a city contract worth millions was awarded to a lone bidder. montreal limited the competition, firms say
6 minute read
mayor valérie plante's projet montréal, which holds the majority at city hall, approved the awarding of the $16.9-million technology contract in a vote at city council in late august. the opposition ensemble montréal party voted en bloc against it.
pierre obendrauf
/
montreal gazette files
technology firms are complaining the city of montreal narrowed the competition when it wrote the call for tenders for a $16.9-million contract it recently awarded to a lone bidder.
the eight-year contract, won by decimal technologies inc., calls for the purchase of cloud-based software to allow the city to track its annual operating budget as well as consulting services from the firm to customize the system and integrate it with the city’s other systems.
the request for proposals (rfp) was ordered by 25 firms, but only decimal submitted a bid.
some of the firms that desisted contend the rfp requirements were unreasonable and the project was ill conceived. one of their beefs is a financial constraint in the rfp that discouraged competition because it requires the contractor to front the cost of the software to the city.
“that one i find extremely dubious,” the partner of one firm, who requested anonymity for fear of reprisals, told the gazette.
“as a businessman, i would qualify the requirement as insane.”
the businessman intended to bid, but said he gave up because he felt the rfp requirements were dissuasive.
another clause in the rfp allows the city to cancel the contract at any time with 10 days’ notice, which he said deepens the financial risk for anyone licensing software from a third-party developer because they would be left paying a licensing agreement if the city cancels.
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“you’re at the whim of (the city). of course no one answered that rfp.”
the contract includes two five-year renewal options that would extend it to 18 years.
decimal, which has contracts with numerous quebec provincial departments, has proprietary software called decimal suite. the company says on its website that it develops its own software solutions.
decimal “has been at it quite a while and they’re good at what they do,” the anonymous businessman said.
however, he added that almost no other company in the pool of potential bidders create their own software like decimal. these firms will partner with software developers to offer financial planning solutions. so the financial risk imposed by the rfp requirement to front the cost of the software would have been on any companies purchasing third-party software, he said.
there were “numerous conditions in the rfp that placed an abnormal amount of financial and/or legal risk” on the contractor, said joseph pusztai, general manager of cubewise canada limited, another company that acquired the rfp package and had considered bidding.
“the biggest sticking point for us was that as part of rfp conditions … they (the city) would not purchase any software whatsoever until the development phase was over,” said pusztai, whose company is an ibm business partner.
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“we’ve never ever seen that in any of our dealings with any rfp. there’s always a minimum amount of software that you (the client) have to purchase to get started. you can increment and add additional licences as you expand the user community. but this condition that all of the risk, all of the development effort would be borne by the vendor struck us as a very odd condition, and that was the primary reason we elected not to bid.”
the businessman who requested anonymity also noted other oddities in the rfp, including that some of the hundreds of questions bidders had to answer were “irrelevant.”
the city launched the call for proposals in january and the sole bid was opened in june after the city delayed the deadline seven times. during those five months, the city produced 14 addenda to the rfp.
mayor valérie plante’s projet montréal majority approved the awarding of the contract in a vote at city council in late august. opposition ensemble montréal party voted en bloc against it, citing the overwhelming number of companies that withdrew from bidding and the complaints formulated by several firms on a city questionnaire after they dropped out.
decimal’s $16.9-million price came in below the internal estimate of $22 million established by the city’s information technology department. the department cited the favourable difference between the estimate and the price among the reasons to award the contract. the department also noted that decimal’s bid received a passing grade from the selection committee.
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the businessman who spoke on condition of anonymity laughed when told the city had estimated the contract at $22 million.
“everyone’s bid would come in under the estimate,” he said.
pusztai said his firm had estimated around $10 million before deciding to drop out, but added there was “not a lot of concrete information to base it on.”
parts of the rfp were ambiguous and it was difficult to get answers from the city, he said. “it was a very limited amount of information that we were given to work with on all fronts — technical requirements, licensing, growth,” he said.
“i personally don’t feel anything nefarious was going on. but there is some trace of unfairness, or bias, if you want to call it that. it was not truly an open bid.”
the comments of the businesspeople who spoke to the gazette echo the complaints of nine of the two dozen firms that desisted and voluntarily completed the city questionnaire on why they dropped out. pusztai, for one, says he didn’t answer it.
“one firm considered the rfp to be restrictive due to the imposition of limited liability for the successful bidder,” the civil service report says, without identifying the firms.
“another indicated that the financial risks were considerable; another recommended two separate contracts: one for (cloud) licences and one for professional services; and another firm stated that not all (software) publishers were willing to adapt their general terms of use to customers. it would be more efficient to contract directly with the publisher.”
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members of city council’s contracts committee “expressed their discomfort with the high number of withdrawals and the reasons given, some of which called into question the city’s choices,” the committee’s report to council says.
“the explanations obtained (from the it department) failed to convince the committee, which questions whether the needs were properly targeted and whether the solution is appropriate to meet the city’s requirements and specific needs.”
however, several members of the bipartisan committee also “expressed concerns about postponing the contract and delaying the project, which is … essential to improving the budgetary process.”
the city’s current technology applications were implemented in the 1990s and early 2000s and are obsolete, the it department told the committee.
the department also said it conducted a “monitoring exercise” to choose the best option for the city and concluded that an “integrated solution” combining software acquisition and professional services was better than issuing separate contracts. separate contracts would divide responsibilities and increase project risks, it said.
the it department also said its monitoring exercise determined there was a competitive market, even within quebec, and that about a dozen suppliers could offer the solution sought by the city.
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the rfp clauses, it added, were generic, taken from a “cloud computing toolkit” and protected the city.
“it is not only the low number (of bidders) that is worrying, but also the reasons given by the firms that have withdrawn,” ensemble montréal councillor alan desousa told the august council meeting before his party voted against the contract.
the high number of companies that walked away from the contract raises concern that the city’s project is flawed, he said. there are examples of it projects that “are never on time, never on budget, and at that point, ultimately, it’s the taxpayers who pay the bill,” desousa said, citing the provincial saaqclic scandal that is under investigation.
however, projet montréal councillor magda popeanu, the city executive committee member responsible for the file, told council that the project provides “a modern, efficient integrated system in the city’s budget cycle. it also allows us to track all our projects and all the investments we make.”
“you can see i’m quite surprised — this is the same opposition that’s always asking for budget frameworks, budget forecasts and so on,” she said of ensemble montréal’s objection to the contract.
“the size of this project is extremely complex, so we needed a single firm responsible for the integrity and deliverables of the project.”
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