OTTAWA: When Canada Revenue Agency sought new bids last summer to do its translating, few expected the result. Masha Krupp Translation Group, the Canadian independent that had been handling the agency’s documents since 2004, was kicked out. And CLS Lexi-Tech, part of a U.S. conglomerate, was invited in. The upshot: MKTG had lost nearly $4 million per year worth of translation business. This was likely the source of more than one-quarter of the firm’s revenues, potentially affecting as many as 30 translators, based on Postmedia interviews from 2015. CLS Lexi-Tech meanwhile had secured a strong foothold in one of the country’s biggest users of private-sector translation services. The deal is all the more important given that the Translation Bureau, the federal government’s in-house agency, has been grabbing an increased share of the overall translation work.
Canada Revenue Agency uses outside professionals to convert 16.8 million words annually from English to French and another 1.1 million the other way around. The initial two-year contract won by CLS Lexi-Tech was to have been followed by five extensions of one year each. More recently, however, there was an even bigger surprise. The tax agency was recently directed to reopen the competition by the Canadian International Trade Tribunal, an independent group charged with ensuring the government’s procurement system is fair. Not only that, Canada Revenue Agency will have to pay MKTG and one other potential supplier for foregone profits. This remarkable turn of events was triggered by Masha Krupp’s decision last fall to appeal CLS Lexi-Tech’s victory.
MKTG alleged the Canada Revenue Agency “failed to evaluate the bids in accordance with the evaluation criteria set out in the solicitation”, the tribunal noted. This is a fairly common complaint by companies that lose competitions for federal government contracts. But mostly these go nowhere. In this case, the tribunal obviously found something not to its liking. Exactly what isn’t clear. MKTG and CLS Lexi-Tech declined comment for this story. CRA spokesman David Walters said: “As this is an ongoing litigation matter we cannot comment at this time”. Nevertheless we can glean a few things from procurement documents and the answers provided by tax agency officials to questions posed online by bidders.
For starters, the winner was to be determined in equal measure based on price and technical merit. In announcing the winner last October, Canada Revenue Agency said it would pay $8.6 million to CLS Lexi-Tech for the first two years of the contract. According to Public Accounts data MKTG earned just $7.2 million during the final two years of its contract, suggesting it may have had the advantage on price. This assumes steady translation volumes at the tax agency and that MKTG didn’t raise its rates significantly in its bid. This leaves the technical component, in which Canada Revenue Agency officials ranked competitors on their strategies for recruiting and developing staff, and the process used to distribute the workload. Incumbents such as MKTG are often difficult to dislodge because they have such deep knowledge of the government’s translation requirements and develop tight personal ties. \Opportunities for rivals arise when incumbents take things for granted or government agencies grow hungry for a change in suppliers. Whatever the reason for awarding contracts, federal agencies have to evaluate the items they said they would, or the tribunal will impose remedies.The tribunal in this case has given Canada Revenue Agency until April 24 to come up with a schedule for a fresh competition and a time frame for finishing negotiations with MKTG over compensation. The tribunal was specific on some points: for example, that MKTG was to be paid for foregone profits “divided by the number of bidders that were compliant with the mandatory criteria.” Canada Revenue Agency confirmed that three bidders qualified for the final run-off, which presumably included the winner. Until the new competition is completed, CLS Lexi-Tech will continue to do the tax agency’s translation work, and MKTG and the third bidder will be permitted to claim foregone profits in the meantime.
