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Montreal Gazette
26-06-2025
- Business
- Montreal Gazette
Montreal overspending on engineering contracts, union charges, with study pegging extra cost at $40M in 2024
Montreal Politics By Montreal's municipal engineers were sounding the alarm even before a recent bombshell study revealed that engineering fees paid by the city to private firms have skyrocketed while the quality of work has diminished since the Charbonneau Commission a decade ago. But it has been a frustrating year of whistleblowing for the Association des scientifiques et ingénieurs de Montréal (ASIM), says the union's president, Gisella Gesuale, who has spoken at city budget hearings, buttonholed councillors outside of council meetings, met with department managers and filed formal complaints with the city's Bureau de l'inspecteur général (BIG) and auditor general in an effort to get someone to act. 'We're at one year later and we're still at square one,' said Gesuale, who was a municipal chemist before being elected president of her union in October 2023. 'There's been no reaction. They haven't taken our hand yet.' As it turns out, the problems pinpointed by the union in a 19-page brief it has circulated among city officials and shared with The Gazette jibe with the findings of Colin Pratte, the researcher at the Institut de recherche et d'information socioéconomiques (IRIS) who authored the study released on May 29. Pratte's study concludes that Montreal paid at least $40 million too much on over $200 million in contracts to engineering consulting firms awarded in 2024 — in other words, at least 20 per cent above fair value. The estimate, which Pratte describes as conservative, is based on the fact that the hourly rates paid by Montreal in its contracts with external engineering firms increased by 82 per cent from 2012 to 2024. That was more than double the inflation rate for the period. The study looked at contracts awarded by the main three central city departments hiring external engineers: road infrastructure, water and urban planning and mobility. Gesuale's union notes the spike in external professional fees doesn't include interest costs the city is paying on them. Most engineering contracts are in the city's capital works program, which is financed through long-term loans charging interest over 20 or more years, and not paid in cash out of the city's annual operating budget. Moreover, the IRIS study says the city could have avoided the explosion in engineering fees if it had followed the recommendations of the Charbonneau Commission. Among other things, the 2015 report of the public inquiry into corruption and collusion in the Quebec construction industry recommended reducing the city's reliance on subcontracting, a suggestion that is reiterated by Pratte. Gesuale's union, for its part, calculates that the total annual value of contracts awarded by Montreal to engineering consulting firms has increased by 809 per cent — from $23 million in 2012 to $209 million in 2024 — while the number of in-house engineers has remained relatively stable. Her union represents 575 Montreal municipal engineers, many of whom are tasked with preparing estimates and correcting the plans submitted by the external engineers. The Association des firmes de génie-conseil du Québec (AFG), which represents 71 member engineering consulting firms, maintains the 82 per cent increase in professional fees between 2012 and 2024 cited in the IRIS study is directly linked to the increase in construction projects carried out by the city. But bigger investment in construction — from rebuilding roads and sewer pipes to installing traffic lights and creating bike paths — doesn't explain the exponential increase in the hourly rates paid to junior and senior engineers, technicians and so on within each external contract, the union noted. 'That's what started us wanting to look into what was going on,' Gesuale said. 'One (city) engineer noticed that the hourly rate that was being charged to the city was exploding. It was three to four times our salary.' The union, like Pratte, concludes that Montreal is overpaying and that it stems from the way the city has restructured its external contracts for engineering work in the decade since the Charbonneau Commission ended. Montreal has shifted toward paying engineering consulting firms by the hour through contracts called 'framework agreements' — and has moved away from fixed-price contracts that pay by project. A framework agreement will provide a bank of, say, 100,000 hours over a time span for an engineering firm to work on various city projects. Engineers employed by the winning firm will bill their hours from that bank. In 2012, the city was mostly awarding fixed-price contracts, paying engineering firms a flat amount for a project. Framework agreements were slammed in the 2013 report of a city committee headed by former Parti Québécois minister Jacques Léonard, which issued 60 recommendations to Montreal to prevent corruption and collusion in municipal contracts. But while the city has shifted away from framework agreements for construction work since then, it has increased their use for engineering work since Mayor Valérie