Alberta’s auditor general has found the government of former premier Alison Redford breached its own policies when it handed two flood-related, sole-source contracts to Navigator Ltd., a consulting firm with close ties to Redford, current Premier Jim Prentice, and the provincial Progressive Conservative party.

An internal report by the auditor general, obtained exclusively by CBC News, shows that during the 2013 southern Alberta floods Redford’s communications director, Stefan Baranski, “engaged” Navigator on behalf of the premier’s office with what became a $247,000 contract.

But the premier’s office “did not prepare a contract, perform the necessary due diligence on the pricing or ultimately sign the contract,” says the report.

The auditor general could not find adequate documentation to explain why Navigator was hired, or even if it had the qualifications to perform the work. Auditors also found no evidence any effort was made to contact other companies to determine if they could have done the work.

Despite this, executive council gave another sole-source contract to Navigator for $73,000 to conduct focus groups on how the public thought the Redford government was handling the floods.

Again, there was no attempt to seek out other companies.  Although department officials expressed concern the contract price was too high, executive council went ahead and signed the sole-source contract with Navigator, according to the report.

Auditors conducted a cost comparison with similar focus-group contracts and found the Navigator contract cost about $30,000 more.

Jason Hatcher, one of Navigator’s partners and a registered lobbyist, served as Prentice’s anonymous spokesman for the media before Prentice formally announced his intention to run for the Tory leadership.

Navigator’s managing partner, Randy Dawson, signed the $240,000 contract. He helped run the Tories’ 2008 election campaign, and was a member of the party’s strategy committee for the 2012 election of Redford’s majority government.  Dawson has also been directly involved in at least one of four Alberta byelections - Calgary Elbow - since as recently as last week.

Ties to Tories

Prentice has publicly said both Hatcher and Dawson are long-time friends. The auditor general’s report shows Prentice, as president of executive council, was provided with a copy of the report on Sept. 19.

In an emailed statement, Prentice said he accepted the auditor general's recommendations. He said there would be no more sole-source contracts allowed under the new Accountability Act he proposes to introduce this fall. He also promised that no firm which lobbies the government will be eligible for contracts. Navigator is now registered to lobby on behalf of several clients. 

Wildrose leader Danielle Smith finds the political connections troubling.

“I think it is pretty clear decisions were made to allow for a company that has very close political ties to the previous premier - and the current premier - to be able to get a sweetheart contract without justifying the work that they were doing,” Smith said after viewing the auditor general’s report.

Auditor General Merwan Saher also found that the Municipal Affairs department signed the first of two contracts with Navigator. That was after both the province’s Southern Alberta Flood Task Force and the Public Affairs Bureau, which Navigator was supposed to be assisting with communications work, declined to sign.

“The (Municipal Affairs) department did not have in place a written contract that established the contract deliverables, a timetable for the deliverables and a price when the work began,” the  report states.

“We were also unable to find evidence that the department benchmarked the proposed hourly rates in the contract to determine whether they were reasonable.”

No weekly status reports

Saher found Navigator actually negotiated its contract with Municipal Affairs as it was conducting the work and eventually signed it “three days before the termination date of the contract.”

The auditor general verified Navigator delivered a “communications road map, flood-mitigation communications strategy and work related to a flood symposium.”

But Municipal Affairs could not provide any of the weekly status reports Navigator was required to produce under the terms of the contract to show what work it had done and the timelines for that work.

“It seems to me that no one supervised that contract,” Edmonton Liberal MLA Laurie Blakeman said. “How does anyone track what they’re doing, then?”

For both contracts, the auditor general found Municipal Affairs and executive council breached their own contract policies by failing to document a rationale for the sole-source contracts. Auditors also discovered the departments failed to conduct required follow-up evaluation of Navigator’s performance.

“Good contracting policies are designed to ensure the procurement of services is competitive, fair and cost effective and results in the right services delivered at the right place at the right time,” the report states. “To not follow policy is to risk substandard performance by not receiving the best value for money.”

In March, the Liberals called for the auditor general to investigate sole-source contracts to Navigator after obtaining the $240,000 contract through a freedom of information request.

In response to questions from Liberal Leader Raj Sherman, interim premier Dave Hancock told the legislature Navigator had a “unique talent.” He said the awarding of the sole-source contract had “nothing to do with whom you know; it has to do with what you can do.”

Blakeman said Navigator must be a “magical” firm.

“Because they magically don’t have to qualify, they don’t have to follow the rules, they don’t have to sign the contract, they don’t have to submit the reports. It’s magical,” she said.

Peer review

In March, Hatcher told the Calgary Herald that Navigator had a peer review done of its work. The review found the firm's fees were appropriate and the company's costs probably were higher than the amount billed to the province.

Hatcher said the review showed "what we did was all above board" and he said political connections did not play any role in his firm’s selection. He said the firm was chosen because it is one of the country’s leading crisis-communications firms.

Smith said Prentice needs to distance himself from Navigator.

“This is, I think, a test of Jim Prentice’s leadership,” she said. “He likes to pretend he is going to do things differently and yet we see he is appointing friends to key positions and he still hired a company to work his campaign who are at the centre of another debacle.

“I think he should distance himself from this company,” Smith added.  “But I doubt very much that Mr. Prentice is going to take my advice on that.”

Read the report: