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N.L. government breached contract, tech company claims

Tehnoto says it has lost out on hundreds of thousands of dollars, or even millions of dollars, worth of work that went to other companies despite a standing offer agreement with the province.
Tehnoto says it has lost out on hundreds of thousands of dollars, or even millions of dollars, worth of work that went to other companies despite a standing offer agreement with the province. - Screen grab

Technoto claims it has lost out on hundreds of thousands of dollars in data wiring work

A small telecommunications and IT consulting company that was awarded a standing offer agreement in May 2016 to supply data wiring services, when needed, to the provincial government says it has lost out on hundreds of thousands of dollars, or even millions of dollars, worth of work that went to other companies.

Technoto and its managing partners Mike Labonte and Mark Downey claim the provincial government breached its contract.

The two-year Master Standing Offer Agreement signed in 2016 through the Government Purchasing Agency and authorized by the Office of the Chief Information Officer (OCIO) — and which was extended last week to 2019 — is for the supply of data wiring services to government-owned or leased buildings on the island part of the province.

In the contract, Technoto is listed as the preferred bidder, which means that when data wiring work is required, Technoto is to get first opportunity.

The contract in part reads, “the issuing authority will contact the preferred bidder first and if that vendor is not available, the next lowest vendor will be contacted and so forth. If there is no vendor available from the eligibility list to complete the work, the issuing authority may contract with others for (the work).”

Labonte said that though the contract does not guarantee any volume of work, they started to become aware a few months ago that work had been done that should have gone to their company.

“We were constantly doing large quotations (job estimates) for school rework for the Newfoundland and Labrador English School District,” Labonte said.

“We went out and conducted the site audits and we put in quotations to the school board. Nothing came from it, nothing happened. So we thought they might’ve just requested it for budgeting purposes because we knew government was tightening its purse strings.

“Sometime later, however, we found out that the work was done by another company, and that’s a breach of our contract.”

Labonte said he and Downey started digging further and contacted the OCIO.

“They said it was clearly wrong and that they would start asking questions themselves,” Labonte said.

“We contacted the school district and they told us that they were in violation of the terms of the contract and were making changes to ensure it didn’t happen in the future.”

The Newfoundland and Labrador English School District, upon request, provided them with details of work on specific schools that was done by other companies. One explanation offered by the school district, Labonte said, was that technical personnel misinterpreted wording of the standing offer agreement.

In addition, he said, contractors building new schools or doing renovations utilized subcontractors to do the data wiring work.

“Schools built under the Department of Transportation and Works utilized a subcontractor during the procurement process at those schools,” he said. “That work should have gone to us under this contract.

“That goes for any government facility or building in any department with re-work, new construction, etc. under various projects, including capital works projects.”

Labonte said they’ve contacted various government departments, including the Department of Finance and the Premier’s Office, but have not gotten a satisfactory response.

“(Finance Minister Tom Osborne’s) office told us it was a problem with the school district only,” Labonte said. “Clearly, from the information we have, it is not.”

The Telegram has requested a response from Service NL, the department responsible for the Government Purchasing Agency, but the department was unable to provide a response by Friday deadline.

Labonte and Downey, in frustration, contacted their MHA, Keith Hutchings (PC Ferryland), for help.

Hutchings reviewed the contract and the information Labonte and Downey provided, and said it appears the contractual relationship is not being honoured by the government.

“The contract they presented to me, from what I could determine, they had a two-year contract to be the first right of refusal based on their quotes to supply IT wiring and services to pretty well any government entity,” Hutchings said.

“And they indicated to me that over a two-year period they received probably less than $1,000 worth of work.

“When you think about a lot of the infrastructure built over the past number of years and just general day to day servicing, they found there was a lot of work gone through the Newfoundland and Labrador English School District, and they sought information from them as to why they weren’t chosen. Again they were left with a lot of unanswered questions, but did get an indication there could have been an actual violation in their contract.

“Then they proceeded to the finance minister, who would be responsible for the OCIO. I followed up with an email on their behalf to the finance minister and asked that it be looked into. The response I got was that this was an issue for OCIO, which was rather surprising to me that a minister who has a department that it’s under his responsibility, and there appears to be a clear violation in a signed contract, wouldn’t want to get that clarified and get the information to the individuals and their small business.”

According to government information, standing offer agreements provide government departments with goods and/or services at predetermined prices, terms and conditions.

Labonte said any job estimate quotes they provided were based upon the terms, and agreed-to prices and costs in the contract.

In the contract it also states, “all departments whose network is the responsibility of the OCIO must co-ordinate all their data wiring requests (i.e. adds, moves and changes) through the OCIO. OCIO will work with the requesting department to invoke the appropriate vendor.”

“We have determined there has been a large amount of work completed in many different departments and areas, and those departments have not been made aware that they have been in breach of the terms of our contract,” Labonte said.

“Those individual departments didn’t know this contract existed. OCIO didn’t communicate this with all the other departments and they don’t know they were in violation of this contract.

“Now we are constantly knocking on the door and wanting to do the right thing, and do what is fair, but they don’t even communicate with us.”

Labonte said their company has been negatively affected, not only through loss of revenue, but with the loss of relationships with suppliers.

“It’s not allowed us to bid on other work, that’s the most damning thing,” he said. “With the work we were expecting, we intended to hire more people, and to scale up. Now our suppliers, some of these jobs were huge and we had to order the gear right away because if we were given the go ahead we had to start right away. We had a good relationship and now that supply relationship is gone.”

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