The Boiler Files – Part 2

Research by Kevin Gelinas, Authored by Todd Williams and Wayne Lapaire

  1. Did Administration tell Council and the public the truth about the project in the Capital Project Update July 16, 2018? (Part 1)
  2. What was the procurement process used and why was the lowest bidder not chosen?
  3. Were all bidders treated in the same manner throughout the procurement process?
  4. Who was accountable for the faulty installation that caused a delay in the pool opening date for 2018?
  5. Why did the replacement of one boiler require a four boiler solution?

In Part 1 of this series we learned that the Town of Turner Valley has a procurement policy that is based on an inter-provincial agreement, New West Partnership Trade Agreement (NWPTA). The policy and the agreement are intended to ensure that tax dollars are spent appropriately. The focus is to be on the following:

Generally, procuring entities must ensure that covered procurements meet four principles of:

  • Openness
  • Non-Discrimination
  • Non-Circumvention
  • Transparency

It is concerning that the policy is not being followed. The procurement process in the case of the pool boiler project appears to have been circumvented and then apparently misrepresented to Council and the public in the July 16, 2018 Agenda.

So, what was the process Council used and why was the lowest bidder not chosen? In an email dated July 25, 2016 C. Beaton indicates that “Most interactions were by telephone prior and after receiving quotes.”  It seems clear that this does not follow the Town purchasing policy. Random meetings and phone conversations with no email or paper trail is simply not acceptable. Perhaps the issue is that it was unclear to administration what the cost for the project would be and so it fell under a different section of the Purchasing Policy that allowed for just 3 quotes to be obtained. So where did Mr. Beaton get the $110,000 project budget amount from? That is the amount he presented to Council on January 22, 2018.

We have an email dated December 6, 2017 from A&S Mechanical with the budget number of $97,942.60. So presumably with direction from then CAO Williamson a budget number was obtained two months prior to it going to Council. We asked for documentation on who instructed Mr. Beaton to proceed prior to the December 6, 2017 request for a budget from A&S but nothing was provided.

Our initial FOIP request was for all the procurement documents relating to the boiler procurement. We also had to make a follow-up request when we noted that some information had not been provided. After two tries we have concluded that we now have all the documentation available on this portion of the matter.

We noted that we were not given an actual quote from A&S Mechanical. The only documentation we were provided was their budget document dated December 6, 2017. If A&S was not required to provide a quote like the other contractors, then the process was not really fair and transparent to the other bidders. The screen shot of the town finance software shows that A&S was paid the exact amount of their budget document. When one contractor is given months of advance time to get ahead of your competitors is that a fair process? What if the other contractors learn that the bidding process was not fair? What should their reaction be to all this? Based on the documentation that was provided from our FOIP request, we have to conclude that the process for awarding this contract does not meet the expectations of the Town Bylaw or the NWPTA.

On March 16, 2018 Mr. Beaton sends this to the Interim CAO Heather Thomson:

Hi Heather,

I have selected A&S Mechanical to install the pool boiler. They not only provided the best pricing (before they knew what the budget was as posted in the paper), they already provide many services to the town and have proven to provide excellent service.

“Best pricing” is not accurate as discussed in Part 1 of this series. It is not a surprise that A&S hit their own suggested budget number. A&S provided the budget number to Mr. Beaton that he presented in Council. In the email from Mr. Beaton above: “They already provide many services to the town and have proven to provide excellent service.” The tax payers of Turner Valley paid roughly $30,000 more to have A&S install 4 boilers rather than having Low Cost Plumbing and Heating (LCPH) do the job with fewer boilers.

We need clarification on what, exactly, Mr. Beaton means by “provide many services”. In addition, Western Matrix Systems (WMS) also provides service to the town. When we spoke on the phone to Scott at WMS he indicated that WMS is currently working on two other town projects.

According to Mr. Beaton WMS tried to influence the process by providing “upsell” items. What would their bid have been if Mr. Beaton asked them to remove the items? On February 13 WMS asked, by email, if an Ultra Violet disinfection system was needed. Mr. Beaton simply said “no thanks” in an email response.

It certainly appears that the town staff involved may have intentionally manipulated the procurement process to award this work to a favourite contractor. It cost tax payers a significantly higher price than other options may have. The process was so murky that it is hard to even determine if all the potential providers were given the same information to build their quotes on. This seems like a convenient way to bend the bidding process toward your personal favourite rather than the bidder that would provide the best value to the community.

We suggest that this is a serious breach of trust regarding taxpayer money. When a similar situation occurred at the Provincial level as reported in August 2015 when Deron Bilous was the Alberta’s Municipal Affairs minister, he said this regarding the situation:

 “We want to ensure that…contracts go through a proper process and that we’re awarding and appointing folks based on merit, not based on who they know or if they have a membership card,”

Let’s summarize where we are by going back to our initial questions to check what we have answered.

  1. Did Administration tell Council and the public the truth about the project in the Capital Project Update July 16, 2018?

Answer: The documentation in the report to council dated July 16, 2018 was incorrect. This was either by intent or incompetence. We can see no other alternatives.

  1. What was the procurement process used and why was the lowest bidder not chosen?

Answer: There was no formal process used. It appears to have been mostly undocumented phone conversations with no stated scope of work, no supporting documentation, electronically transmitted information or website used. This did not ensure a fair and open process. The lowest bidder was not chosen. It did not follow the Town Bylaw or the NWPTA.

  1. Were all bidders treated in the same manner throughout the procurement process?

Answer: The informal method used makes it impossible to know for sure how all the bidders were treated. It is very clear, however, that one bidder was given a significant advantage and that the low bidder was not seriously considered. A&S had several months head start on their competitors in the bid process. They were not required to submit a quote and were awarded the work on a budget number built some months earlier. Mr. Beaton himself stated they are a Turner Valley frequent service provider and apparently, at least in this example, at a higher price.

  1. Why was there a delay in the pool opening date and who was accountable for the faulty installation that caused it?
  2. How did the replacement for one boiler become four boilers?

Part 3 will answer the last two questions and provide an overall summary of the importance of this information. What it means to town tax payers. We will delve into the possible causes and reasons for this staff behavior. Finally, we will offer some suggested remedies.

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