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1 2 3 TORONTO COMPUTER LEASING INQUIRY 4 5 6 7 ******************** 8 9 10 BEFORE: THE HONOURABLE MADAM JUSTICE DENISE BELLAMY, 11 COMMISSIONER 12 13 14 15 16 Held at: East York Civic Centre 17 850 Coxwell Avenue 18 Toronto, Ontario 19 M4C 5R1 20 21 ******************** 22 23 24 March 31st, 2003 25
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1 APPEARANCES 2 3 Ronald Manes (np) )Commission Counsel 4 Patrick Moore ) 5 Daina Groskaufmanis (np)) 6 Linda Rothstein (np) )City of Toronto 7 Lily Harmer ) 8 Robert Centa ) 9 Gordon Capern ) 10 David Moore )MFP 11 Fraser Berrill (np) ) 12 Ken Jones (np) ) 13 Brian Heller (np) )Ball Hsu and Associates Ltd. 14 Melissa Kronick (np) )CUPE 15 Raj Anand (np) )Lana Viinamae 16 Bay Ryley ) 17 William Anderson )Wanda Liczyk 18 Valerie Dyer (np) )Dell Computers 19 Jennifer Lynch (np) ) 20 Edward Greenspan (np) )Jeff Lyons 21 Todd White (np) ) 22 Hugh MacKenzie )Jim Andrew 23 Bryan McPhadden )Brendan Power 24 Zoran Samac ) 25 Joyce Ihamaki )Registrar
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1 TABLE OF CONTENTS 2 Page 3 4 Exhibits 4 5 6 Brendan Power, Resumed 7 Continued Cross-Examination by 8 Mr. Gordon Capern 8 9 Cross-Examination by 10 Mr. Bryan McPhadden 13 11 Re-Direct Examination by 12 Mr. Patrick Moore 31 13 14 David Beattie, Sworn 15 Examination In-Chief by 16 Mr. Patrick Moore 83 17 Cross-Examination by 18 Ms. Bay Ryley 147 19 Cross-Examination by 20 Mr. Hugh MacKenzie 174 21 Cross-Examination by 22 Mr. William Anderson 211 23 24 Certificate of Transcript 249 25
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1 EXHIBITS 2 Exhibit No. Description Page No. 3 4 23 Volume IV Bound document titled 5 "Brendan Power", 6 Additional Tabs 127-128 31 7 8 24 VOLUME I Bound document titled 9 "Dave Beattie" tabs 1-57 10 and affidavit of 11 Mr. Beattie. 54 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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1 --- Upon commencing at 10:00 a.m. 2 3 MADAM COMMISSIONER: Good morning. 4 Mr. McPhadden? 5 MR. GORDON CAPERN: Commissioner, if I might, 6 just before -- 7 MADAM COMMISSIONER: Oh, sorry -- 8 MR. GORDON CAPERN: -- just before Mr. 9 McPhadden begins, on Thursday afternoon I went back to the 10 office following the completion of my cross-examination. 11 When I got back, it was drawn to my attention 12 that there was one (1) document that may require a bit more 13 review with Mr. Power, prior to his departure. 14 The reason for that is, that I -- is that it 15 deals with some anticipated testimony from Mr. Loreto with 16 respect to matters arising under the comfort letter and 17 certain requests that Mr. Loreto made. 18 I've spoken with Mr. Pat Moore this morning 19 about that. He and I are -- for what it's worth, both 20 satisfied that it's proper re-examination, because it arises 21 from my cross examination. 22 And I think what we wanted to address -- 23 certainly I would like to address, is to give Mr. Power, an 24 opportunity to hear what Mr. Loreto's anticipated evidence 25 may be, so that he's not caught off guard in the same --
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1 dealing with the same issue that arose with Mr. Hainey's 2 examination. So -- 3 MADAM COMMISSIONER: Okay. 4 MR. GORDON CAPERN: -- I intend just to leave 5 it with the re-examination for Mr. Pat Moore, unless there's 6 any strong objection to that. 7 MADAM COMMISSIONER: Mr. McPhadden, I assume 8 you don't have an objection to that? 9 MR. BRYAN McPHADDEN: I'm just wondering what 10 document that is? 11 MR. GORDON CAPERN: It's the document found at 12 Mr. Power's Tab 33, which is an e-mail sent in February 2001. 13 It's actually a memo to file from Mr. Loreto. 14 15 (BRIEF PAUSE) 16 17 MR. BRYAN McPHADDEN: Tab 33, Volume 1, is 18 that it? 19 MR. GORDON CAPERN: Yes. 20 MADAM COMMISSIONER: I guess, Mr. McPhadden, 21 the other option is to deal with it right now, to deem Mr. 22 Capern as not having finished his cross examination. 23 I take it, the way that Mr. Capern is putting 24 it, is that rather than do that right now, which would have 25 Mr. Power in the situation where he hasn't actually had the
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1 Loreto document put to him, if it comes up in re-examination 2 then that will give him a bit more time. 3 So -- but, I'm -- it doesn't matter to me 4 which way it goes, whether we -- whether we just have Mr. 5 Capern deal with it now, or whether it goes in re- 6 examination. 7 MR. BRYAN McPHADDEN: My preference is -- 8 MADAM COMMISSIONER: Do you care? 9 MR. BRYAN McPHADDEN: -- I do. 10 MADAM COMMISSIONER: Okay. 11 MR. BRYAN McPHADDEN: My preference is that he 12 deal with it now, because in the event that there are any 13 questions arising out of that I'll -- 14 MADAM COMMISSIONER: Actually, that's a very 15 good idea. That's a very good idea. 16 MR. GORDON CAPERN: Thank you, Commissioner. 17 I'm sorry for the interruption. 18 MADAM COMMISSIONER: No problem. 19 MR. BRYAN McPHADDEN: I understand -- I'm told 20 by a reporter that you suffered a personal loss over the 21 weekend? 22 MADAM COMMISSIONER: Yes, I did. 23 MR. BRYAN McPHADDEN: On behalf of all 24 present, I'd like to pass on our condolences. 25 MADAM COMMISSIONER: Thank you very much.
