2018-03-16

Rescinding of two garbage collection and transportation contracts (calls for tenders S08/004 and 16-15252), decision filed on March 16, 2018

Summary

Two contracts with Services Environnementaux Richelieu Inc. were rescinded. Several recurring breaches were observed, including collections from private companies far exceeding the allocated amounts, a collection that mixed recycling with garbage and private collections carried out outside the designated boroughs and even outside City territory. This garbage was mixed with the borough residents’ and merchants’ garbage then dumped, disposed of and billed to the Montréal Agglomeration account.

SUMMARY

The Office of Inspector General (OIG) initiated an investigation after receiving a denunciation that Services Environnementaux Richelieu Inc. (“S.E.R.”), to which the Verdun borough had entrusted garbage collection and transportation, was carrying out private garbage collection contracts at establishments inside and outside the borough limits in violation of the tenders documents, and that the content of these were potentially being disposed of and charged to Ville de Montréal.

Call for tenders S08/004 was launched by the Verdun borough in 2008 for the collection and transportation of various waste material, including garbage from private residences and merchants in the borough. The ten (10)-year contract was awarded to the lowest bidder, i.e. S.E.R, for $29,649,756.60. Over the years, addenda were issued to include garbage collection from new homes and merchants in the borough and the contract amount was thus increased to

$30,138,771.52.

In the course of its investigation, the OIG conducted surveillance of S.E.R.’s operations in the Verdun borough. The results of this surveillance prompted the OIG to also look into S.E.R.’s performance of the garbage collection and transportation contract in the neighbouring borough of Sud-Ouest. Resulting from call for tenders 1615252, this forty-three (43) month contract was awarded to S.E.R. for $4,250,374.

Both the specifications of calls for tenders S08/004 and 16-15252 contain numerous contract clauses setting out the rules for garbage collection. The successful bidder must therefore respect the garbage quotas allotted by the borough to its residents. It may conclude private contracts for additional garbage collection but cannot carry out these private contracts at the same time as it collects garbage for the boroughs. The successful bidder must also respect the rules concerning the sorting of waste material and selective collection, in particular not mixing recycling with garbage.

The investigation revealed that S.E.R. violated these provisions on numerous occasions. The surveillance conducted by the OIG investigating officers revealed garbage collection from private companies that largely exceeded the quantities allotted by the borough, one collection that mixed recycling with garbage, garbage collections outside the designated borough and even off-island from Brossard, Longueuil, Saint-Basile-le-Grand and Carignan. This garbage was mixed with the garbage of residents and merchants of the Verdun and Sud-Ouest boroughs and dumped, disposed of and billed to Montréal Agglomeration’s account.

The investigation also showed that the recurring breaches together with the repeated assignment by S.E.R. supervisors of routes that combined public and private collections constitute tactics that attest to S.E.R.’s willingness to shirk its financial obligations in regard to paying Ville de Montréal a rebate if it collected less garbage than the tonnage stipulated in the contract.

Section 57.1.10 of the Charter of Ville de Montréal, Metropolis of Québec states two (2) cumulative conditions giving the Inspector General the right to intervene. The Inspector General must find non-compliance with a requirement in the tender documents or contract, or that false information was given during the contracting process. He must also be of the opinion that the seriousness of the breach justifies rescinding of the contract.

In respect to the first criterion, based on the evidence gathered during the surveillance operations, which was corroborated by GPS data from the company’s trucks and time sheets completed by S.E.R. drivers, the Inspector General found numerous breaches of the requirements in the contracts resulting from the calls for tenders in question.

As regards seriousness of the breaches, it is the fact that these are recurring, contravene a wide range of obligations imposed on S.E.R. and clearly demonstrate the involvement of the company’s supervisors. In that respect, the breaches observed concern the very essence of garbage collection and transportation activities and illustrate S.E.R.’s utter disregard for fulfilling several of its contractual obligations. Furthermore, S.E.R.’s actions leave a lingering doubt about the content of its past and future collections and, by the same token, about the company’s integrity.

The company’s systemic fraudulent activities actually suggest that had it not been for the Inspector General’s investigation, they would have continued over time.

In short, believing that the conditions set out in section 57.1.10 of the Charter of Ville de Montréal, Metropolis of Québec have been established, the Inspector General rescinds the contract awarded to S.E.R. by the Verdun Borough Council on July 2, 2008 following call for tenders S08/004 and by the City Council on December 20, 2016 following call for tenders 16- 15252.

While the initial denunciation received from the Verdun borough authorities was detailed and well-documented, and while this does not in any way diminish the nature or seriousness of S.E.R.’s breaches, the Inspector General’s investigation nonetheless revealed shortcomings on the City’s part in managing performance of the contracts resulting from calls for tenders S08/004 and 16-15252 that created a favourable climate for breaches to occur with impunity.

Among others, the public weigh scale in the Verdun borough that was to be used to weigh S.E.R.’s trucks was often broken. The Verdun and Sud-Ouest borough authorities did not regularly check that S.E.R.’s trucks were empty when they started the collection. The City’s representatives rarely, if ever, consulted the trucks’ GPS data. These are all control measures provided by the City that were not systematically exercised and that would have allowed the City to detect S.E.R.’s actions sooner.

In general, the facts revealed during the investigation showed that the division of roles and responsibilities between the boroughs and the Environment Department (Service de l’environnement) has led to a segmentation of information and surveillance efforts, leaving the way open for fraudulent activities. The City must break down the silos that characterize management of these files and rethink its method of proceeding. The collection, transportation and disposal of garbage are recurring services that require the stakeholders involved to be able to see the big picture. They also require greater cooperation between the representatives involved to effectively monitor the City’s co-contractors.

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Rescinding of two garbage collection and transportation contracts (calls for tenders S08/004 and 16-15252), decision filed on March 16, 2018