A senior government official is acknowledging that last-minute changes on the tendering process for a Parliament Hill renovation project favoured the Montreal company that won the contract, went bankrupt and left the construction site in disarray.
But the official said the changes were necessary to make the process more competitive.
The controversy will get an airing on Tuesday as a parliamentary committee starts probing the contract, which is already under investigation by the RCMP over allegations of unregistered lobbying surrounding LM Sauvé's bid.
The matter started in 2007 when the Montreal-based construction firm hired a plugged-in Conservative business adviser, Gilles Varin, to help the company obtain the contract to renovate the West Block building on Parliament Hill. Shortly before the government created a short list of general contractors to oversee the project, the rules were changed to allow bidders to have only one subcontractor - instead of two - for each of the major portions of the contract.
The change was requested by LM Sauvé, who specialized in masonry and did not wish to solicit a separate bid from a second masonry company.
"Did it favour LM Sauvé? Yes, absolutely," the senior federal official said on Monday.
But the official said the move meant the process became more competitive, because two other construction companies qualified as a result of the modification. After the short list was drawn up, the firms put a price to the project, with LM Sauvé's winning $8.9-million bid nearly $2-million below other estimates.
The senior federal official added that none of the other companies bidding on the project complained at the time, and that had the change not been made, the government's tendering process would have been vulnerable to a legal challenge.
The opposition jumped on the file during Question Period on Monday, accusing the government of intervening in favour of LM Sauvé and Mr. Varin, who was paid $140,000 for his work with Sauvé.
"Experts in the construction industry have said this would have benefited only one bidder, LM Sauvé. Who in the minister's office approved this amendment?" Liberal MP Marcel Proulx asked in the House.
Public Works Minister Rona Ambrose insisted that "public servants are responsible for and manage the entire process, including the contract award."
Meanwhile, the Bloc Québécois focused on a Conservative fundraiser organized in 2009 by LM Sauvé's president, Paul Sauvé, at which the guest of honour was the Public Works minister of the day, Christian Paradis. In a recent interview with Radio-Canada, Mr. Paradis acknowledged it was a mistake to attend the fundraiser with Mr. Sauvé and other individuals in the construction project.
"Had I been aware at the time, I might have gone back on my decision," he said.
The project is facing new delays, as a second firm - RJW Stonemasons - has been forced out of the project.
RJW Stonemasons president Robert Watt said that had LM Sauvé not benefited from a federal intervention in 2007, "the project would be nearly done by now, and done very well."
The project was supposed to be finished, but the new estimated date of completion is spring, 2011.
Mr. Watt said his crew - which took over responsibility for the masonry from LM Sauvé - was forced out of the project this month, and that he now stands to lose the $3-million stone shop that he built in large part to provide material for the massive Parliament Hill renovation project.
At a news conference on Monday, Mr. Watt explained he has now filed a complaint with the RCMP, alleging that his company has been illegally ousted over a financial dispute.
The battle is part of a bigger rivalry among construction firms, which are seeking to secure a share of the multibillion-dollar plan to renovate all of Parliament Hill over the next 25 years.