A former engineering executive says that in the years before the feds pumped billions into infrastructure projects under their action plan, a group of companies had set up their own collusion plan.
He said eight companies created a system for the Quebec City area in 2004 where they agreed on a minimum price for work and would take turns winning public bids.
Patrice Mathieu said the practice really took off after 2006, when the federal government embarked on a historic multibillion-dollar infrastructure spending blitz.
A 2007 federal plan was then topped up after the following year's economic crash as part of the broader "action plan" for which the feds have created ads, a jingle, websites and the 1-800-O-Canada hotline.
Mathieu said the meetings between company executives became more frequent after the federal manna arrived.
He said things got so busy that companies around Quebec City didn't even bother agreeing on what percentage of the work each firm would take.
He said they simply agreed to charge rates above a minimum price, and whatever company had enough available labour to handle the workload would take the bid.
"There were so many projects," Mathieu testified Wednesday.
"Given the volume of projects we opted rather for whoever was available — they would win the bid."
He said the losing companies would make sure they bid within five per cent of the predetermined price, to keep the difference narrow enough and avoid rousing authorities' suspicion.
Mathieu said 70 per cent of municipal projects around Quebec City were targeted by the system, especially contracts for sewer and road repairs, and street extensions. He says the collusion did not apply to bridges, building renovations and analysis work.
There was apparently pressure to comply with the system.
Even company presidents signed a charter promising not to repeat past price wars. Companies pressured one other, and their own employees.
"Don't cut your prices, don't cut your prices," Mathieu said he was told by people in his own company.
He said the Quebec City collusion continued until the end of 2011 — well after corruption scandals had already engulfed the province.
But he said that, unlike other parts of the province, companies did not corrupt public officials in Quebec City.
Details of Wednesday's testimony had Mayor Regis Labeaume fuming: "Quebec City residents got screwed," said Labeaume, who was elected in 2007.
The inquiry has heard of far more elaborate schemes around Montreal, where inquiry testimony has helped torpedo the career of public officials including former mayors.
But it has heard little about federal politics — as anything outside Quebec's borders has been declared off-limits under the inquiry rules.
Mathieu was vice-president of urban and transport engineering for Eastern Quebec for the U.S. giant Aecom, which bought his company Tecsult in 2008.
Another witness from Gatineau, Que., has complained that Aecom's arrival brought a new code of conduct made him uncomfortable, as it even forbade buying lunch for a bureaucrat.
The federal government has repeatedly pointed out that it provides the funding for infrastructure projects but is not involved in awarding contracts.
"The projects that our government funds are priorities established by the provincial government," Michele-Jamali Paquette, a spokeswoman for the minister of infrastructure, said in an email yesterday.
"The province of Quebec is responsible for overseeing the tendering process and awarding contracts on these projects."
Meanwhile, Quebec has been rocked by testimony of illegal activity by political parties at the provincial and municipal level, by construction companies, municipal bureaucrats, and their links to the Mafia.
Only a fraction of the testimony has touched on provincial politics, so far, with most of the witnesses to date stemming from the Montreal-area municipal realm.
The closest the inquiry has come so far to scorching federal politicians has been in brief and peripheral references — such as when engineering executive Rosaire Sauriol replied, "Yes," when asked whether he performed the same illegal fundraising activities for federal parties as he had provincially.
Note to readers: This is a corrected story. An earlier version incorrectly named Patrice Mathieu as Pierre Mathieu in the third paragraph.
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