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1 That's very kind of you all. 2 Thank you. 3 MR. GORDON CAPERN: Thank you. 4 5 CONTINUED CROSS-EXAMINATION BY MR. GORDON CAPERN: 6 Q: Mr. Power, if I can get you to turn up Tab 7 33, if you have it in front of you? 8 A: Yes. 9 Q: This at least on its face, appears to me 10 to be a memo to file, from Mr. Loreto to himself, on or about 11 February the 15th of 2000, which I think it times closely 12 with the provision by the City of the comfort letter that was 13 ultimately address to Canada Life and to MFP. So, you're 14 familiar with that letter? 15 A: Yes. 16 Q: All right and ca -- you've now had an 17 opportunity to review this memo to file? 18 A: Yes. 19 Q: And can you help me, sir, d -- the -- Mr. 20 Loreto seems to suggest in here that you and he spoke at 21 approximately 4:30 p.m. on February the 15th, 2000. Do you 22 recall that conversation, sir? 23 A: No, I -- no. 24 Q: Do you recall having a conversation with 25 Mr. Loreto about the information set out in this memo to
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1 file? 2 A: I can't recall. It wouldn't seem 3 unreasonable. I wouldn't -- that I would have a conversation 4 but I don't recall this particular one, no. 5 Q: Okay and just so that I'm clear, it 6 appears to me that Mr. Loreto sought from you confirmation 7 about the amounts that were to be spent on the equipment 8 schedules. Do you see that, sir, in the bottom half. It's 9 the -- I guess the large paragraph that appears in that memo 10 to file? 11 A: Yes. 12 Q: All right and he suggests that he 13 confirmed with you that the amounts to be spent contemplated 14 by the equipment schedules to be signed were not in excess of 15 the amounts approved by Council for that equipment. Do you 16 see that, sir? Now, did Mr. Loreto say to you or at least 17 did you understand from any discussions you had with him that 18 Mr. Loreto was operating under the apprehension that there 19 was a limit to what Council had authorized and it's -- the 20 amounts to be put on lease with MFP? 21 A: No. 22 Q: All right. So are you saying, sir, that 23 that conversation -- that you never had any conversation with 24 Mr. Loreto where you would have gained that understanding? 25 A: I don't recall any discussions with Brian
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1 about that. 2 Q: Are you saying they didn't happen or that 3 you don't remember them? 4 A: I don't remember them. 5 Q: So it's possible that they did happen and 6 you just don't remember? 7 A: That's possible. 8 Q: And there's reference here where it says: 9 "Brendan said Council $43 million" 10 And I anticipate that Mr. Loreto will testify, 11 sir, that when he wrote that, what he meant was that you 12 confirmed for him that the Council authorization was $43 13 million. Do you recall confirming that with Mr. Loreto? 14 A: No, I don't. 15 Q: Is it possible that you told him that, 16 sir, and you just don't remember? 17 A: I don't think I would have told him that, 18 no. 19 Q: Why is that? 20 A: Because I didn't think that the limit was 21 $43 million. 22 Q: As far as you were concerned at that point 23 in time, you were operating under the understanding that 24 there was no maximum amount, no cap that Council had imposed 25 on the leasing -- amount of the assets that could be put on
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1 lease with MFP? 2 A: That's correct. 3 Q: And he says -- suggests in the next 4 sentence. He said -- in the memo he says: 5 "He said these schedules total $33 million" 6 From which I understand Mr. Loreto will say 7 that you told him that at least up to that point in time, $33 8 million had been commit -- worth of assets had been committed 9 to schedules with MFP. 10 A: Yeah, that sounds reasonable, yeah. 11 Q: So you do recall telling him that? 12 A: Well, I don't recall the conversation at 13 all but at that point, $33 million seems like a reasonable 14 amount that had been put on schedule. 15 Q: No, I understand that, sir, but what I'm 16 interested in understanding is your communication of that 17 point to Mr. Loreto. You agree with me, sir, that he would 18 have needed to go to someone in IT and most likely you in 19 order to get that -- 20 A: Yes. 21 Q: -- information? 22 A: That's correct. 23 Q: So it's probable, sir, that he did get 24 that information from you? 25 A: Yes.
