Minister of P3

Greg Weston of the Sun chain has an excellent piece exposing the insider deals in Public Works to sell off government buildings, which began under the Liberals, and then lease them back. Which makes about as much sense as selling your house and then paying rent.

It was only a matter of time.

The moment Stephen Harper appointed a corporate investment banker to be public works minister in charge of government contracting with thousands of Canadian corporations, political controversy was sure to follow.

The inevitable storm engulfed senator-minister Michael Fortier this past week after a company publicly complained about losing a $400-million contract bid to one of Fortier's former investment banking clients.

While there is no evidence of fiddling by Fortier or his team, the opposition parties are justifiably asking that the newly created Integrity Office review the contract award, if only to lift all suspicion from the minister and reassure the public.

For all the same reasons of probity and protecting reputations, maybe the ethics folks might also want to review what could be the largest government real estate deal in decades.

Fortier announced in March that public works is ready to sell $1.5 billion of federal office buildings that the government would then lease back for the next 25 years.

$6M IN COMMISSIONS

Last September, Fortier's department awarded the contract for the real estate sell-off to the investment banking arms of the Royal Bank (RBC) and the Bank of Montreal (BMO), a deal expected to generate at least $6 million in commissions.

The key player in BMO's winning bid, for instance, was Rick Byers, managing director of the firm's government investment banking group.

Byers is highly qualified for the job as an expert in government privatizations, having had lead roles in projects such as the $1.5-billion spinoff of the air traffic control services at Canadian airports.

But Byers also happens to have been a prominent Conservative party fundraiser and organizer who has twice run for a federal seat under the Tory banner in the Ontario riding of Oakville, and is a candidate for the Ontario PCs in the provincial election this fall.

Byers' political ties to the current public works minister go back to the 1998 Conservative leadership race when Fortier ran against Joe Clark and lost by a mile.

In 2003, the two investment bankers backed Scott Brison's bid for the PC leadership -- Byers was the campaign chairman for Ontario, Fortier assumed the same role for Quebec.

One of Brison's chief fundraisers was another highly respected investment banker named Michael Norris, then head of RBC's investment banking operations and now the firm's deputy chairman.

It all begins with the appointment of investment Banker Michael Fortier to the Senate as the unelected Minister of Public Works and goes downhill from there.

The Public Works changes now throw into disarray the procurement-reform process, which is intended to generate savings of $2.5-billion over five years. The savings have already been built into the government's books and Prime Minister Stephen Harper mandated Mr. Fortier to find the savings.

But before more reforms are made, the minister wants answers on two issues raised by The Globe and Mail this week, a senior Public Works official said: a trip to London by two high-ranking advisers that was marred by missed and cancelled meetings; and a consulting contract with A.T. Kearney Ltd. that was supposed to be worth $15-million over four years but has cost $24-million in only nine months.

“The minister has asked for a full report on the A.T. Kearney contract to see whether we obtained value for money,” the official said. “Why did we spend more in one year than what we had planned over four years? There was obviously a management problem.”

The contract was awarded in November by the previous Liberal government, but most of the cost increases occurred after the Conservatives came to power this year.

The Liberals began the overhaul at Public Works, an initiative known as The Way Forward, which is supposed to save $3.5 billion over five years. The Harper government endorsed the reforms, but Mr. Fortier took a different course from the Liberals, who considered selling much of the government's real estate holdings, and issued a tender call for advisers on how to manage the portfolio. That contract will be awarded soon.

The Tories continued the course started by the Liberals for procurement reform until Mr. Fortier faced a near revolt from small suppliers over a tender call for temporary help agencies that called for the use of reverse auctions.

It turns out that this is another case of the Government commissioning a study that it does not want to share. The study being done by party pals of the government,and Minister Fortier, who would benefit from the sale and leasing of these buildings. It replaces the previous Liberal contract with A.T. Kearny and the Tipple Rotor non report.

The two consultants hired by Fortier will profit from this for their employers, two of Canada's biggest banks, the lucrative fees they make kick backs to stalwart Conservative political operatives.

Public Works Minister Michael Fortier rejected demands from opposition members yesterday to refer a controversial plan to sell off nine federal buildings to the newly created Integrity Office.

Fortier also refused to release a report from two banks giving advice on the prospective sale and lease-back of the buildings, estimated to be worth $1.5 billion.

Those two banks would also earn a commission on the future sale of the federal buildings, Fortier confirmed to a Commons committee yesterday.

Officials would not disclose the details of that commission.