Plante's Projet Montréal administration was elected in November 2017. In 2012, 35 per cent of Montreal engineering contracts were framework agreements; in 2024, 93 per cent were, the IRIS study found. When it was in the opposition at city hall, Projet Montréal denounced framework agreements. Plante's office ignored The Gazette's questions about the IRIS study and the problems raised by the engineers' union. The five political aides who handle media relations for the mayor and city executive committee didn't respond to the newspaper's messages. Executive committee chairperson Émilie Thuillier also didn't respond to a direct request for comment. On the civil service side, a spokesperson for the road infrastructure, water and urban planning and mobility departments said it's difficult to move away from hourly-rate contracts in engineering. Framework agreements, spokesperson Gonzalo Nunez said in a written response, are 'essential due to the volume of projects and their ever-increasing scope, particularly to address the maintenance deficit in our infrastructure.' Montreal has seen an 'acceleration of planning for certain projects,' he added, and that 'has indeed led to an increase in professional fees, but also an increase in the hours worked by city employees on these same projects.' By comparison, Quebec City awards very few framework agreements for professional services. In fact, 97 per cent of engineering contracts awarded by Quebec City are fixed-price, Gesuale said. Paying external firms by the hour offers no incentive for them to deliver work expeditiously, Gesuale said. Moreover, it means the city is paying external engineers to correct their errors, she said. Meanwhile, the exponential increase in external engineering fees is reinforced by another factor that was denounced by the Charbonneau Commission and in the Léonard report, Gesuale said: Montreal's method of estimating the price of new contracts. Quebec's Cities and Towns Act requires a municipality that plans to award a contract of $100,000 or more to establish a control estimate before opening the bids. A large difference between the estimate and bids might point to an error or lack of clarity in the plans and specifications. On occasion, it leads a municipality to cancel the call for tenders and start again. Montreal continues to use the historical price to estimate engineering contract prices, even though it has dumped that method for construction contracts. Under the historical-price method, Montreal takes the already inflated price of a previous contract, adds inflation and voilà — that's the city's estimated price of the next contract. For construction contracts, the city now uses a 'fair value' method of estimation, which takes into account objective factors, like the real costs of items in the contract, market conditions and supply and demand. Montreal's BIG has advocated internally for the city to end historical-price estimation, Gesuale noted. Now, the union has decided to act where the city won't, she added. Last month, the union issued instructions to its members to produce estimates according to fair value instead of historical price. To do that, the union developed a tool that establishes fair value, based on municipal engineers' salary conditions plus an additional 90 per cent to cover firms' direct and indirect costs, such as rent, as well as benefits and profits. The factor of 90 per cent is used by different authorities, Gesuale said. 'We have no choice,' she said of developing the tool. 'It's our role because the city's not doing anything.' The union has also advised its members to keep a written record if a manager directs them to use an estimation method that isn't 'consistent with best practices — particularly the use of prices from previous years.' The city, for its part, didn't explain in its responses why it's sticking to the historical-price method to estimate engineering contracts. Gesuale describes Montreal as a 'school' for external firms to send inexperienced engineers to learn from municipal engineers. In the meantime, the city isn't developing its internal expertise, she said. As well, the city itself has complained about the quality of work by external engineers, her union discovered in the minutes of meetings between city managers and representatives of the association of engineering consulting firms. The union obtained the minutes through an access-to-information request. The AFG says the solution has to come from both sides. 'Regarding quality, we intend to continue working with the City of Montreal to identify issues on both sides and find solutions to improve our practices on an ongoing basis,' AFG deputy general manager Pierre Nadeau said in an email. Gesuale's union is calling on the city to repatriate recurring work, the kind that's outsourced year after year or under long-term contracts. 'We know we can't do all the engineering work internally,' she said. 'There will be outsourcing. But can we not ensure it's well-balanced?' The union is also calling on city management to form a committee to work on the union's recommendations. 'Our objective is to ensure that Montreal gets the most for its buck,' Gesuale said. 'And at the moment, that's not what I'm seeing.'