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1 Q: So then I suggest to you, sir, that it's 2 also probable that the other information that's contained in 3 this memo came from you. Do you agree that that's at least a 4 possibility? 5 MADAM COMMISSIONER: You're asking him if it's 6 a possibility that it's probable that -- 7 MR. GORDON CAPERN: -- that it's possible -- 8 that it's at least a possibility that the rest of the 9 information that's contained in that paragraph came from you? 10 MR. BRYAN McPHADDEN: Initially you said the 11 letter. Do you mean the paragraph or the letter? 12 MR. GORDON CAPERN: I mean the paragraph. 13 THE WITNESS: Yes, except as I mentioned about 14 the $43 million, yeah. 15 16 CONTINUED BY MR. GORDON CAPERN: 17 Q: You -- you just say that you have no 18 knowledge of where Mr. Loreto would have got that information 19 from? 20 A: I'm just saying, I don't think he got it 21 from me. 22 Q: Okay. So, when I said, Brendan said, 23 Counsel $43 million, you're suggesting that that wasn't him 24 saying that he got that information from you? 25 A: Well, as I said, I don't think that
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1 Counsel approved the $43 million, I -- I don't -- I wouldn't 2 have said it that way. 3 Q: All right, sir. I'm -- I'm going to 4 suggest, sir, that you did have that conversation with Mr. 5 Loreto, and in fact, you did tell him that it's $43 million. 6 Is that -- you're going to tell me that that 7 did not happen? 8 A: That's -- I -- I don't recall, but I can't 9 imagine I would say that, no, that way. 10 Q: All right. 11 12 MR. GORDON CAPERN: That's the extent of my 13 questions on that, Commissioner. 14 MADAM COMMISSIONER: Thank you Mr. Capern. 15 Mr. McPhadden? 16 17 (BRIEF PAUSE) 18 19 CROSS-EXAMINATION BY MR. BRYAN McPHADDEN: 20 Q: Mr. Power, in the course of being 21 questioned by other Counsel, you were taken to the 22 reasonableness of the guarantee period of ninety (90) days. 23 At the time that you were preparing the RFQ, did you have any 24 reason to believe that a ninety (90) day guarantee period 25 would be too short?
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1 A: No, given the -- the approval process and 2 the Counsel schedule, I think ninety (90) days was a 3 reasonable time, yeah. 4 Q: Did you have any specific reason for 5 believing that, in fact, approval would be obtained within 6 ninety (90) days? 7 A: Yeah, well, working backwards from the 8 last Counsel of that session, I think they -- they take a 9 break at the end of the summer, so we're working towards that 10 -- that Counsel session. 11 Q: Where you aware, at that time, of other 12 entities using a longer than ninety (90) day guarantee 13 period? 14 A: Well in the past, when I was with the 15 Provincial Government, we had asked for prices to be held for 16 longer than ninety (90) days, sometimes a hundred and twenty 17 (120) days. 18 Q: All right. And why were you doing that, 19 in those circumstances? 20 A: Well, just understanding of the length of 21 time it takes things to get approved in Public Sector 22 organizations. 23 Q: All right. Well, we know that, in fact, 24 no equipment was put on lease prior to the expiry of the 25 ninety (90) day guarantee period, and we know that -- or the
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1 evidence would suggest that, that was first done on October 2 1st, 1999. 3 Do you know, or have any idea, as to how much 4 was put on lease on October 1st, 1999? 5 A: Well, I don't recall exactly, I think it 6 was about $20 million. 7 Q: Now, are you aware of any reason why at 8 least some of that $20 million could not have been put on 9 lease prior to September 11th, 1999? 10 A: In my view, there's no reason why it 11 couldn't have happened. They had been purchasing equipment, 12 I think, going back to January of that year, so they had the 13 equipment in place and presumably the invoices and other 14 documentation, so a schedule could have been completed within 15 -- well within the ninety (90) days, in my view. 16 Q: In fact, are you aware of any reason why 17 the whole, say $20 million, could not have been put on lease 18 by September 11, 1999? 19 A: I'm not sure of all the details of what 20 was all in the first least, or the first schedule. In my 21 view, a lot of it could have been done. 22 Q: All right. And were you the cause of any 23 delay with respect to equipment being put on lease, or not 24 being put on lease, until October 1? 25 A: No.
