10/22/2012 05:09 EDT | Updated 12/22/2012 05:12 EST

Embassy Security Contracts With British Agency Broke Rules

OTTAWA - The Foreign Affairs Department broke government rules by handing two sole-sourced security contracts, worth $15 million, to a British government agency for Canada's Afghanistan and Pakistan missions, The Canadian Press has learned.

Treasury Board cited Foreign Affairs in an Aug. 12, 2011, letter for not following government contracting guidelines when it tendered the "non-competitive, emergency contract(s) to the Foreign Commonwealth Office Services (FCO Services)."

FCO Services is a British government agency that has specialized in international security for six decades.

Details of the arrangement between Canada and the British government agency are laid out in the Treasury Board letter — a copy of which was obtained by The Canadian Press — that is highly critical of Foreign Affairs for opting for an emergency contract.

Treasury Board concluded that a report on the matter by the Foreign Affairs Department's physical resource bureau "does not comply with procedural aspects of the policy for the reporting of emergency contracts."

The bureau, says the letter, "does not make a convincing case for invoking emergency authorities in accordance with TB Contracting Policy.

"In addition, it appears that procedures for undertaking an emergency contract were not completely fulfilled …"

Foreign Affairs declined to answer questions on the matter, reiterating a standard response that it doesn't discuss embassy security. Therefore, it is not clear whether the security upgrades were ever done.

The letter emerged a month after Canada and Britain announced they would consolidate consular services in some embassies as a cost-saving measure, a plan that sparked criticism that the government was compromising its foreign policy interests abroad.

Foreign Affairs Minister John Baird and his visiting British counterpart, William Hague, touted the new arrangement as a way to cut costs by sharing services in some countries, where Britain has a diplomatic mission and Canada does not, or vice versa.

The Treasury Board letter summarizes a more lucrative level of Canada-British diplomatic co-operation dating back to last year on an embassy security arrangement in the capital cities of Afghanistan and Pakistan.

"There are few firms (especially Canadian) that are willing to work in high-risk regions or that possess the proper experience to undertake security-related projects," the letter states.

"Given the recent difficulties experienced during the implementation of the chancery in Kabul and other physical security projects in this region, the Foreign Commonwealth Office Services (FCO Services) was retained on a sole source basis."

The British agency provided "project management support and physical security expertise services in Kabul and Islamabad to supplement the resources in the Physical Resources Bureau and help deliver the property and security program for these missions."

NDP foreign affairs critic Paul Dewar said the Kabul and Islamabad contracts, combined with the recent embassy sharing agreement with Britain, raises accountability issues and represents a significant rebuke of Foreign Affairs.

"We're talking about getting involved with other countries. The question is: whose rules are we going to follow then?" said Dewar.

"We can't even follow our own rules, so how is it we're going to be able to track what we're doing with other countries?"

Foreign Affairs has been given $235 million to improve embassy security in high-risk missions, as well as another $192 million to improve infrastructure of its foreign diplomatic buildings.

The letter also says that Foreign Affairs "has been able to obtain security site planning and engineering services as well as security products, such as blast resistant windows and doors through competitive means."

It adds that the department "has had difficulties in retaining competent, qualified and reliable construction and project management services in high risk zones such as Kabul and Islamabad."

As a result, Foreign Affairs entered into two "tasking agreements" with FCO "using emergency authorities, with a potential value of up to $15M."

Foreign Affairs relied on regulations in government contracting policy that allowed for this if "the need is one of pressing emergency in which delay would be injurious to the public interest" and "only one person or firm is capable of performing the contract."

Treasury Board rejected Foreign Affairs' arguments on both counts, saying that it "is not persuasive that normal contracting procedures could not have been used."

Treasury Board concluded that the Foreign Affairs' physical resources bureau should "request training in emergency contracting and associated reporting" from the department's own corporate operations branch.

Dewar said the government simply hasn't explained why it didn't look elsewhere, perhaps to a Canadian company, for the security work.

"We just don't know because they didn't go out and try and source it … the question is: why didn't they allow this to happen?"

Earlier this year, Foreign Affairs issued a much smaller contract on embassy security after a competitive bidding process. It awarded $2 million to the international security firm, Control Risks Group, for a sweeping intelligence study of potential threats to Canada's foreign embassies.

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