Montreal Gazette
29-05-2025
- Business
- Montreal Gazette
Corruption trial: Prosecution continues to grill Zampino about ‘Mr. Three Per Cent'
Montreal Crime By The personal life of the man who came to be known as 'Mr. Three Per Cent' appeared to be a mess while he was allegedly involved in the bid-rigging scheme that is at the heart of Frank Zampino's municipal corruption trial. Zampino, the president of Montreal's executive committee between 2002 and 2008, was again asked several questions Thursday morning about an alleged attempt by Bernard Trépanier to extort $1 million from Smart Centres, an Ontario-based real-estate development company that was interested in building a shopping centre on the site of a quarry in St- Michel. During the trial, which began at the Montreal courthouse on Feb. 3, Quebec Court Judge Silvie Kovecevich has heard evidence that Trépanier was fired from his job as the head of fundraising for Union Montréal because of the alleged extortion attempt. The incident is not related to the charges Zampino, 65, and four other men face in the trial, including Robert Marcil, 60, the former head of Montreal's public works department. Zampino and Marcil face three charges each: conspiracy, fraud and breach of trust. The other three accused are former executives with engineering firms. The scheme stretched from 2004 to 2009, and the case involves 34 contracts worth more than $160 million. The prosecution's theory is that Zampino organized a plan to award contracts, offered through public tenders by the city of Montreal, in exchange for illegal financing for Union Montréal. Zampino is alleged to have put in place and orchestrated a system of collusion with the goal of leading the fraudulent awarding of contracts to 13 engineering firms in exchange for political contributions to Union Montréal. Trépanier is alleged to have acted as an intermediary between Zampino and the engineering firms. Some of the evidence heard in the current trial was also heard during the Charbonneau Commission, a public inquiry into construction contracts held years ago. During the inquiry, Trépanier came to be known as 'Mr. Three Per Cent' because that is what he is alleged to have asked for in the form of kickbacks for Union Montréal when contracts were awarded to colluding companies. In 2017, Trépanier was charged in the same case and died of natural causes in 2018. It appears that the prosecution is implying Trépanier had become so brazen in his role in the bid-rigging scheme that he simply tried to extort $1 million from Smart Centres without having to create another bid-rigging scheme. Questions posed by prosecutor Nicolas Ammerlaan while cross-examining Zampino on Thursday indicated Trépanier was struggling financially while the incident involving Smart Centres allegedly took place. Zampino said Trépanier lived in a condominium on Jarry St. in St-Léonard in a building that 'was not extravagant' and that he got around in a Dodge Caravan 'that was not a recent model.' 'According to the image of what I saw, it was a very modest living, but I don't know what his finances were,' Zampino said. Ammerlaan reminded Zampino that Marc Deschamps, a former official agent with Union Montréal, testified that he had informed Zampino that Trépanier was 'in trouble' with both provincial and federal revenue agencies around 2006 or 2007. 'I think I had already left city hall (in 2008) when (Deschamps) had informed me,' Zampino said. 'In 2006 or 2007, did he inform you that Bernard Trépanier was going bankrupt, but (Deschamps said) that didn't bother (you),' Ammerlaan asked. 'I don't remember Marc Deschamps mentioning that (but) don't dispute what you're saying,' Zampino said, adding that Trépanier 'never, never' told him he was facing bankruptcy. 'I don't know what his financial affairs were. We can't judge a person based on the car they are driving or the condominium they've purchased. I never inquired about what his personal finances were.'
Montreal Gazette
28-05-2025
- Politics
- Montreal Gazette
Corruption trial: Zampino grilled again about alleged extortion attempt by ‘Mr. Three Per Cent'
Montreal Crime By Frank Zampino, the former president of Montreal's executive committee, testified for a second time about one of the more startling allegations to arise from his criminal trial at the Montreal courthouse, where he is charged with running a multimillion-dollar bid-rigging scheme out of city hall. While being cross-examined by prosecutor Nicolas Ammerlaan for a second day on Wednesday, Zampino, 65 and now retired, was asked several questions about an alleged attempt by Bernard Trépanier, the man who came to be known as 'Mr. Three Per Cent' during the Charbonneau Commission, to extort $1 million from Smart Centres, a real-estate development company based in Ontario. Trépanier is alleged to have asked for $1 million to give Smart Centres access to a project involving a quarry in St-Michel. In 2017, Trépanier was charged in Project Fronde, the investigation that is the subject of the current trial, along with Zampino, Robert Marcil, 60, the former head of Montreal's public works department, and three former executives with engineering firms alleged to have taken part in the bid-rigging scheme. Trépanier died of natural causes in 2018. Throughout the trial, which began on Feb. 3, Trépanier has been portrayed as the go-between for Zampino and the engineering firms that took part in the scheme. Zampino was the head of Montreal's executive committee between 2002 and July 2008, and Trépanier was the head of fundraising for Union Montréal, the political party that Zampino and former Montreal mayor Gérald Tremblay were in. The Crown's theory in the case is that Zampino organized the bid-rigging scheme and that Trépanier went to executives from engineering firms demanding they kick back three per cent of the value of the contracts they were awarded to Union Montréal. One of the more startling allegations to emerge in the trial is that while the illegal fundraising scheme was well underway, Trépanier had become so brazen that he simply tried to extort $1 million from Smart Centres. The allegation was part of a civil lawsuit and at least two witnesses heard in Zampino's trial said it happened. Like all of the incriminating testimony heard at the trial, Zampino continued to deny knowledge of both the scheme or any wrongdoing on Trépanier's part. He has repeated often that he knew Trépanier since 1986 and that he helped organize his political campaigns. Tremblay testified during the trial and said he informed Zampino that Trépanier would be dismissed from Union Montréal because of the allegation. Zampino has said he has no recollection of the discussion and repeated on Wednesday that he first learned of the situation when Trépanier 'stormed' into his office at city hall. 'I sort of remember the incident. It was many years ago. I was in a meeting and I wasn't able to speak to him. He was emotional, troubled and stressed by the situation,' Zampino said. 'I just told him that I was in a meeting and that I'd be home by 7 o'clock. It was a matter I thought I needed to speak (to him) in person. 'I was extremely troubled by the fact that he told me he had spoken to the chef du cabinet du maire and that he was being accused of having requested a $1-million extortion amount from a representative of Smart Centres. 'I told him clearly that I didn't want any stories. I wanted the truth. I wanted him to tell me exactly what happened because this was a serious allegation.' Zampino said Trépanier denied the allegation 'and I took his word for it.' 'He told me that this never happened.' Zampino also said that once he had Trépanier's denial, he decided to discuss the allegation with Tremblay for the first time. 'It was troubling to me because it was the most serious allegation that I had ever heard at the city of Montreal and it involved my political election organizer that was with me since 1986,' Zampino said. 'He gave me a clear and transparent answer to the fact that he had never done this.' Zampino also denied Tremblay's version of events and said he spoke to the mayor only after he spoke to Trépanier, who was ultimately dismissed from Union Montréal. Some witnesses who testified in the trial said Trépanier somehow continued to do fundraising for the political party after he was fired and that he did it from an office outside of Union Montréal headquarters. Zampino's cross-examination will resume on Thursday.
