The Canadian government still does business with companies that were involved in criminal bid-rigging schemes.

In one case, federal departments have dished out more than $150 million in contracts to a company after its part owner and senior executive pleaded guilty to bid-rigging.

In another, the government has ongoing contracts with a convicted consulting firm it has blacklisted, and has recently invited the company to bid on federal work worth millions.

The two firms have tallied close to 500 contracts for government consulting, IT services and other work since the corporate wrongdoing came to light, an ongoing Star investigation into federal contracts has found.

Anti-bid-rigging law exists to stop companies from secretly colluding on bids or tampering with a tendering process to guarantee certain firms win contracts.

At a hearing last July where the Ottawa-based Corporate Research Group pleaded guilty to bid-rigging, the Crown prosecutor explained the importance of coming down hard on companies that commit corporate crime.

“These conspiracies are serious offences,” said prosecutor Guy Pinsonnault. “The courts have repeatedly emphasized that a fine in criminal conspiracy cases must not become a mere licence fee or a cost of doing business — or of doing business illegally.”

Among the departments giving these firms contracts is Public Works and Government Services Canada, the government’s central purchaser and accountant.

The department says it has been cracking down for several years on taxpayer-funded contracts going to companies that commit crimes.

Recently, Public Works toughened its existing procurement policies, removing an exemption that allowed companies that had engaged in bid-rigging from simply paying a fine before queuing up to bid for more department work.

“Since 2007, strong rules have been brought into effect to ensure companies that want to do business with the government have a high degree of integrity and respect for the law,” Public Works spokeswoman Lucie Brosseau said.

These rules, however, allow Veritaaq, an Ottawa-based IT consulting firm, to continue picking up lucrative government contracts.

In February 2009, Shannon Lambert, the company’s part owner and vice-president of business development, pleaded guilty to rigging a 2005 bid to supply IT services to Transport Canada. The rigging was part of a larger alleged scheme involving $67 million in federal contracts.

In exchange for her co-operation and upcoming testimony against the other companies and individuals charged in the case, the judge granted Lambert an absolute discharge.

She paid a $5,000 donation to a charity. A court order prohibited the company from committing any bid-rigging for 10 years.

“We were part of a consortium of companies and we failed to disclose this in our bid, which we were required to do,” Veritaaq’s president, Paul Genier, told the Star.

“The resulting outcome was reflective of our level of involvement in the consortium as well as our co-operation and openness with the authorities.”

Since Lambert’s plea, Veritaaq has received close to 500 federal contracts, according to contract disclosure records analyzed by the Star.

Close to half of those contracts were awarded by the Canada Revenue Agency, which included a $512,000 consulting gig beginning March 2012 to analyze and develop a tax-free savings account software application.

“The individual in question was granted an absolute discharge,” revenue agency spokesman Philippe Brideau said of Lambert.

“(Public Works) procurement integrity framework indicates there must be a conviction in order for a supplier to be ineligible to receive a contract or to have their contract terminated.”

Herein lies a loophole with Public Works’ procurement policies: despite admitting to an act the government says cheats the system and can harm taxpayers, Lambert’s absolute discharge allows her company to continue collecting government contracts.

“It’s a fair question to ask: If Lambert did something wrong, why is she still able to participate in contracts for the federal government?” said Serge Buy, a government relations specialist who has worked as a spokesman for one of the companies accused in the alleged scheme, TPG Technology Consulting.

Donald Powell, the director of TPG, describes the bid-rigging charges as a political attack attempting to derail an ongoing lawsuit he has against Public Works.

Powell is suing the department for $250 million. He alleges another company with ties to a former Public Works minister was inappropriately awarded a lucrative contract once held by Powell’s firm. In April, Powell’s lawyers appealed a 2011 decision to dismiss the suit.

In an interview, Powell said he thinks Lambert made a calculated decision that allowed her company to continue getting government work.

“You’re put into a position: You pay a trivial amount of money, basically, and you walk away scot-free or you risk it all by fighting it (in court),” Powell said.

The case against Powell, his company and others is expected to go to trial later this year.

Genier, Veritaaq’s president, said his firm withdrew from the accused consortium after realizing there were problems with its 2005 bid. When later contacted by Competition Bureau investigators, the company co-operated, he said.

“We acknowledge that we made a mistake. We owned up to it, we took accountability for it, and we’ve put in measures to make sure a situation like this never happens again,” Genier said.

Those measures include audits by a law firm to ensure Veritaaq’s bidding practices are compliant with the Competition Act, as well as establishing a board made up of senior industry executives to act as advisers.

