The Department of Business New Brunswick turned to a team of outside consultants to kickstart economic development work in the north, even though it has its own staff doing that work, CBC News has learned.

Since December 2007, the department has signed two contracts worth more than $550,000 combined with Roc Consulting Group to bolster the province's efforts to expand economic development opportunities, according to hundreds of documents obtained through the Right to Information Act.

And Business New Brunswick Minister Greg Byrne has confirmed that RCG's current contract has been extended for four months to focus on the province's economically challenged northern region.

In arranging the contracts, worth $110,000 and $448,000, the departments of Business New Brunswick and the Regional Development Corp. twice got approval to override the public tendering process to give the work directly to RCG.

'The standard approaches and sectors for investment attraction have been utilized for some time with un-spectacular results.'— Business New Brunswick memo in December 2007

Business New Brunswick's investment and export development wing has roughly 50 employees, but a spokesman said about 14 staff are dedicated to investment attraction. The department appears to have been underwhelmed by staff traditional efforts to generate investment.

"The standard approaches and sectors for investment attraction have been utilized for some time with un-spectacular results," the document said.

Business New Brunswick argued to hire the consultants in December 2007 despite a hiring freeze, arguing that foreign business attraction was an essential element to the government's 20-year self-sufficiency plan and it needed to do better than its efforts to date in contracting lead generators, management changes and recruiting new staff.

"If the request is not granted, otherwise applicable investment opportunities will not be identified, jobs will not be created and the division's objectives will not be met," it concluded.

Consultants brought 'unparalleled' knowledge

The economic crisis in the north, combined with the opportunity to hire four consultants from RCG who appeared to have a wealth of experience that could not be found elsewhere was, for Byrne, reason enough to bypass the public tendering process.

"I see this as more than business consulting. I see this as a team of individuals with a very specialized skill set with a knowledge base that is unparalleled," he said.

The four consultants listed on the contract are all former senior bureaucrats in the Frank McKenna-era Department of Economic Development.

Brian Freeman, a partner with Roc Consulting Group, served as a former assistant deputy minister at the department; Mike MacBride was a director; Larry Armstrong was a deputy minister and Jim Scott was a manager of investment.

Freeman, MacBride and Scott all served in the department under then-deputy minister Francis McGuire, who is now the chairman of NB Power and has been a key adviser to Premier Shawn Graham and co-author to his government's self-sufficiency agenda.

The four consultants were given offices inside the government, BlackBerrys and are also listed as project executives within the department's staff directory.

When the second contract was being hammered out in June 2008, the province again sought approval to ignore the public tendering process, which would have permitted other companies to bid on the work allowing the government potentially to find a cheaper deal.

This time the rationale for sole-sourcing the contract was outlined in a June 18 memo to the Department of Supply and Services by Brian Dick, deputy minister of Business New Brunswick and Bill Levesque, president of the Regional Development Corp.

"The nature of this agreement requires the urgent need of the services of a consulting firm that is specifically and uniquely experienced and has direct knowledge of the history and the economic challenges of northern New Brunswick," they wrote.

"The urgency evolved as a direct result of the closure of three large mills in the pulp and paper industry along with the downturn in the economy that has a significant impact on the northern regions."

Smurfit-Stone closed its containerboard mill in Bathurst in 2005, throwing 267 people out of work.

In Miramichi, UPM, which was the northern city's largest employer, closed its mill in December 2007, leaving more than 500 people out of work.

Dalhousie, the province's northern-most town, lost 330 jobs when the AbitibiBowater mill shut its doors at the end of January 2008. The news only got worse for the community of 3,600 when Olin Corp. closed two of its chemical plants in March, eliminating another 100 jobs.

Contract extended for 4 months

Business New Brunswick had money left in the budget when the contract would have expired at the end of December so the contract was extended for four months or until the $448,800 budget has been tapped out.

The province actually signed a $1.3-million contract purchase order that would extend out to June 30, 2010, just in case the province wanted to renew the contract.

When the government first reached out to RCG in December 2007, the consultants were asked to generate a series of ideas the province could target for its investment development initiatives.

But as economic news continued to worsen, especially in northern New Brunswick, the Liberal government felt pressured to act quickly to generate jobs. The province's business minister said that is why RCG was brought back under the unique contract.

"Certainly the north has undergone considerable challenges. For us we need to be able to respond quickly. It takes time to develop these opportunities and turn them into realities," Byrne said in an interview.

"We needed to hit the ground running. We needed to have a team dedicated to developing leads to the north."

BNB sidesteps tendering process for contracts

There was internal concern over the public perception of such a large contract being funded without taking the normal course through the Public Purchasing Act.

There is a list of exemptions that departments can use to bypass the tendering process: the service is required because of an emergency or urgent situation; calling for bids would compromise confidentiality; the contract is for less than $100,000 or the choice of vendor "is limited to one or a very limited number of individuals."

Under the terms of the agreement, RCG was to have developed about 270 leads at this point. There have been between 230 and 235 leads entered into the province's database, a dozen have been boosted to the project status [shy of the 40 outlined in the deal], and two or three have what the department believes to be a high potential for closure.

'We want to diversify the economy and bring new industry to the north. They have worked on very specific projects that could be sustainable industries for the north.'— Business New Brunswick Minister Greg Byrne

"We are very pleased with the progress they've had and of course, they are working very closely with the investment team at Business New Brunswick," Byrne said.

With funding still available for the contract, Byrne said the four-month contract extension will have the consultants look at modular component construction in the north. The companies would build large pieces for mega-projects, such as oil refineries, power plants and aircrafts around the world.

The consultants argued the north's under-utilized ports and the international shortage for these component manufacturers "is seen as a New Brunswick advantage."

"We want to diversify the economy and bring new industry to the north. They have worked on very specific projects that could be sustainable industries for the north," Byrne said.

"Modular component construction, for example, is an area they've been working very strenuously on. This is an area that we think is a great opportunity for the north."