06/18/2015 09:14 EDT | Updated 06/18/2016 05:59 EDT

Selinger welcomes probe into controversial flood-fighting contract

WINNIPEG - Manitoba Premier Greg Selinger says he would welcome a new ombudsman investigation into a planned $5-million contract that has stirred up accusations of cronyism and rule-breaking.

Selinger denied Thursday an assertion his cabinet tried to circumvent the rules for awarding contracts last fall by ordering the contract go to a company with links to a senior cabinet minister instead of being up for open bidding.

"I directed that it be done by a competitive tendering process. I at no other time directed it to be dealt with in any other way," Selinger said.

"I'm comfortable that the ombudsman can review it again in any way, shape or form."

The controversy dates back to last summer, when Steve Ashton, the province's longtime emergency measures minister, announced plans for $5 million in equipment to help First Nations communities battle flooding.

An anonymous whistleblower complaint, filed with the provincial ombudsman last fall and first reported by the Winnipeg Free Press this week, alleged Ashton pushed to have the contract awarded to a company that supplies water-filled tubes called Tiger Dams.

The whistleblower alleged two officials from the company have been Ashton campaign contributors and Ashton wanted to bypass the normal requirement to allow other companies to bid on the work.

A government source, with first-hand knowledge of the discussions, told The Canadian Press on Thursday that Ashton made the request to the provincial Treasury Board, which insisted on open bidding.

The matter then went to cabinet, and Selinger initially backed Ashton's request, said the source, who would only speak on condition of anonymity.

Within a couple of weeks, the whistleblower went to the ombudsman — Mel Holley, who has since retired. Holley said Thursday he approached one of Selinger's top advisers, Milton Sussman, and asked whether the contract was going to be handed to the company linked to Ashton.

"Milton called me a day or so later, and ... told me in no uncertain terms that he and the premier had taken the position that this was simply not going to happen."

Holley ended his investigation and by November, the contract was put up for open bidding. It has still not been awarded. In the meantime, one First Nations group had purchased flood-fighting equipment and had been reimbursed by the federal government.

The source said Selinger only decided to allow open bidding when he found out about the whistleblower complaint. But the premier denied that.

"I wanted a fulsome review by Treasury Board, which it got, and I wanted a discussion at cabinet, which it got."

Ashton also denied the accusations and said a new probe by the ombudsman's office would clear the air.

"I would welcome the ombudsman revisiting, reviewing whatever happened."

A new ombudsman review would likely be limited in scope, however. Under provincial law, the ombudsman can investigate government workers and senior staff, but not politicians.

"We don't have the jurisdiction to investigate members of the legislature," Holley said.