Charges laid against four individuals for bid-rigging in the engineering industry
Bulletin staff
On June 26, the Federal Competition Bureau announced that criminal charges were laid on June 21, 2018, against four individuals who allegedly conspired to rig bids for 21 City of Gatineau infrastructure contracts between 2004 and 2008.
“When companies or individuals rig bids on public infrastructure contracts, costs for taxpayers go up while value for money goes down. Cracking down on bid-rigging is a priority for the Bureau and I’m pleased that the criminal charges in this matter are now before the courts,” stated Matthew Boswell, Interim Competition Bureau Commissioner.
Back in the fall of 2014, Gatineau Mayor Maxime Pedneaud-Jobin acknowledged that corruption and collusion had cost the municipality many millions of dollars. He confirmed that between 2003 and 2009 there was about $22 to $23 million worth of contracts granted.
The charges under the bid-rigging provision of the Competition Act were laid before the Court of Quebec against André Mathieu, formerly Vice-President and Associate of Cima+; Claude Marquis, formerly Regional Director, Outaouais for Genivar (now WSP Canada); Michel Famery, formerly Regional Vice-President, Dessau; and Dave Boulay, formerly Director and Assistant Vice-President, Outaouais, Dessau.
As these alleged offences took place prior to 2010, if convicted of bid-rigging, those charged face potential prison terms of up to 5 years and a fine at the Court’s discretion. Potential prison terms are now up to 14 years.
Evidence gathered by the Competition Bureau suggests that these engineering firms strategically divided contracts awarded by the City of Gatineau among themselves. The evidence further suggests that the firms secretly fixed prices submitted in response to City of Gatineau calls for tenders at, or near, a tariff schedule established by the Association des ingénieurs-conseils du Québec. The City of Gatineau was unaware of the alleged bid-rigging scheme.
At the end of the scheme, contract costs decreased and the number of bidders increased at the City of Gatineau. Between 2003 and 2009, the alleged colluding firms obtained 128 of the 140 contracts valued at $25,000 to $500,000 granted by Gatineau and consumed close to 90% of the funds. Other firms picked up the scraps, winning 12 of the 140 contracts granted, amounting to 10% of funds distributed. Between 2010 and 2013, the situation drastically changed. Colluding firms picked up 73% of municipal contracts and the other firms won 27% of contracts.
Aside from the numbers, one engineering industry employee spoke publicly about the modus operandi. On September 3, 2013, then Outaouais’ AECOM Director Marc-André Gélinas recognized during his testimonial at the Charbonneau Commission that a system of contract sharing existed in Gatineau between 2003 and 2008.
AECOM is an important engineering firm that purchased Tecsult, one of Canada’s biggest engineering firms, in 2008.
Gélinas claimed that four important engineering firms shared municipal sewer, lighting and sidewalk contracts worth between $25,000 and $500,000. In 2003, the four firms drafted a special agreement after the provincial government introduced Bill 106, forcing governing bodies to launch a call for tender for infrastructure projects and to select the lowest bidder.
To avoid price wars, firms established a contract sharing scheme that gave CIMA+ 40% of the market, Génivar 27%, Tecsult 22%, and Dessau 11%. Annually this represented about $2.4 million in municipal contracts. For the system to work, the firms gathered and determined who would get what contract. Each company placed a bid, but the designated losers placed a 5% bid over the pre-determined winning bid.
According to Mr Gélinas, city staff was unaware of this system. He said this because many non-colluding firms received municipal contracts, since those involved in collusion only bid on contracts between $25,000 and $500,000. Prices were also realistic, noted Gélinas.
Bid-rigging in connection with private or government procurement increases the cost of goods and services. Where government procurement is affected, the cost increase caused by a cartel means less available public money for other important needs.
This scheme was common elsewhere in the province, such as Quebec City. On June 27, the Disciplinary Council of the Ordre des ingénieurs du Québec (OIQ) rendered its decision of guilt and sanction in the case of Michel Labbé, who will be temporarily struck from the OIQ’s roll for a period of 20 months.
Mr Labbé was found guilty of violating several provisions of the Code of Ethics of Engineers for participating in a contract sharing scheme that made it possible to circumvent the competitive bidding process of Quebec City, tolerating said scheme and knowing that colleagues were taking part in it.
Mr Labbé’s alleged offences were committed between 2006 and 2010, while he was regional vice-president of SNC-Lavalin.
The Disciplinary Council also ordered Mr Labbé to pay all costs in connection with processing the complaint, including publication costs. The costs in connection with processing the complaint are payable within 30 days of the decision. The sanctions faced by Mr Labbé, which include being struck off the roll for 20 months and paying the publication costs, are enforceable when he registers again on the OIQ’s roll.