Montreal Gazette
26-05-2025
- Politics
- Montreal Gazette
City of Montreal has sued Frank Zampino, court hears in his corruption trial
Montreal Crime By Frank Zampino, the former president of Montreal's city executive committee, has legal woes beyond the current criminal trial in which he is alleged to have run a bid-rigging scheme involving infrastructure contracts awarded by the city. On Monday, Zampino, 65, was in his third day of testifying in his defence in the trial at the Montreal courthouse that began in early February. While answering questions from defence lawyer Philippe Morneau, Zampino said he is still a defendant in a civil lawsuit, brought against him and other defendants, through which he is being sued by the city of Montreal. Zampino said the lawsuit is based on testimony given by Michel Lalonde, a retired engineer and the former president of engineering firm Groupe Séguin, during the Charbonneau Commission, a public inquiry into construction contracts that started in 2011 and concluded in 2015. When the criminal trial began, the prosecution described Lalonde as the key witness. Groupe Séguin was one of the firms that took part in the collusion. Lalonde testified that at one point in the scheme he was asked to become 'a spokesperson' for the other engineering firms that agreed to take part in it. He said executives with the other firms felt Bernard Trépanier, the person in charge of fundraising for the Union Montréal political party at the time, did not understand engineering and was doing a lousy job of distributing the contracts. Some firms complained they had to wait too long to be awarded a contract. Fundraising for Union Montréal is at the heart of the criminal trial. Lalonde also told the court that during 2007, he had three meetings with Zampino during which the illegal scheme was discussed. That included a meeting held on a Saturday at the St-Léonard borough hall. Besides being head of Montreal's executive committee, Zampino was mayor of the St-Léonard borough at the time. During that meeting in 2007, Lalonde alleged that he, Trépanier and Zampino discussed having Robert Marcil, then the head of Montreal's public works department, added to a committee that selected the contracts to be approved by the executive committee. Marcil, 60, is also charged in the same trial at the Montreal courthouse. Last week, his lawyer said Marcil will be the last of the five accused to present a defence. The other three people on trial are former executives with engineering firms. Zampino and Marcil face three charges each: conspiracy, fraud and breach of trust. Last week, Zampino denied Lalonde's allegations and said Lalonde and Trépanier showed up 'unannounced' on the Saturday he referred to. Zampino also said he recalled having other things to do that day and that he tried to get Lalonde and Trépanier out of the borough hall as fast as possible. The civil trial 'is tied to what we have here,' Zampino told Quebec Court Judge Silvie Kovacevich on Monday, adding the civil case involves Tecsult, an engineering firm that admitted it took part in the scheme. '(Lalonde) basically described the same three meetings (during the Charbonneau Commission).' Zampino was named to be head of the executive committee after Gérald Tremblay was elected in 2002 as mayor of the newly merged city of Montreal. Zampino's last day in office was on July 2, 2008. The scheme stretched from 2004 to 2009, and the case involves 34 contracts worth more than $160 million. The prosecution's theory is Zampino organized a plan to award contracts, offered through public tenders by the city of Montreal, in exchange for illegal financing for Union Montréal. Zampino is alleged to have put in place and orchestrated a system of collusion with the goal of leading the fraudulent awarding of contracts to 13 engineering firms in exchange for political contributions. Trépanier is alleged to have helped Zampino organize the scheme. In 2017, Trépanier was charged in the same criminal case brought against Zampino, but Trépanier died of natural causes in 2018.