Since Lambert pleaded guilty, Veritaaq has received contracts from the provincial government, the Star found. In Ontario, the firm has received 54 government contracts worth a total value of roughly $5 million.

The provincial government was not aware of the company’s previous involvement in a bid-rigging scheme, said a spokesman for the Ministry of Government Services, which sets the procurement policy framework for all provincial ministries. The government does security screening of each contracted employee that actually performs the work, spokesman Jason Wesley said.

Veritaaq informs buyers of Lambert’s guilty plea “where there is a requirement to disclose this information,” Genier said, adding Lambert’s current position involves strategic planning and the management of employees. She is not a consultant nor does she perform work on clients’ sites.

In 2012, Ottawa’s Women’s Business Network named her its corporate business woman of the year.

The Corporate Research Group, whose website says it’s backed by a network of more than 850 consultants, had long held a firm grip on providing consulting for Public Works’ vast real-estate portfolio.

Then, in 2007, Public Works decided to split up a standing offer for property consulting services previously held by CRG to three different companies.

What followed was what a judge would later call “your classic bid-rigging case”: the Corporate Research Group teamed up with another company, and the two firms submitted separate bids without telling the government of their business agreement.

The two companies ended up netting 80 per cent of the work, worth more than $1 million, according to Public Works.

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In July, the company pleaded guilty to bid-rigging. It provided witnesses and documents to Competition Bureau investigators in exchange for a more lenient sentence. It was fined $125,000.

The bid-rigging wasn’t the only time the consulting firm had been a source of trouble for Public Works.

The company and its president, Brian Card, were at the centre of an internal investigation into Public Works’ former assistant deputy minister in charge of its real-estate management division that found “there was favouritism in awarding (the) firm contracts.”

An audit of Public Works contracts awarded to CRG found the company kept insufficient time sheets to justify its invoices for five contracts. The firm voluntarily repaid the department more than $303,000.

CRG’s president Card declined to comment on this story through a lawyer, Jeff Saikaley, who said Card is “currently writing a book that will address the issues you have raised and others.”

When the company pleaded guilty, it was expected to be little more than a costly interruption before business as usual.

Corporate Research Group had participated in the Competition Bureau’s leniency program. If a company comes forward early in a bureau investigation and agrees to plead guilty and co-operate, investigators will recommend a lighter sentence. The program is an important weapon to combat secret, anti-competitive business cartels, the bureau said.

At the time, Public Works’ procurement policies allowed co-operative companies like Corporate Research Group to continue getting contracts, despite their corporate crimes.

In the 102 days following its guilty plea, the firm got eight government jobs worth $566,000.

Then the rules changed.

In November, Public Works scrapped its exemption for companies that participated in the leniency program.

While Public Works says the policies apply to only its procurements, several departments say they use its rules as guiding principles.

The policy change is supposed to mean CRG can no longer get government contracts unless there are exceptional circumstances, such as it being the only company capable of doing the work.

However, the company has since received three government contracts worth close to $200,000.

Defence Construction Canada, a Crown corporation that oversees procurement for Department of Defence infrastructure projects, gave the contracts. One — $60,576.93 for market and industry analyses — was given as recently as Feb. 22.

The contracts were part of standing offers awarded to the company in August 2010, said Melinda Nycholat, Defence Construction’s vice-president of operations.

“When the standing offers were put in place in 2010, DCC had no legal grounds for rejecting CRG’s tender,” she said. “No further calls-ups will be made under these standing offers.”

The government is legally obligated to honour contracts made before the rule change, Public Works spokeswoman Lucie Brosseau said. Any ongoing deals between Public Works and the Corporate Research Group will be subject to “heightened scrutiny and oversight . . . for the remainder of the contract to protect taxpayers’ interests.”

Yet since Public Works toughened its policy, both the department and the Department of Defence have invited Corporate Research Group to bid on more than 10 new contracts valued in the millions.

A February procurement notice asked CRG and 44 other companies to submit an offer to work as an “organization development consultant to assist with the implementation of a business plan for Public Works.”

Tender records do not show whether the firm bid on the work.

Public Works’ Brosseau said the department is updating its standing offers and supply arrangements and expects Corporate Research Group will be off its lists of pre-qualified companies by October.

The company has been ineligible to submit bids since November 2012, Brosseau said.

“(Public Works) no longer does business with individuals and companies found guilty of offences under integrity provisions unless exceptional circumstances require it for the public interest,” she said.

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