Mitel gets legal advice, argues City of Ottawa bid process is flawed

Rebuffed in its attempt to win a lucrative contract with the City of Ottawa, local telecom gear maker Mitel Networks Corp. now says the whole procurement process was unfair from the get-go. Cue the lawyers. “We have now consulted with external legal counsel and have asked them to make an assessment of the process,” said Mitel chair Terry Matthews during a press conference at Ottawa city hall today. “As a result we have formed the view that the process was flawed and as such is open to challenge.” Is this a court case waiting to happen? No – or at least, not yet, said Mitel CEO Don Smith. It would be “premature” to talk about the outcome – a new procurement process, a re-start on this specific tender, or a court case. “Clearly we have taken the steps” to get legal counsel regarding Mitel’s concerns, but the company isn’t willing to say it would go all the way and sue the city, Smith said. Mitel does plan to send letters to Ottawa city councillors early next week outlining its position, according to Matthews. And although the city was expected to consider this matter in a committee meeting next Tuesday, the company now expects the municipality to refrain from making any major decisions until sometime after the letters have gone out the door. “We value our standing in the Ottawa community and want to assure the public that our intentions are founded in a desire for fairness and nothing more,” Matthews said. It all started with a straightforward RFP about two years ago for a contract valued at between $4 million to $7 million. The city wanted a new VoIP communications system and requested bids from vendors. When the process was done, Ottawa decided on Bell Canada and Cisco Systems. That’s when Mitel’s chair got creative. Matthews wrote to mayor Larry O’Brien on April 1 offering to donate 10,000 IP phones valued at $2 million for the privilege of becoming Ottawa’s exclusive communication system provider for a number of years. Matthews said the offer was made “in good faith which we had been advised was a viable option within the procurement process.” But Ottawa’s fairness commissioner investigated, and deemed it unfair for the city to accept. Matthews said Mitel withdrew the offer as soon it found out last week – but clearly the battle is far from done. “We have no criticism of city staff or city management in their endeavours here,” Matthews said. “But it became apparent to us that there are significant elements of unfairness that need to be resolved in order to create a level playing field.” What was unfair? Matthews and Smith hinted the very premise of the procurement lacked fairness, and that part of the problem had to do with the fact the new voice and data system would have to work with certain existing voice-data infrastructure. But they wouldn’t provide details. “I think it would be inappropriate to delve into that,” Smith said. “We have had preliminary dialogue about our concerns with city management, and we’ve made a commitment to them that we’d be providing more information in very short order. We feel it’s very important to provide information to the councillors as well. We’re going to take those two steps. Clearly at that juncture there will be more information.” Matthews said that in his vision, the city would employ local technologies to demonstrate local tech talent and capabilities. But both he and Smith reiterated that Mitel’s issue isn’t that the city didn’t “buy local” this time. “This is not about that,” Smith said. “This is about a level playing field.” But Iain Grant wonders if it should be. Head of telecom consultancy The SeaBoard Group, he suggests Mitel’s current civic travails are simply another example of the company’s perpetual problem: great international reputation; no support here in Canada. “Inasmuch as you want to support local companies...the procurement process makes no sense at all,” he said. Ottawa is home to a number of technology companies, and Ottawa city council recently called for federal and provincial aid to ensure struggling local enterprise Nortel Networks stays in business. “Nortel and its predecessors have been an important part of Canada’s business community for almost 115 years,” said Kanata North councillor Marianne Wilkinson in a statement. “If they are allowed to sell parts of Nortel it would mean the loss of key intellectual property and quite possibly the end of the high tech sector in Ottawa.” Stefan Dubowski is a freelance writer in Ottawa. You can reach him via sdubowski@rogers.com.

Mitel gets legal advice, argues City of Ottawa bid process is flawed

News | May 29, 2009

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