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1 Q: In the course of questioning by City -- 2 the City Solicitor's Office, a suggestion that was put to, 3 that there would be a problem if the RFQ process resulted in 4 only having two (2) qualified bidders. 5 And this was in particular reference to the 6 buy/lease back, in terms of the RFQ. How important was -- 7 was the buy-lease back term of the RFQ to the City? 8 A: It was very important to the City because 9 they had been purchasing this equipment and looking to lease 10 it, rather than spend capital money on it. 11 MADAM COMMISSIONER: When they bought it, were 12 they thinking of leasing it right at that time, or was it 13 just after that they decided to lease it? 14 THE WITNESS: No, the intent was all along to 15 finance the -- at least the equipment being purchased for the 16 Year 2000 project through leasing. 17 MADAM COMMISSIONER: Okay. 18 19 CONTINUED BY MR. BRYAN McPHADDEN: 20 Q: Now it was your evidence that everyone 21 involved in the process was aware that this was to be a 22 buy/leaseback situation. 23 To the extent that only two (2) of the bidders 24 actually specifically addressed that aspect, is there a 25 problem -- inherent problem with only two (2) qualified
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1 bidders coming out of a RFQ? 2 A: No, not at all. That's part of the 3 process. 4 Q: In the course of examination by other 5 Counsel, questions were put to you with respect to the merits 6 of a single supplier approach versus a multi-supplier 7 approach. 8 As of 1999, were you aware of any entity of 9 the size of Toronto, that was using or using a multi-supplier 10 arrangement? 11 A: No, I was not. 12 Q: All right. Have you since become aware 13 that Ontario uses some form of a multi-supplier arrangement? 14 A: Well, they have an arrangement, as I 15 understand it, it isn't necessarily a multiple supplier, they 16 have qualified at the government level, a list of I believe, 17 five (5) leasing companies that they will do business with. 18 But, the individual ministries or the 19 clusters, as they're set up now for IT, if they wish to have 20 -- to choose a leasing company, they have to go back out and 21 do an RFP, to these five (5) specific companies and choose 22 one (1). 23 MADAM COMMISSIONER: And RFP? 24 THE WITNESS: An RFP, yeah. It's kind of 25 secondary sourcing.
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1 CONTINUED BY MR. BRYAN McPHADDEN: 2 Q: Given that an entity the size of Toronto, 3 or even larger, is now using a multi-supplier approach, and 4 knowing what you know about that now, in 1999 would you have 5 recommended to the City of Toronto that it use a multi- 6 supplier approach? 7 A: No, I would not. I didn't see any reason 8 for it and I think they had enough difficulty putting 9 together a one (1) supplier process, given it was the first 10 time they were -- they were taking on this type of work in 11 this magnitude. 12 Q: And, in fact, subsequent events 13 demonstrated that a single supplier was difficult enough, as 14 it was, for the City? 15 A: That's correct. 16 Q: I'd like to take you to Volume 1, Tab 47. 17 18 (BRIEF PAUSE) 19 20 Q: This is an e-mail from Mr. Rabadi, and 21 it's Begdoc 14114. 22 A: Yes. 23 Q: All right. And in this e-mail, Mr. Rabadi 24 expresses some gratitude to you, for checking the numbers and 25 the formulas, do you see that?
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1 A: Yes. 2 Q: All right. Did you check any formulas 3 with respect to the RFQ or the response to the RFQ? 4 A: I checked the numbers to make sure the 5 numbers you were using were the ones that were in the 6 response. 7 Q: Now, when you say the numbers, are you 8 referring to the inputs? 9 A: Yes. 10 Q: All right. Did you review his calculation 11 or his use of any formulae? 12 A: No. 13 Q: You were just asked questions by Mr. 14 Capern with respect to Council's approval of $43 million. 15 According to the report, did a recommendation 16 go to City Council that this sum of $43 million be approved? 17 A: To my knowledge, the report to City 18 Council did not have any numbers like $43 million in it. 19 Q: All right. Did it have any number in that 20 regard, as to an upper limit of what could be spent under the 21 master lease? 22 A: No. 23 24 (BRIEF PAUSE) 25
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1 Q: Now, later when you were working on the 2 CMO -- 3 A: Yes. 4 Q: Right. Your evidence was that you 5 anticipated that departments in seeking to put equipment on 6 lease under the master lease would indicate their budgetary 7 approval. Do you recall that being your evidence? 8 A: Yes, I think so. 9 Q: And in fact, we -- if we can go to Tab 34, 10 Volume 3. 11 12 (BRIEF PAUSE) 13 14 Q: This is Begdoc 29387. 15 MADAM COMMISSIONER: Tab -- On Volume 3? 16 MR. BRYAN McPHADDEN: I'm sorry. If I said 43 17 I meant 34. 34 in Volume 3. 18 MADAM COMMISSIONER: 34? 19 MR. BRYAN McPHADDEN: Yes. 20 MADAM COMMISSIONER: Okay. 21 22 23 CONTINUED BY MR. BRYAN McPHADDEN: 24 Q: And according -- this is your outline and 25 proposal of draft of the documentation relating to the CMO,
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1 is it? 2 A: Yes. 3 Q: All right and where in here do you 4 indicate that approval -- or the source of the budget 5 approval of each department should be stated with respect to 6 anything that's to go on the master lease? 7 A: I guess on the document numbered 29390 and 8 it's a list of steps, here. The first one -- the department 9 initiates the -- the request and approves the expenditure at 10 that first step. 11 Q: All right and you also prepared a form, 12 Begdoc 29395? 13 A: Yes. 14 Q: And is there any significance in terms of 15 what we're talking about to the approval signatures and one 16 of them being the requesting department manager. 17 A: Yeah. That's -- that's the approval by 18 the department head to approve the expenditure of the value 19 that's at the top of the form. 20 Q: All right. Now, I understand you weren't 21 involved in the operation of the CMO subsequently? 22 A: That's correct. 23 Q: You were involved in setting it up but to 24 your knowledge with respect to any amounts that were put on 25 lease by the City of Toronto pursuant to this MFP, to your
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1 knowledge were any of the amounts not authorized by some form 2 of budgetary approval. 3 A: To my knowledge they were all approved. 4 Q: In the course of examination by Mr. 5 Andrew's solicitor, there's some suggestion that Mr. 6 Wilkinson, who was negotiating the contract with you on 7 behalf of MFP, was an expert and that perhaps your level of 8 knowledge did not achieve or was not the same of his. In the 9 course of your associations with Mr. Wilkinson, did you 10 believe that you were in any form of a disadvantage? 11 A: No. 12 Q: All right. Did you make any compromises 13 on behalf of the City in your negotiations with Mr. Wilkinson 14 arising from any difference in your levels of knowledge or 15 expertise? 16 A: No. 17 Q: Some of the questions that were put to you 18 related to the schedules to the master lease agreement and 19 there was some hint or suggestion that perhaps a lawyer be 20 involved in that process. Do you have any views in that 21 respect in terms of the need or advisability of having a 22 solicitor involved in negotiating the schedules. 23 A: Well, schedules are basically just an 24 inventory of what is going to be put on lease for that 25 particular schedule or period.
