Angry in the Great White North

Now that David Smith and Frank Brazeau have testified in front of the Public Accounts Committee, the sheer crappiness of the contract award system is apparent:

David Marshall, the deputy minister of Public Works, told the Commons public accounts committee yesterday that managers in the RCMP and Consulting and Audit Canada (CAC) "rigged" contracts to ensure work was directed to specific suppliers, effectively circumventing the government's competitive bidding process.

"I just think the whole thing stinks, to tell you the truth," Mr. Marshall told MPs.

Mr. Marshall said contracts look "rigged" when the RCMP requests specific suppliers for the work and when their names are put into the database of consultants they are "magically" selected.

"The next thing we know the person's name put into the database, is fished out and given the contract. ... I mean that's rigged in my terms. There is no other way to put it. Everyone is dancing around and saying I am not an expert, but, hey you know, it's clear, this is not a properly managed process and it should never have happened," said Mr. Marshall.

And the role of Abotech was to enter these magically selected names in the first place, and provide the means by which to get around the rules that would prevent giving contracts to these former civil servants:

A key witness was former Liberal MP David Smith who found himself at the centre of a storm when the audit found his consulting company, Abotech Inc., was used as a conduit through which government departments could hire the consultants they wanted for contracts and avoided the competitive bidding process.

Many of the contracts involved retired public servants who, under the government's cooling off period and conflict rules, couldn't work for the government without affecting their pensions. Instead, CAC would direct the contract to Abotech as a middleman, which would collect a fee and turn it over to the contractor doing the work.

Using Abotech as a placement agency to "launder" retired public servants is a way of getting around rules to prevent former bureaucrats from collecting full pensions and salaries at the same time.

What typically happened is a consultant expecting a forthcoming contract would be referred to Abotech by CAC, usually through Mr. Brazeau. Abotech didn't know the consultant or have any relationship with the department.

Abotech would then take on the consultants as clients and enter their names in the CAC database. When bids were called, Abotech would submit a proposal. When it won the contract, Abotech turned it all over to the consultant and department. The consultant would invoice Abotech, which in turn billed CAC and collected a markup of between five and 10 per cent. CAC also got a 15-per-cent fee for handling the award of the contract.

Although rules were broken, Mr. Marshall stressed his department found no evidence of fraud, bribes or kickbacks.

David Marshall is talking abut his own department, of course, when it comes to fraud, bribes, or kickbacks. There is still the issue of the 10% markup David Smith was pocketing for recommending a "consultant" who was otherwise a complete stranger to him, 10% that consisted of taxpayer's money the RCMP was supposed to be using to manage the pensions of retiring Mounties.

Public Works has already refunded $200,000 to the RCMP that PWGSC "earned" for managing the RCMP pension contracts. Negotiations are ongoing concerning the refund of the remaining $450,000. Based on what we know, David Smith and Abotech pocketed upwards to $500,000 for the part he played in the contract pipeline.

In any case, when it comes to frauds, bribes, and kickbacks, only a criminal investigation would have the powers to look into private financial records. But then there was the RCMP raid that allegedly took place at Frank Brazeau's house.