Like the guys who went to England to learn from New Labours P3 failures paid for secretly by the PMO, were hired as government consultants. And thanks to the power of the PMO, their report paid for by taxpayers also remains secret.

Hon. Michael Fortier: Let's deal with the gentlemen and the visit
to London. I had a report from the deputy on what the business trip
was about, and I'll let him talk about this in a second.
With respect to A.T. Kearney, there is no report. They were hired,
as you pointed out earlier, more than 18 months ago through a fair
RFP open process. Big numbers. I totally agree with you. Where I
come from, $19,000 is a lot of money. The original contract was for
$19 million with the ability to go to $24 million. The media reports
talk about the contract being seven or eight or nine or ten times what
it was supposed to be. The reality is it was signed by the former
minister, and the number that he authorized is the number that was
spent.

Ms. Peggy Nash: Excuse me, Mr. Minister, you say there was no
written report that came out of this $24 million contract. What did
come out of it?

Hon. Michael Fortier: They were advising the department in
three or four specific areas. One was to actually look at these savings
and see how they could be generated. They were looking at $20
billion of procurement through 50 to 60 departments, and they were
helping the department literally collect data and strategize on the
reform itself.

The reform is not just about saving money. We've talked about it.
It's about proceeding with procurement in a smarter and more
transparent fashion.

Ms. Peggy Nash: When there were reports of the two
representatives who spent a week in London and cancelled
meetings—I don't know if they actually succeeded in meeting with
anyone there—the media reported that you had asked for a report.
Did that happen?

Hon. Michael Fortier: I spoke with the deputy. The deputy
reported to me on what the situation was.

This is not "New", the Harper Government of Canada really is becoming all too tiresome in its predictability for autarchy and secrecy.

During an appearance before the Standing Committee on Government Operations and Estimates, the Minister refused repeated requests by opposition Members of Parliament for an investigation into this apparent conflict of interest. The review would be conducted by the Public Service Integrity Office, an office created by the minority Conservative government as one of its new "accountability" measures.

"This government talks a good game about accountability, but they apparently forgot to send the memo to their Senator-Minister, who apparently believes he is above oversight," said Mr. Rodriguez.

Public works minister says he had no role in handing out contract

Kathryn May, The Ottawa Citizen

Published: Wednesday, April 25, 2007

Public Works Minister Michael Fortier says he won't ask the integrity office to investigate complaints that he was in a conflict of interest over the awarding of a $400-million technology contract because he has never been involved in the selection of bidders since he took the job.

"I have not directly or indirectly been involved in the selection and awarding of any contract, not just this contract, since I was sworn in as minister of public works in February 2006," he told the Commons government operations committee yesterday.

Last week, Ottawa-based TPG Technology Consulting raised concerns that Mr. Fortier may be in a conflict of interest over a $400-million contract it lost to competing bidder CGI Group Inc., for which Mr. Fortier worked during his previous career as an investment banker. TPG alleges the bidding process was stacked in favour of CGI, even though it offered the lowest price.

TPG Concerned that Minister Fortier Doesn't Support an Investigation into Suspicious Contract

    OTTAWA, April 25 /CNW Telbec/ - TPG Technology Consulting Ltd.'s
president, Mr. Don Powell, is concerned that a number of recent statements
made by Mr. Michael Fortier, Minister of Public Works and Government Services
Canada (PWGSC), suggest the Minister is turning a blind eye to the
circumstances surrounding the pending award of a $400 million contract for
technical services. Otherwise, his department would be more willing to
investigate the potential conflicts of interests and possible breaches of
protocol surrounding this process.
"The Minister keeps stating that nothing went wrong and that he doesn't
want an inquiry into the process, but an inquiry would give other individuals
the opportunity to come forward and state once and for all what happened,"
said Mr. Powell.
"We thought this new government would welcome whistle-blowers and be
ready to investigate their claims to ensure the fairness and transparency of
the process, but the opposite seems to be happening!" Mr. Powell said.
"How can they say there's nothing wrong without even looking at what we
have? We thought the 'shoot, shovel and shut up policy' wouldn't be part of
the Conservative's agenda."
Mr. Powell said PWGSC has not seen the evidence obtained by TPG, but has
worked hard to discredit TPG's concerns.

Where is the accountability?

Mr. Powell states that he is ready to divulge information to an
independent body that will offer protection to involved individuals so that
they can feel safe in coming forward to share their concerns about this
process.
An independent inquiry is the only way to determine whether this contract
process was conducted in a fair, open and transparent manner.

See:

• Mr. P3

• Super P3

• State Capitalism By Any Other Name

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