Contract extension shut out leasing bidders: Lastman

TORONTO — Companies that bid on the City of Toronto’s Y2K project may have lost out when a last-minute change was made to the length of the contract, the Toronto Computer Leasing Inquiry

heard Monday.

The inquiry’s goal is to determine why the city ended up spending more than $80 million for a contract originally valued at $43 million for hardware and software.

Commission counsel Ron Manes questioned Toronto Mayor Mel Lastman about a report from city staff that recommended MFP Financial Services Ltd., which won the contract, deliver its services for three years.

A later recommendation from councillor Tom Jakobek altered the original staff report to ask the lease be “”flexible enough so that the life span of equipment be extended beyond three years.””

Lastman, who said he was not present at the meeting as he was dealing with a crisis related to the Caribana festival at the time, said he doesn’t know why Jakobek’s motion was made.

“”What does more than three years mean? Is that four years, five years or 10 years?”” he said. “”It doesn’t make it fair to the other bidders because they may have come in at five years at a lower price.””

Original bidders were not asked to resubmit their proposals once the change was made, Manes said. “”Would good government have been to redo (them)?”” he asked.

“”I agree,”” Lastman said.

Lastman, who admitted he does not use his computer at City Hall, said he relied heavily on staff to make sure the city got what it needed at a good price when it sought requests for proposals prior to Y2K. In fact, when the City’s request for quote (RFQ) was issued in late May 1999, the problem wasn’t even on his radar. “”It was not discussed,”” Lastman said.

But on July 20,1999, the mayor was briefed on a report with respect to the leasing deal by Wanda Liczyk, then the city’s chief financial officer and treasurer, and Jim Andrew, executive director of information technology.

“”When I go through the agenda my staff said, ‘This is the lowest quote and the lowest qualified quote.’ I rely on the professionals — I have to,”” said Lastman.

The mayor confessed he did not fully understand the ramifications of Y2K, which was why at one point he said he turned to the IT industry’s best-known chief executive.

“”I even tried to get an appointment with Bill Gates to ask, off the record, what’s going to happen in one day, because I just couldn’t figure it out,”” he told the inquiry.

Commission counsel also asked about city staff involvement with MFP sales representative Dash Domi, brother of Maple Leaf right-winger Tie Domi. Manes read a memo from senior MFP staff indicating Domi had “”developed a strong relationship with IT staff and senior management and key decision makers in the megacity.””

“”Did you know Mr. Jakobek had been frequently entertained by Mr. Domi?”” Manes asked.

“”No, not until this all came up,”” Lastman said.

During his testimony, Lastman also described a Toronto city hall where chaos reigned as creation of the megacity was forced through following his election to office in 1998. In that time, Lastman’s budget grew to $6.5 billion, compared with $350 million when he was mayor of North York.

The inquiry, being held at the East York Civic Centre, is expected to continue for more than two months and hear over 40 witnesses. Commissioner Denise Bellamy said Monday a second inquiry – The Toronto External Contracts Inquiry — is taking place parallel to the Toronto Computer Leasing Inquiry.

Days after the OPP investigation was called, council asked to extend the terms of the inquiry to include several software companies including Beacon Software, Ball Hsu and Remarkable Software.

That inquiry will begin when the Toronto Computer Leasing Inquiry ends.

Comment: info@itbusiness.ca

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