Editorial: Contract mess leaves pile of legal headaches

While there’s been vociferous criticism of the Ontario government’s waste of hundreds of millions of taxpayer dollars through the gas-plant mess, the federal government has found itself having to shell out $40 million in damages and costs for a bungled relocation contract.

It seems governments have a lot of trouble when it comes to relocating things, whether it be gas plants or employees. In Envoy Relocation Services Inc. v. Canada (Attorney General), the federal government landed on the hot seat for favouring Royal LePage Relocation Services over the plaintiff. Among other things, Superior Court Justice Peter Annis found Royal LePage Relocation Services had insider knowledge as the incumbent that gave it an advantage in its contract bid. As a result, the court deemed Envoy Relocation Services the successful bidder for the five-year contract to provide relocation services for federal employees and awarded it almost $30 million in damages.

If that weren’t bad enough, Annis added another $10 million in costs for the government’s “reprehensible” actions in the case. Not only did the government act unfairly in awarding the contract itself, it made things worse through its conduct during the litigation, Annis found in his May 3 costs order. For example, it fought production requests for documents that “clearly should have been disclosed in the Crown’s affidavit of documents,” he wrote, noting it took a court order to get it to turn them over.

“I disagree with the defendant’s submission that there was no deliberate conduct on its part,” Annis added. “The concealment of crucial evidence that played a major role in the outcome of the case and misled the court is grave misconduct. Moreover, this conduct was intended to conceal significant deliberate reprehensible conduct prior to litigation.”

The contract itself dates back to a time when the Liberals were in power. But the Conservatives, of course, have been running things since then and must therefore take responsibility for the aggravating conduct during the litigation. In the meantime, there are new questions about problems with a subsequent contract also awarded to Royal LePage Relocation Services in 2009 as well as an appeal of Annis’ ruling by the government, the Ottawa Citizen noted recently. In addition, opposition MPs would like to know what the government plans to do to avoid problems with a future contract once the current one expires.

They’re all good questions that the government should answer as this isn’t an old problem. As the case demonstrates, it’s not just gas-plant relocations that trip up governments. The matter is evidence of yet another scandal that shows our government’s capacity to add layer upon layer to its legal headaches.
Glenn Kauth

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