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1 The people typically involved in that, are the 2 IT people who own or manage the assets, make sure that 3 they're identified properly, serial numbers are correct and 4 that kind of thing. 5 Q: All right. And in terms of moving forward 6 and the negotiation of future lease schedules, who would you 7 recommend participate on behalf of the City in that regard? 8 A: I would think the appropriate manager in 9 the IT department. 10 MADAM COMMISSIONER: So, you're saying it 11 doesn't need to be a lawyer is that -- 12 THE WITNESS: That's correct. 13 14 (BRIEF PAUSE) 15 16 CONTINUED BY MR. BRYAN McPHADDEN: 17 Q: I want to turn briefly back to the ninety 18 (90) day guarantee period. As at September 11th, that being 19 the expiry of the ninety (90) day guarantee period? 20 A: Yes. 21 Q: Were you aware of any decision or concrete 22 decision to put equipment on a sixty (60) month lease? 23 A: I wasn't aware of any concrete decision to 24 do that, no. 25 Q: All right. You were asked subsequently to
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1 obtain sixty (60) month lease rates, correct? 2 A: Yes. 3 Q: All right. And, in fact, we've seen that 4 the City proceeded to put the -- you say, $20 million 5 thereabouts on a lease. And that was a sixty (60) month term 6 was it? 7 A: Yes. 8 Q: In those circumstances, what difference 9 would it have made had you obtained the lease rates as at 10 September 11th from MFP? 11 A: Well, it wouldn't have matter, because the 12 lease rate for the sixty (60) month period was a whole 13 different direction. 14 Q: According to the request -- 15 MADAM COMMISSIONER: I'm not understanding 16 what you're saying, sorry. 17 MR. BRYAN McPHADDEN: All right. 18 19 CONTINUED BY MR. BRYAN McPHADDEN: 20 Q: According to the -- the proposal from MFP, 21 the lease rates were to be for thirty six (36) months, 22 correct? 23 A: Yes. 24 Q: All right. And the rates for sixty (60) 25 months are different?
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1 A: That's correct. 2 Q: All right. The obligation, if you will, 3 of MFP as regards rates and guaranteeing those rates, only 4 pertain to the thirty six (36) month term, correct? 5 A: Correct. 6 Q: All right. So, to the extent that, as at 7 September 11th, you were going to go to seek an extension of 8 the ninety (90) day guarantee, in light of what you knew at 9 the time, and in light of MFP's obligation, that would only 10 have related to a thirty six (36) month term? 11 A: Yes. 12 13 (BRIEF PAUSE) 14 15 Q: Now, in terms of the change from thirty 16 six (36) months to sixty (60) months, did you see it as your 17 role to give advice in that regard, in terms of that change? 18 A: I wasn't asked for advice on that change. 19 Q: Now, you indicated in your earlier 20 testimony that Ms. Viinamae came to you and instructed you to 21 obtain a rate from MFP for a sixty (60) month term, do you 22 recall that? 23 A: Yes. 24 Q: All right. Was there anything in that 25 instruction to you, that suggested that Ms. Viinamae was
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1 seeking your input or advice, as to the advisability of the 2 sixty (60) month term? 3 A: No. 4 Q: At the time that, Ms. Viinamae, gave you 5 those instructions, were you aware that there had already 6 been discussions between IT and MFP and others at the City 7 with respect to the sixty (60) month term and related rates? 8 A: No. 9 10 (BRIEF PAUSE) 11 12 Q: I want to take you now to your dealings 13 with Mr. Fecenko. And, in particular, the precedence issue, 14 this is whether or not the RFQ and MFP's response takes 15 priority or precedence over the master -- master agreement? 16 A: Yes. 17 Q: All right. Now, did Mr. Fecenko ever ask 18 you for a copy of the RFQ and the MFP -- or MFP's response? 19 A: No. 20 Q: Did you tell Mr. Fecenko that they 21 contained only business terms? This is the RFQ and the RFQ 22 response from MFP? 23 MADAM COMMISSIONER: That they contain only 24 what? 25 MR. BRYAN McPHADDEN: Business terms.
