Montreal’s Inspector General blasts STM for contract breaches — again


STM employee did not disclose he was married to employee of firm awarded contracts

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Montreal’s Inspector General has once again rapped the knuckles of the Société de transport de Montréal for ethical breaches in the awarding of consulting contracts.

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In a report tabled Monday in city council, Brigitte Bishop said the STM committed several breaches in awarding three consulting contracts valued at $1.7 million to an outside firm to manage group insurance plans. She also faulted the transit authority for the failure of one of its employees to disclose that he was married to an employee of the firm.

It was the third time in eight months that Bishop had hauled the STM on the carpet over its practices in awarding and managing contracts.

On March 9, the STM canceled the last of its three contracts with the firm, valued at $862,312.50, following an audit by its own auditor and the investigation by the Inspector General.

Bishop did not name the firm, saying her investigation did not find that it had violated professional norms.

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In 2016, the STM awarded a $574,875 contract to the firm for consulting work on the management of employee pay and benefits.

In 2018, he hired a project manager specializing in employee benefits to oversee implementation of the contract. The project manager was married to a highly placed employee of the firm.

The following year, the project manager proposed that the STM could substantially reduce the cost of its group insurance plans by merging seven contracts into a single call for tenders. The transit authority gave him the green light to do so.

But in July 2020, the employee informed the STM that he had learned that the change would generate additional fees totaling $263,000, plus taxes, thus increasing the total cost of the contract by 50 per cent. At that point, the original $574,875 had already been spent.

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Bishop said the STM violated several guidelines in its response to the additional costs. They include:

  • Increasing the cost of the initial contract by $172,462.50 to $747,337.50, including taxes, inDecember 2020;
  • Splitting the work and awarding a second contract to the same firm totaling $103,477.50, including taxes, in February 2021;
  • Publishing a new call for tenders in April 2021 that unduly restricted competition;
  • The STM project manager’s failure to formally declare to upper management that he was married to an employee of the firm;
  • The STM’s failure to implement supervision measures because of the apparent conflict of interest;
  • Agreeing to pay additional fees over and above the original contract; and
  • STM employees’ failure to fully inform the transit authority’s board of directors of the situation before the board approved the amendments to the initial contract and awarded the new contracts.

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Last September, Bishop blasted the transit authority for increasing the cost of three contracts it had awarded for goods and services by respectively 62 per cent, 96 per cent and 336 per cent.

In February, she again slammed the STM over contracts it had been awarded for the construction of its new Bellechasse bus garage.

She said the transit corporation did not show good faith with construction firms that bid on a $1.7-million contract for formwork for the underground garage because it was already negotiating a price with construction giant Pomerleau for a subcontractor to do the work. Bishop said the violations would have warranted canceling the contracts had the work not already been carried out.

Ensemble Montréal leader Aref Salem said the opposition was “scandalized by the report.”

“How was the STM able to let a project manager lead so much in the preparation of calls for tenders while his spouse was employed by the winning company and ignore this potential conflict of interest?” he asked, calling for closer supervision of the awarding of contracts.

Bishop said the STM had acknowledged that it violated the norms and promised to implement an action plan to correct the situation.

Bishop vowed to “make sustained verifications of its implementation.”

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