The Quebec government was forced to pay $5 million in damages to a company involved in a tender call for Montreal's Palais des Congrès a decade ago, according to an investigation by CBC's French-language service.

Quebec spent millions of dollars on an extension for Montreal's biggest convention centre, the Palais des Congrès. (Ryan Remiorz/Canadian Press)The province paid out damages to Axor, a construction company that was not awarded a lucrative $200-million public works contract to expand the downtown convention centre in 1999, despite being the leading bidder during the tender.

The news comes as the provincial legislature is considering stricter rules for public works contracts.

Former premier Lucien Bouchard and the Parti Québécois were governing the province at the time of the Palais des Congrès debacle.

Three firms — Axor, Pomerleau and Gespro — were trying to land a contract to renovate and expand the convention centre.

Axor was the front-runner after the first round of tenders, but Quebec's public lands agency launched private contract talks with Gespro, another company that bid on the work, according to Radio-Canada's investigation. The head of the agency at the time denies any parallel talks were held.

François Lebrun, the Palais's CEO at the time, found out about the private negotiations with Gespro and insisted the government hold a second call for tender because he was worried about being sued.

The contract was still awarded to Gespro, prompting Axor to sue Quebec.

The manoeuvring is "stunning," according to Roger Nicolet, former president of Quebec's order of engineers, who has years of experience with public contracts.

A government can't launch sideline negotiations in the middle of a tender process, he told Radio-Canada.

"And the fact that there were, or there seem to have been, negotiations would indicate a form of prejudice on the part of the party handing out the contract," he said.

Radio-Canada's findings follow a string of revelations about how for years, the bidding process for public works in Quebec was manipulated to permit a small group of firms to land contracts at inflated prices.