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1 MADAM COMMISSIONER: Terms. 2 THE WITNESS: I believe so, yes. 3 4 CONTINUED BY MR. BRYAN McPHADDEN: 5 Q: You believe you told him that? 6 A: Yes. 7 Q: Based on your knowledge and experience, 8 did Mr. -- was Mr. Fecenko familiar with the City's bidding 9 process? 10 A: I -- yes, I think he is or was at the 11 time. 12 Q: Now, in terms of the alleged recorded 13 difficulties experienced by the City, that is the cost under 14 this MFP agreement being 80 or 85 million as opposed to some 15 say 43 million, is there anything in terms of the priority of 16 the RFQ or MFP's response to the RFQ that gives rise to that 17 purported problem? 18 A: I wouldn't say so, no. 19 Q: Okay. Tab 69 of Volume 3. 20 21 22 (BRIEF PAUSE) 23 24 A: Thank you. 25 Q: Now, this letter was drawn to your
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1 attention which is back to ten (10) meetings with Mr. Andrew 2 said to have been attending with Oracle? 3 MADAM COMMISSIONER: Can I have the Begdoc 4 number? 5 MR. BRYAN McPHADDEN: I'm sorry. 40460. 6 MADAM COMMISSIONER: Thank you. 7 8 CONTINUED BY MR. BRYAN McPHADDEN: 9 Q: And of course that questioning, it didn't 10 appear clear to me whether or not you were aware of this, 11 rather, in 1998 or in 1999? 12 A: No, I wasn't. 13 Q: Did the first that this letter came to 14 your attention, was that in the course of this Inquiry? 15 A: Yes. 16 Q: And I'd like to turn to Tabs 96 and 97 of 17 Volume 1. These are two (2) e-mails from Mr. Fecenko. One 18 dated January 19th and bearing Begdoc 16187 and the other is 19 at Tab 98. 20 A: Okay. 21 Q: Sorry, Tab 97 bearing Begdoc 16189 and in 22 the course -- the course of being questioned about these two 23 (2) e-mails, you were asked whether or not you responded to 24 one or either of them and your evidence was that you couldn't 25 recall.
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1 A: Right. 2 Q: Now, with respect to the January 19th 3 e-mail, we see that Mr. Fecenko is asking you: 4 "Have matters proceeded with Oracle?" 5 And he doesn't seem to know or be aware of the 6 fact that the City had entered into a contract with Oracle as 7 of that time. 8 A: Right. 9 Q: You agree with that and yet if we take a 10 look at his next e-mail, being the February 1 e-mail, he is 11 saying: 12 "Can I please get a copy of the Oracle 13 agreement for my files?" 14 It would appear, would you agree, that between 15 January 19th and February 1st that Mr. Fecenko has learned 16 that, in fact, that two (2) parties have entered into an 17 agreement? 18 A: Yes. 19 Q: Okay. To your knowledge, was anyone else 20 dealing with Mr. Fecenko during that time relative to this 21 matter? 22 A: No, there wasn't. 23 Q: Is it reasonable, therefore, to surmise 24 that you had, perhaps not by way of e-mail, in fact responded 25 to Mr. Fecenko's January 19th e-mail?
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1 A: Yes. 2 Q: All right. 3 MR. BRYAN McPHADDEN: Thank you. Those are 4 all my questions. 5 6 (BRIEF PAUSE) 7 8 MADAM COMMISSIONER: I told you the questions 9 from your lawyer would be easier than what you've gone 10 through. 11 Mr. Moore, re-examination? 12 13 (BRIEF PAUSE) 14 15 MR. PATRICK MOORE: Commissioner, the -- Madam 16 Registrar tells me that the documents at Tabs 127 and 128 of 17 Volume 4, have not yet formally been stated on the record to 18 have been included in that Volume. 19 And so at some stage before we let Mr. Power 20 go, I'd ask that that be attended to. 21 MADAM COMMISSIONER: Who are you wanting to 22 have attend to that? 23 MR. PATRICK MOORE: Just that -- 24 MADAM COMMISSIONER: Wouldn't that be you? 25 MR. PATRICK MOORE: -- well, I would think
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1 that it would be well if you were to confirm that these have 2 been received and included in the Volume. 3 MADAM COMMISSIONER: Okay. That's 127, Begdoc 4 12765, a -- I gather it's a draft. I'd written the word, 5 draft, on it although it doesn't say that it's draft, but, 6 the evidence has been that it's a draft, dated January 24th, 7 1999, to Policy and Finance Committee from the Chief 8 Financial Officer and Treasurer and the Executive Director of 9 Information and Technology, regarding leasing of computer 10 equipment and software. 11 And the next one (1) is Tab 128, Begdoc 06447, 12 a letter from Mr. Fecenko to Mr. Garrett. 13 MR. GORDON CAPERN: Commissioner, 127 should 14 be noted as June 24, 1999, not January. 15 MADAM COMMISSIONER: Did I say January? 16 MR. GORDON CAPERN: You did, sorry. 17 MADAM COMMISSIONER: I -- 18 MR. GORDON CAPERN: Just so the record is 19 clear. 20 MADAM COMMISSIONER: It says very plainly here 21 June. Okay. I guess I'm not firing on all cylinders. 22 Thank you. 23 MR. PATRICK MOORE: Thank you, Commissioner. 24 25 RE-DIRECT EXAMINATION BY MR. PATRICK MOORE:
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1 Q: Mr. Power, I wonder if I might just -- 2 before we leave the conversation that you had with Mr. 3 Loreto, which may or may not be accurately recorded, but, 4 there is the file memo at Tab 33, Volume 1. 5 If I might just talk to you briefly about 6 that. That's the conversation in which, as My Friend Mr. 7 Capern read to you, says in part: 8 "Brendan said Council $43 million." 9 Now, I recall that when you and I spoke some 10 time ago, in the earlier part of your evidence, that we 11 talked about the Council resolution and that you told me that 12 you were not present at the time that the resolution was 13 adopted in July of 1999. 14 Do you recall that? 15 A: Yes. 16 Q: And I thought you had said that you did 17 not, at least not at that time, read the Council resolution? 18 Did I have that right? 19 A: At the time? 20 Q: Yes? 21 A: Correct. 22 Q: Now, the time that this document at Tab 23 33, Volume 1, the memo to file with Begdoc 12586, the time 24 that that document appears to have been created is February 25 of 2000?
