Chief administrator insists no conflict in Invest RFP process
The Medicine Hat chief administrator insists there is no conflict in the process involving Orka Management Group staff being involved in the lead up to a request for proposals being issued for Invest Medicine Hat.
But the standard conflict of interest definitions used in city procurement packages were altered in the RFP bid involving Invest Medicine Hat.
The clause usually used by the city in procurement packages defines a conflict of interest when, “the proponent has an unfair advantage or engages in conduct, directly or indirectly, that may give it an unfair advantage.”
It additionally states a conflict includes when the bidder has, “access to confidential information of the City in preparation of its proposal that is not available to other proponents.”
The RFP package involving IMH did not include those standard definitions when issued.
On the surface, if the standard definition was included, it would have likely disqualified Orka, as that company’s ownership and all of its listed staff are city employees working for IMH.
According to Medicine Hat CAO Bob Nicolay, Orka/IMH staff were involved in meetings leading up to council’s decision in May to launch the RFP process.
“Yes, they would have been involved in those discussions,” he said, adding they recused themselves from development of the RFP as well as the evaluation of bids.According to the IMH RFP package, such involvement would also disqualify Orka.
Additionally, Orka/IMH staff, “communicating with any person with a view to influencing preferred treatment in the RFP process,” could result in Orka being disqualified, according to the conflict of interest definition in the IMH bid package.
It is unclear why the city’s standard conflict of interest definition was altered for the IMH RFP, who requested the change and what the reasoning was.
Similar definitions of conflict of interest to what’s usually found in city procurement packages can also be found at all levels of government.
The government of Alberta’s standard conflict of interest clause includes that, “the contractor shall not have any financial interest in the business of a third party that causes, or would appear to cause, a conflict of interest in connection with the performance of the services.”
In addition to Jason Melhoff’s role as managing director of IMH and being a partner in Orka, he also describes himself as a real estate developer in social media profiles.
Layered on top of the issue of conflict of interest is the city’s code of ethics for city employees.
That code states, “an employee shall not place his or her private interests in actual, potential or apparent conflict with the interests of the City.”
IMH describes itself as a, “connection to land development and real estate, incentives, and investment opportunities in the community.”
Orka advertises its services to include, “consulting, tax planning, capital growth, land development and real estate, and marketing and communications.”
Despite this, Nicolay said the circumstances that led up to the bid by Orka/IMH staff are, “certainly not unheard of.”
None of the multiple elected municipal officials contacted by the News from outside the city, and speaking on the condition of anonymity, say they have ever heard of such a situation. Nor could subject matter experts who spoke to the paper identify anything similar.
The News was unable to find any source — on or off the record — who would substantiate claims that the city’s actions aren’t unusual. The paper did invite the city to produce any independent source that would backup the claim that the situation involving Orka/ IMH staff and the RFP process is normal business practise.
Retired Western University professor Andrew Sancton, author of several books and articles on the subject of municipal government, said in his 40 years of research and teaching, he’s never heard of such a situation.
“It looks to me there is an apparent conflict of interest,” said Sancton.
But he said a potentially bigger issue is understanding what advantages there are to the city in engaging in a process that could end with the municipality having the same people doing the same work.
If it’s efficiencies, “how are the efficiencies supposed to be achieved,” said Sancton. “The mayor or CAO should be able to explain.”
Sancton says some provinces legislate that municipalities must have integrity commissioners who can provide oversight when conflict issues arise — particularly if they involve elected officials.
In lieu of that, and when it comes to the city’s code of ethics for employees, “you would expect the city manager or city council enforcing it,” said Sancton.
Oversight of the IMH is being provided by business advisory firm MNP.
In an emailed statement, the company says, “MNP’s role is to support the City of Medicine Hat’s procurement process to outsource the economic development responsibilities within the City, specifically to design a fair, equitable and open RFP process.”
Despite that, only the RFP bid by Orka/IMH staff was received by Monday’s deadline.