Powell Group's $250M lawsuit against government to be heard in court

The Powell Group is suing the federal government for $250 million, alleging a laundry list of irregularities when Public Works awarded an IT services contract for government computer systems that manage everything from the Canada Pension Plan to Old Age Security and the government payroll.

Company alleges list of irregularities by federal government in awarding 2007 contract to CGI

A lawsuit being heard in an Ottawa courtroom today might answer seven years of questions concerning a $428-million government contract for IT services.

The Powell Group (TPG) — the losing bidder — is suing the federal government for $250 million, alleging a laundry list of irregularities when Public Works awarded the engineering and technical services contract for government computer systems that manage, for example, the Canada Pension Plan, Old Age Security and the government payment system.

The contract was officially awarded in October 2007 to CGI, Canada’s largest supplier of IT specialists. In investigating why it lost, TPG said it found:

  • It had the lowest bid by about $30 million.
  • It lost out on the technical evaluation despite a strong record as current providers of the service.
  • The technical evaluation involved a mark on how the bidder would handle the transfer from the old provider (themselves) to the winning bidder. Even though TPG would not have to transfer resources, it scored lowest on that evaluation.
  • No fairness monitor was appointed to oversee the procurement process, which is unusual in such a large contract.
  • The original technical evaluation was altered in favour of CGI and to TPG’s detriment (IBM was also bidding).
  • Public Works ignored its own rules in the transition period, and actively recruited TPG’s employees to work for CGI.
  • CGI did not have the resources to meet the contract's requirements, but planned on using TPG’s current team of resources.

None of the above allegations has been proven in court, and CGI is not party to the TPG lawsuit against the government.

“The Government of Canada awarded a contract to a company that proposed our team without permission,” Don Powell told CBC News. “The government ended up paying a higher price for the same people.

“We think it’s unlawful.”

Government says bidding conducted fairly

At the time of the transition from TPG to CGI, Powell told CBC that CGI was so dependent on using his resources that he feared many of the crucial computer functions in government were in jeopardy.

The government has maintained the bidding was conducted fairly, and that the continuity of its computer services was never threatened.

In court this morning, lawyer Peter Osborne, who is representing the government, said the 2007 contract was a departure from the way TPG had conducted the job before. He added that CGI complied with the bidding process, "and all required resources were delivered within a timely fashion. No member of the public failed to receive cheques on time." 

When Powell complained to the Canadian International Trade Tribunal and spoke to a parliamentary committee about the contract, he alleges he was punished. He and 17 others were charged with bid-rigging for a contract in another department.

A trial on that matter is scheduled for later this year.

Powell, who first started working with government computers after he joined Statistics Canada in 1968, is picking up most of the legal fees in that case because he believes the others were dragged into it because of his fight with the government.

The Crown has stated that the two cases are separate and it was a vain attempt by Powell to prove 'animus' by public officials.

CGI, the company that won the seven-year engineering and technical services contract (which is now up for renewal), has been at the centre of more than a few controversies. Its American subsidiary, CGI Federal, lost the U.S. government contract earlier this year to create the website for President Barack Obama’s signature health-care law. The botched rollout last fall created a political crisis for the president, who was intending to spread health-care coverage to millions of Americans.

CGI was also the key contractor in the government’s quest to replace its computer system for the federal gun registry. In November 2007, when there was growing alarm at the overall cost of the gun registry, the government gave CGI $10 million – after already spending $81 million – and cancelled the project.

Michael Roach, CGI president and chief executive officer, said CGI will be vindicated on Obamacare when the full story is known. The cancelling of new software for the gun registry has often been attributed to the Conservative government's desire to get rid of the registry, which it did five years later. 

Powell believes the case is significant for those wishing to bid on government contracts, and will show a lot about the integrity of the current government.

CGI was given an opportunity to comment on this story, but hadn't done so by the time the story was published.

With files from Julie Ireton