Mitel Networks has been told that it isn't allowed to offer the city of Ottawa 10,000 free VoIP phones because it violates the procurement process.

The city of Ottawa's procurement is flawed, the chairman of Mitel, a Kanata-based high-tech firm, said Friday.

Terry Matthews' statement came after a fairness commission hired by the city ruled that an offer Mitel had made to the city went against Ottawa's procurement rules.

Mitel Networks had offered to give the city 10,000 voice-over-internet protocol (VoIP) desk phones worth about $2 million. In return, Mitel wanted to be given the maintenance contract to maintain those phones.

But the offer came after the city had already put out a call for tender and had already decided that the winning bid would go to Bell and Cisco Systems.

After Mitel had made its offer, the city announced on April 7 that it was putting the procurement process on hold.

"Mitel has consistently, throughout the process, raised concerns about this procurement," Matthews said Friday about the initial bidding process.

"We've now consulted with external legal counsel and have asked them to make an assessment of the process. As a result, we have formed the view that the process was flawed, and as such is open to challenge."

Marianne Wilkinson, the councillor for Kanata North, said she was aware that Mitel had concerns.

"They have said something all through the process," said Wilkinson.

The process, she said, is still on hold now that the Mitel offer has been ruled unfair.

"There's been no contract signed," said Wilkinson. "We need some time for city staff to go over this, to try to say what the best way is for us to deal with this situation."

Mitel officials said they have already met with Kent Kirkpatrick, the city manager, and that they're preparing to outline their position in a letter to city councillors.