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1 A: Yes. 2 Q: Taking your mind back to that time, can 3 you tell us whether you had read the Council resolution by 4 February 15, 2000? 5 A: Yes. 6 Q: And so, if Mr. Loreto had asked you a 7 question about the content of the Council resolution, you 8 would have been in a position then, to tell him from your own 9 knowledge, what the resolution said? 10 A: Yes. 11 Q: And if you were then of the view that you 12 are now, that there was no cap of $43 million, stated in that 13 resolution, you were in a position to tell Mr. Loreto that, 14 if the conversation had gone in that direction? 15 A: Yes. 16 Q: And similarly, as the result of the 17 inquiries you made, you appear to have been in a position to 18 tell him that $33 million or so, of assets, had been placed 19 on lease by the time of this conversation in February 2000? 20 A: Yes. 21 Q: And you've told us that you had the view 22 in mind, at the time you drafted the RFQ, that the asset 23 acquisition involved in that RFQ, would have been 24 substantially in excess of $43 million. 25 So, with that in mind, if Mr. Loreto had asked
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1 you something like, well, Mr. Power, 33 million is on lease 2 now, how much is it going to grow to eventually, you would 3 have been in a position, to give him the benefit of your 4 wisdom on that, as well? 5 A: Yes. 6 Q: And is it your recollection now that he 7 did or did not ask you that question? 8 A: I don't think he did. He -- this is -- 9 this is to do with the letter that was going to MFP? 10 Q: Yes, sir. 11 A: I provided Brian with quite a few pieces 12 of information about that. As a matter of fact, I think I 13 went and got a certified copy of the -- of the Council 14 resolution from the Clerk's office as part of the 15 documentation I was giving him. So I -- I can't understand 16 the conversation being as described here. 17 Q: But in addition to being in a position to 18 tell him your views on what the size and shape of the 19 transaction could turn out to be, is it fair to say that at 20 that time there was no reason why you wouldn't have told him 21 that it would have been substantially in excess of $43 22 million had he taken you to that subject? 23 A: That's correct. 24 Q: And there was no reason for you to 25 volunteer it in the context of the direction of this -- the
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1 purpose of this conversation, that is the letter for the 2 lenders? 3 A: Correct. 4 Q: All right. Mr. Anderson took you to a 30 5 June draft and to the fact that the reference in early drafts 6 to a $43.15 million cap, if we will, on the expenditure as 7 set out in the first recommendation was in subsequent drafts 8 taken out. You remember that conversation? 9 A: Yes. 10 Q: And in terms of expectations, was it your 11 expectation at that time that the two (2) people who were 12 shown to be -- intended to be signatories of the draft 13 agreement going to Policy and Finance would read and 14 understand the document before it went forward? 15 A: That would be my understanding, yes. 16 Q: And based on your experience, if somebody 17 you prepare a document for doesn't fully understand it, when 18 you're shown as a contact person would you be contacted by 19 the person whose name would appear in the document? 20 A: That has happened, yes. 21 Q: Mr. Berrill took you to one part of a 22 document. It was the 7 October Steering Committee meeting at 23 Volume 3, Tab 59 and I wonder if we can turn that up 24 together. 25
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1 (BRIEF PAUSE) 2 3 Q: That, for the record, is a document with 4 number 15210 and you remember that Mr. Berrill took you to 5 the portion on Page 1 which suggested that an additional $2 6 million might be a cost incurred by the City to dispose of 7 assets? 8 Just so that we're clear on the point, I 9 wonder if I might also point you to the provision in that 10 same paragraph which is the one numbered 3 towards the bottom 11 of the page which reads: 12 "There is a possibility of using a 13 recycling firm free of charge." 14 And in the next paragraph: 15 "The Steering Committee approved the 16 strategy of removal of obsolete 17 decommissioned computers by a recycling 18 firm." 19 Do you see that, sir? 20 A: Yes. 21 Q: And on the basis of your experience at the 22 province and elsewhere, at that time, and that time would be 23 back in the fall of 1999, there were recycling firms who 24 would take assets such as computers and dispose of them free 25 of charge?
