Manitoba PC Party Throwing Rocks From Glass House RE Untendered Hydro Deal?

Posted on March 8, 2016


PC Party on Hydro Contract

Today it was revealed that a $85 million contract with Manitoba Hydro was not tendered. This is happening too often.

Our Open Government Initiative will ensure that untendered contracts are truly the exception and are used only in exceptional circumstances. Sign your support:

The Manitoba PC Party’s opportunistic use of social media should be applauded.

The above text, which appeared in conjunction with the featured Facebook timeline photo, was posted by the party shortly after news hit that Manitoba Hydro had awarded an $85 million contract on a single source basis.

Under a banner image championing what is being called an “Open Government Initiative,” the posting referred to point #16 of the 18 specific action items aimed at ensuring accountability, transparency and genuine, ethical leadership. Specifically, the need to “Allow the Auditor General to conduct random audits of departmental use of untendered contracts.”

In and of itself, such a request does not seem to be unreasonable. After all, doesn’t absolute power corrupt absolutely?

However, and has outlined in my response in the corresponding Facebook comment stream (see below), the posting failed to reference two AG reports from 2014 and 2015. Nor was there any mention of the 4th Session – 40th Legislature, Public Accounts 7, Oct 5, 2015 transcript, in which AG Ricard talked about the perils of single source contracts. Besides demonstrating that the AG has, at least to a certain extent, gained access to assess current procurement practices, my other reason for referring to the reports and transcript will become apparent fairly quickly.

Despite AG Ricard’s assertion that “Untendered contracts increase the risk of impropriety in procurement,” and his describing single-source contracts as a type of “higher risk” transaction, there is nothing in the AG office’s 2014 report and the subsequent November 2015 Follow-Up report, to substantiate the “only in exceptional circumstances” use of single sourcing as a viable procurement practice. Even after reviewing the 4th Session – 40th Legislature, Public Accounts 7, Oct 5, 2015 transcript, I could not find any tangible data or actual case references demonstrating that single-source contracts have resulted in a notable increase in costs to the taxpayer or, that the public interest was not served.

Now I want to stress once again, that I am not against the introduction of random audits, provided that they are not based on a penny-wise, pound foolish framework that undermines the procurement process.

When I say undermine, I am talking about what appears to be an all-encompassing anecdotal conclusion that all single source contracting is bad, and that its utilization should be arbitrarily restricted to what the PC Party post calls “exceptional circumstances.” Especially when all governments at one time or another have been on the receiving end of criticism relating to their own use of single source contracts.

What is the saying about people living in glass houses?

Does anyone remember the 2008 controversy surrounding the single source award of a $122,430 contract to Hugh MacPhie? Then PC Finance Minister Jim Flaherty took a good deal of heat for “handing a former Mike Harris speechwriter (MacPhie) an untendered contract.” Although there was an admission that Treasury Board guidelines had not been followed, Mr. Flaherty was eventually cleared of any wrongdoing.

Flaherty Cleared CBC

There is of course a disturbing similarity between both the Hydro and the Flaherty situations. It does not appear that anyone bothered to determine if either single-source contracts resulted in a notable increase in costs to the taxpayer. Nor was it ever determined if the contract awards resulted in a failed outcome i.e. the work done was lacking or, the desired objectives of the contracts were not achieved. To this point in time, I haven’t been able to find any kind of information that would lead one to conclude that these were inherently bad deals.

Think about this last point for just a moment.

There is no evidence showing that the public did not get the best deal in either instance.

Despite this absence of proof of loss or harm, there is an unwavering persistence that the only way to ensure that the taxpayer’s interests are properly served is through a love all, serve all tender everything process.

Unfortunately, and as you will discover from my interview with Judy Bradt, the tendering process is not as open and available to all suppliers as you might think. (Note: Click on the image to watch video.)

Bradt Interview2

During the interview, we talked about the fact that 90% – that’s right 90% – of all contract awards are determined prior to the issue of an RFP. In other words, if the first notification a supplier receives regarding an RFP is through a tendering platform such as MERX, then it is already too late.

My point here is that outside of commodity items that are readily available from a seemingly unlimited pool of suppliers, even openly tendered contracts have a single source element to them.

What is the takeaway from the above revelation?

Instead of focusing on procedural compliance, and anecdotal fears of buyer malfeasance related to single source contracting, there should be an increased effort to actually determine if the taxpayer’s best interest is being served from a true cost and outcome standpoint.

In the absence of such insight, statements that untendered contracts will only be used in exceptional circumstances is both short-sighted and irresponsible.


Posted in: Commentary