Competition Bureau Announces Charges Against Companies Accused of Rigging Bids for Government of Canada Contracts

Backgrounder

February 17, 2009

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The Investigation

In 2005, Public Works and Government Services Canada (PWGSC) officials contacted the Competition Bureau to voice concerns about certain bidding processes, and the Bureau began an investigation.

In conducting its investigation, the Bureau found evidence indicating that bidders, in response to calls for bids for the supply of IT services to Canada Border Services Agency (CBSA), PWGSC and Transport Canada, secretly agreed in advance on the technical and financial proposals they would submit.

The Bureau’s investigation focused on 10 contracts. Eight of the contracts, worth $62 million, relate to IT services for CBSA. The other two contracts are for IT services for Transport Canada (worth $4 million) and PWGSC (worth $1 million). The bidding processes for the CBSA and PWGSC contracts were managed by PWGSC, while Transport Canada managed its own contracting process.

The evidence indicates that the bidders’ objective was to collectively win and divide the contracts awarded, while blocking competitors who were not part of the conspiracy. As a result of the agreement, the bidders were allegedly able to maximize the rates at which services were to be provided to the various departments.

Bid-rigging conspiracies are, by their nature, difficult to detect and to prove to the criminal standard of beyond a reasonable doubt. Over the course of the Bureau’s investigation, a number of investigative tools were used, including interviews and searches. Bureau officers searched 10 locations, including head offices and homes, and seized over 125,000 paper and electronic records.

In addition, the Bureau secured cooperation from applicants under its Immunity and Leniency Programs, respectively. Under these programs, the first parties to disclose to the Bureau an offence not yet detected or to provide evidence leading to the filing of charges may receive immunity or lenient treatment from the Director of Public Prosecutions, as long as the parties cooperate with the Bureau. The Immunity and Leniency Programs are among the Bureau’s best weapons to combat these secret anti-competitive agreements.

No allegations are being made against those who performed the actual work for the client departments, nor are any government employees implicated.

Bid-rigging and the Competition Act

Bid-rigging is a serious criminal offence that harms everyone but the perpetrators who cheat the system - it hurts buyers of products and services, competing businesses, and ordinary Canadians who ultimately pay the bills. Some recent studies suggest that in cases where bid-rigging occurs, the price paid for the good or service typically increases by about 20 per cent.

Under Canadian law, when bidders collude on prices, they are committing a crime punishable by jail time and fines. The Competition Act makes it is a criminal offence for two or more bidders, in response to a call or request for bids or tenders, to secretly agree that one party will refrain from bidding, or to agree on the bids they will submit, without informing the party issuing the call for bids of these arrangements. Penalties for bid-rigging include a fine at the discretion of the court and/or a prison sentence of up to five years.

Attacking cartels, including bid-rigging offences, is one of the Bureau’s enforcement priorities. The Bureau has offices across the country active in bid-rigging prevention and investigations.

In addition to its enforcement activities and in an effort to prevent and detect such criminal activity, the Bureau offers educational sessions to businesses and all levels of government about bid-rigging. The Bureau has given 170 educational presentations to procurement agencies, including PWGSC, since 2005, and continues to work with its government partners to educate them on how to detect and prevent bid-rigging.

For information on how to detect, prevent and report suspected incidences of bid-rigging, please see the Bureau’s presentation, Bid-Rigging: Awareness and Prevention.

Charges laid

Contract Numbers	Companies charged	Individual charged
CBSA 46E29-069331	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Tipacimowin Technology Inc.	-Thomas Townsend
CBSA 46E29-069503	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-David Gelineau
CBSA 46E29-069427	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-Barry Dowdall -David Gelineau
CBSA 46E29-06719	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-Barry Dowdall -David Gelineau
CBSA 46E29-06718	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
CBSA 46E29-06720	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-David Gelineau
CBSA 46E29-069505	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-David Gelineau
CBSA 46E29-069502	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-David Gelineau
PWSGC EP341-040191	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-Barry Dowdall -David Gelineau
	-Nortak Software Ltd.
Transport Canada T8080-04-0418	-TPG Technology Consulting Ltd.	-Donald Powell -Phil McDonald
	-Spearhead Management Canada Ltd.	-Susan Laycock (A.K.A. McGregor) -Marina Durward (A.K.A. Mancini)
	-Donna Cona Inc.	-David Gelineau -Barry Dowdall
	-The Devon Group Ltd.	-Ron Walker -David Watts
	-Brainhunter Inc.	-Perry Henningsen -Wendie Loudon
		-Theodore Martin -Kevin O’Rourke -Thomas Townsend -Shannon Lambert