Electronic hiccups could cost Niagara taxpayers dearly

It’s the glitch that could cost Niagara taxpayers hundreds of thousands of dollars.

When Rankin Construction recently submitted an electronic bid to the Niagara Region for a road resurfacing contract, a small icon with a link in the top left corner to verify the company’s bid bond failed.

The entire $7.7 million bid – the lowest of three contenders over $400,000 – was disqualified.

Now the company is asking why officials in the region were unable to verify the bond using other documents provided. And he is frustrated that there is no appeal, other than the staff who made the decision to disqualify in the first place, or going to court.

“They are judge and jury, the purchasing department,” said Tom Rankin, explaining that as a citizen of St. Catharines he is not authorized to speak directly to councilors or city staff about the issue. or it is considered lobbying.

Resurfacing contract 2022-T-92 to mill and pave several roads in Niagara is not going to make or break Rankin Construction.

Rankin, CEO of the company, said it is currently doing work worth $20 million in the area alone. And he has no problem with other companies bidding.

But he fears there is a loophole in the region’s supply system that is costing taxpayers dearly and fears the same could happen to other businesses.

He recalled the time he was not allowed to address the regional council with his procurement concerns over the rebuilding of the Burgoyne Bridge – a project which saw its price balloon with a Quebec company and cost more than $100 million to taxpayers.

“It’s an ongoing thing,” he said. “They don’t change.”

Niagara Region said it could not comment on specific details related to the process or results of a tender that remains open and active.

Resurfacing is on the agenda for Thursday night’s regional council meeting, when it will be recommended that the contract be awarded to the “lowest compliant bidder”.

“The Niagara Region takes its obligations to ensure the integrity of the procurement process seriously, as there is a legal obligation to follow the process set out in our procurement documents and this ensures a fair process for all bidders” , Bart Menage, director or strategic purchasing and acquisitions, said in an email.

The Icon Verification System

In April 2020, shortly after the arrival of COVID-19, the region moved from in-person bid submissions to online auctions, seen as more accessible to a greater number of bidders allowing for increased competition.

Prior to this, companies could submit paper bonds that did not have electronic validity checks.

On June 13, the Region launched a call for tenders for the road surface contract 2022-T-92 with a closing date of July 7.

The instructions to bidders state that each bid must be accompanied by a bid bond in the amount of $200,000 and a digital bonding agreement in an electronically verifiable electronic bond format.

Wendy Wing, chief financial officer of Rankin Construction, said the electronic bond should be “verifiable and enforceable”, but there was no definition of verifiable or enforceable.

Rankin’s bid bond had in the upper left corner an icon for Xenex, a third-party digital authenticator used by the region. When someone clicks on the icon, it is supposed to show that the bond agreement is verifiable and enforceable.

“When we uploaded this, for some reason the auditability didn’t work, which can happen in electronic transmission these days,” she said.

But Wing said the bond was verifiable and enforceable in several other ways. At the bottom of the link was a digital SignatureMaster that could be read to verify the link. She said the company also attached a copy of a letter from its surety and insurance companies stating that the bond was verifiable and enforceable.

“There were signatures from the surety company and it was signed so that everything, at face value, was no different from the traditional bond that we used,” she said. “It was in the exact same format.”

The company sent a pre-award protest letter to the region, but the bid was still rejected.

“They only talk about the Xenex method, they wouldn’t look to the other methods that made bonds valid and enforceable,” Wing said, adding that she was shocked by the decision, as was the surety company.

She said it wasn’t even the link itself, just a link agreement.

“It’s a norm that in the electronic age, if you have a little problem like this, just pick up the phone and call. On so many different levels, that’s wrong and unfair. .

The next lowest bid for the road works was from Walker Construction Ltd. for $8.1 million, with Brennan Paving for $9.2 million.

Although the region does not discuss specifics, Menage said it uses the same process that many municipalities use to validate electronic bonds.

He said bidders are responsible for understanding the procurement requirements and have the opportunity to ask questions and seek clarification from the region before bids close.

“Niagara Region treats all bidders fairly and equally, subject to the same rules and evaluated in accordance with those rules based on the information provided in their bid only,” he wrote in an email.

“The tender clearly stated that the bid bond submitted prior to tender closing must be in an electronically verifiable form; accepting new or additional documents after tender closing would not protect the integrity of the process and could lead to legal challenges from other bidders.

The Niagara Region says it has issued more than 100 bid solicitations since accepting the electronic auction in April 2020 and only had three disqualifications for unverifiable bonds.

Ball in the council yard

The issue was behind closed doors at the area’s public works committee meeting on August 9.

St. Catharines mayoral candidates Mat Siscoe and Mike Britton were two of the councilors who voted for a motion that would have referred the matter to staff for a report “on the electronic bond verification process and the process of bidding regarding this.”

The motion was defeated 12-5.

Siscoe said in a text message that he could not comment on a closed-door discussion and Britton, who made the motion, did not respond to requests for comment.

Niagara Falls County Bob Gale, who also voted to sack, clashed with staff and some of his fellow councilors over supply issues earlier this term – one for processing plant biosolids management of the Niagara region’s wastewater and a second on pollution control improvements at the region’s treatment plant. in Port Dalhousie.

In the case of a multimillion-dollar biosolids contract, a $120,000 third-party report from Toronto-based forensic accounting firm Kroll Consulting Canada found evidence supporting aspects of whistleblower claims against the purchasing department, but it was just a process flaw. , which some staff members had already identified.

“The problem with this board is that it’s staff-driven,” Gale said. “They don’t represent taxpayers. I found the majority, and I say the majority because some of them get it, but too many let the staff handle them.

“People don’t understand that it’s costing taxpayers millions of dollars when this stuff happens. I’m not going to confirm or deny anything that happened behind closed doors, but how many hundreds of thousands of dollars do we have to lose before the public recognizes there is a problem in the Niagara region?

Rankin said a Toronto lawyer indicated he had a good case if he wanted to go to court. But that would take about two years, during which time the company would not be able to bid on any other contracts in the region.

He said the company wouldn’t sue a municipality anyway. He would prefer changes to the Region’s procurement process.

“It would make sense to have a third-party arbitrator to make a decision, but it’s all done by procurement,” said Mike Gallagher, vice president of estimating for Rankin Construction Inc.

“Purchasing decides whether they made a mistake or not. And I don’t know many people in this world who will publicly admit they made a mistake.

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