pascal Patrice, the latter’s president and sole shareholder, is facing criminal charges in the Faubourg Contrecœur case and is currently on trial. Congeres does not hold and has never applied for authorization from the AMF.

The agreement was concluded in 2014 and details the operation of the Généphi-Congeres joint venture. The president and sole shareholder of Généphi, Daniel Lefebvre, handles the financial aspect: he provides the bonding and financing and agrees to pay the invoices issued by Congeres, which handles operations, searches for tender opportunities, prepares the bids, and supplies labour and materials for carrying out the contract.

The facts gathered during the OIG’s investigation show that Généphi and Congeres applied and respected the joint venture agreement throughout call for tenders 16-6853. Pascal Patrice found the call for tenders, handled most of the bid preparation, including contacting subcontractors, and supervised work on the  job  site.  He  is  also  Généphi’s  main  spokesperson  with  the  City.  For  his  part,  Daniel Lefebvre attended two meetings with City representatives and paid the invoices issued by Congeres.

The issue in this case is that Généphi submitted a bid in its name only, without revealing the existence of the joint venture to the City. Other actions taken created some confusion as they further concealed the real role played by Congeres in executing the contract awarded following call for tenders 166853, including the use of Généphi’s email account and electronic signature by Congeres employees.

Under section 57.1.10 of Charter of Ville de Montréal, two conditions allow for the Inspector General’s intervention, which are cumulative. The Inspector General must find that a requirement of tender documents or contract has not been met or that false information was given during the contracting process. He must also be of the opinion that the seriousness of the breach observed justifies the cancellation, rescinding or suspension of the contract.

With respect to the first criterion, the Inspector General believes submitting a bid solely in Généphi’s name, when the head of this company, Daniel Lefebvre, knew full well that the contract would be performed through a joint venture, constitutes false information given during the contracting process. In this instance, it concerns the real identity of the City’s contracting party.

This breach is objectively serious for two reasons. First, by failing to submit a bid in the name of the joint venture Généphi-Congeres, Généphi enabled Congeres to avoid the obligation of holding authorization from the AMF and in so doing, deprived the City and the public of the opportunity to get assurance concerning the winning bidder’s integrity. Allowing Généphi to act in this manner would undermine the usefulness and credibility of such authorization in the Government’s fight against corruption and the use of fraudulent tactics.

Second, Généphi’s actions damages the integrity of the tendering process. Since the obligation to hold AMF authorization pursuant to Order-in-Council 796-2014 is a public policy requirement, the other bidders had every reason to expect that the “real” winning bidder also meet this requirement.

In short, the Inspector General is of the opinion that the conditions set out in section 57.1.10 of Chart of Ville de Montréal have been established, and therefore rescinds the contract awarded by the Agglomeration Council on August 25, 2016 following call for tenders 166853.

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Rescinding of the contract for the reconstruction of lookouts, footbridges and paths in the Bois-de-l’Île-Bizard Nature Park (call for tenders 16-6853), decision filed on September 13, 2017