Ruling over translation contract could cost CRA millions

The Canada Revenue Agency may have to pay millions of dollars to an Ottawa translation firm over a tendering process characterized by the Federal Court of Appeal as "exceptionally compromised."

Trade tribunal, appeal court find 'deep flaws' in tax agency's tendering process

Masha Krupp says 'irregularities' in Canada Revenue Agency's procurement process cost her translation company millions of dollars. CRA has been ordered to compensate Krupp and retender the translation contract. (Julie Ireton/CBC)

The Canada Revenue Agency (CRA) may have to pay millions of dollars to an Ottawa translation firm over a tendering process characterized by the Federal Court of Appeal as "exceptionally compromised."

Masha Krupp, whose company Masha Krupp Translation Group (MKTG) has about 90 full-time employees and another 100 contractors, said the experience was a major setback for her firm, and ultimately a waste of taxpayers' money.

They put my entire business at risk that I had built with my staff over 25 years.- Masha Krupp, MKTG

"They put my entire business at risk that I had built with my staff over 25 years," said Krupp. "I had to borrow money from friends, from family, I remortgaged my home because I was not willing to put the jobs in jeopardy."

Krupp's problems began in September 2016 when CRA informed her she'd failed to win a two-year contract worth approximately $10 million. With five more optional years built into the terms, the contract was potentially worth $35 million.  

The contract was instead awarded to CLS Lexi-Tech, part of a U.S. conglomerate with Canadian headquarters in Moncton, N.B.

Krupp said she was surprised and confused by the decision, since for more than 12 years her firm had been successfully performing the work for the tax agency.

"We have good experience. We have good staff. We do good work. I price it right," said Krupp, whose company currently has translation contracts with other federal departments including courts administration, finance and public safety. "My proposal was pretty sound. I normally place first in all the big contracts."

Evaluation showed 'irregularities'

As soon as she found out she'd lost the bid, Krupp asked for a debrief from CRA. Right away, she said, she found irregularities.
The Canada Revenue Agency has been ordered by the Canadian International Trade Tribunal and the Federal Court of Appeal to pay MKTG for lost income, and to retender its multimillion-dollar translation contract. (Sean Kilpatrick/Canadian Press)

"When I got my evaluation ... the whole process was flawed," Krupp said.

Krupp decided to challenge the decision before the Canadian International Trade Tribunal (CITT), a fight she characterized as "David versus Goliath."

The evaluation proved Krupp's firm had indeed come in with the lower bid, but in her submission to the tribunal, she claimed CRA evaluators had introduced "subjectivity" into the process. 

The tribunal investigated and in March agreed with MKTG, determining that "CRA evaluators acted improperly" during the reference check portion of the tendering process.

"The Canadian International Trade Tribunal recommends, as a remedy, that the Canada Revenue Agency retender the procurement," stated the decision.

The tribunal also recommended Krupp's company be "compensated for lost opportunities in the amount of the profit that it would reasonably have made during the time that CLS Lexi-Tech holds the current contract and until such time as the retendering is complete."

CRA appealed tribunal ruling

But CRA appealed the tribunal's decision to the Federal Court of Appeal.

On Nov. 22 the appeal court upheld the tribunal's decision and dismissed the appeal, noting the original ruling was "justified, transparent and intelligible.

"The CITT found that MKTG's complaint was valid because of deep flaws with the procurement process," according to the court's decision.

Now Krupp's lawyers must work out a settlement with the Canada Revenue Agency.

"The clock is still ticking based on the ruling," said Krupp. "When we did the numbers with my accountant [it] added up to a few million dollars." 

Tax agency responds

In a written response to CBC's request for an interview, Canada Revenue Agency said: "The CRA conducts its procurements in a fair, open, transparent, and cost-effective manner and in accordance with Agency policies, codes of conduct and government obligations. The Agency has full authority to contract and develop its own contracting policy framework, while considering the Treasury Board policies and regulations."

CRA said it will review the court order and "will address the CITT recommendations."

But Krupp said she hopes CRA will also conduct an internal investigation to find out what exactly went wrong with this procurement process.

She said she'd like to see more oversight, such as a fairness adviser, to oversee contracting.

"When you're offering multimillion-dollar proposals and spending that kind of money — taxpayers' money — there has to be accountability, and at the very least, an independent fairness evaluator. Had there been one in my case, this wouldn't have happened," Krupp said.
Masha Krupp must now negotiate with CRA to decide on the amount the tax agency owes her firm. (Julie Ireton/CBC)

About the Author

Julie Ireton

Senior Reporter

Julie Ireton is a senior reporter who works on investigations and enterprise news features at CBC Ottawa. You can reach her at julie.ireton@cbc.ca