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1 A: Yes, yeah. 2 MR. DAVID MOORE: Well, I guess I have -- My 3 Friend has read that sentence but it's immediately followed 4 by a sentence referring to a cost of removing the information 5 on the discarded computers, which I take to be a different 6 matter than simply picking them up and putting them in a 7 landfill site. 8 MADAM COMMISSIONER: Considering that the hard 9 drive, for example, would have to be removed, is that what 10 you're saying? 11 MR. DAVID MOORE: Well, that's what -- that's 12 how I read this. I mean, I expect we may hear from someone 13 who was actually at this meeting who might be able to 14 explain, I don't know if My Friend was intending to suggest 15 anything differently. 16 MR. PATRICK MOORE: No, no I wasn't. 17 MADAM COMMISSIONER: Okay. 18 MR. PATRICK MOORE: I may have misunderstood, 19 Mr. Berrill, but I took his point to be, when he was cross- 20 examining Mr. Power, that there would be a cost -- that there 21 would be costs associated with disposition of obsolete end of 22 lease term assets. 23 My Friend, Mr. Moore, is quite right, that 24 among those costs may well be the cost of decommissioning, 25 but, to the extent that the costs would go further and
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1 include the actual disposition costs, if I understood the 2 cross-examination correctly, then it is well to look at this 3 part of that document to confirm that that cost may be 4 negotiated down to zero, that's the only point. 5 MADAM COMMISSIONER: Okay. Thank you. 6 7 CONTINUED BY MR. PATRICK MOORE: 8 Q: And then later in his cross-examination, 9 Mr. Berrill took you to the question of whether re-tendering 10 would have been wise upon the decision to move from a thirty 11 six (36) to a sixty (60) month term. 12 And you recall that he suggested several 13 reasons, which -- all of which you agreed to, why that might 14 not have been a wise decision to make. 15 For instance, he pointed you to the 16 flexibility provision in -- in the policy and finance 17 decision and report going forward to Counsel, and he asked 18 you about whether the fact that MFP was a Vendor of Record 19 defacto under this process might have made it inappropriate 20 or unnecessary, and he pointed to the fact that you were 21 running out of time. 22 And on that point, I'm wondering if I might 23 ask you this, you remember that when the Councillor's 24 computers were -- when that transaction was going forward in 25 the -- in the late part of 1997, and early '98, I know you
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1 weren't involved, but you now know about that, that was done 2 by way of verbal quotation, and I'm wondering whether, in 3 your experience, in the Fall of 1999, it would have been 4 feasible to obtain verbal quotes from MFP and its competitors 5 on sixty (60) month rates? 6 A: First of all, I don't know if verbal 7 quotes is an appropriate way of doing business. Secondly, we 8 would have to give something more formal to them, in terms of 9 the amount of the equipment there -- what our expectations 10 are, so, I -- I don't see a verbal quote as being a 11 reasonable thing to -- to do at that time. 12 Q: But if you were running the department, 13 and this decision was made under your watch, is it fair for 14 us to conclude that you would have considered all of these 15 alternatives that Mr. Berrill put to you, you would have made 16 an informed decision, and you would have recorded it for 17 future reference? 18 A: Yes. 19 Q: And in addition to that, keeping in mind 20 the provision in the Counsel resolution of reporting back 21 from time to time, would it be reasonable to conclude that 22 you would have reported back to Counsel on this decision 23 having been made and the reasons for it? 24 A: Yes. 25 Q: Mr. Berrill also took you to the Section
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1 1.1.17, a provision in the RFQ, and -- and your conclusion, 2 having seen the MFP response that that was response was 3 acceptable, do you recall that? 4 A: Yes. 5 Q: Just talking about -- about the mechanism 6 for a moment, if I may, and -- and the wisdom or feasibility 7 of tying to an external marker. 8 Is it fair to say that one (1) of the reasons 9 for requesting a mechanism for future changes in the lease 10 rate is to know, with some degree of certainty what the lease 11 rate will be in the future? 12 A: With some degree of certainty, I suppose, 13 if it's tied to some future benchmark that a major part of 14 the rates, I would think, would depend on the type of 15 equipment that you're going to put on lease and that would 16 influence the rate. 17 Q: And your point also was, I think, if I 18 have it correctly in my mind, that it's difficult to predict 19 the money markets, and therefore it's difficult to say, that 20 even if you tie it to a bond rate or an interest rate, that 21 you will have comfort of an accurate prediction on a going 22 forward basis. Is that your point? 23 A: That's right, yes. 24 Q: But, to that point, can I ask you this? 25 At the time that the RFQ is being responded to, if you
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1 request and require that bidders come up with a formula that 2 pegs future changes to, let's say a bond rate, is it not the 3 case, and one (1) of the advantages of doing that, that 4 you'll be able to compare the bidders between and among 5 themselves? 6 For instance, one might be three hundred (300) 7 points over the bond rates, while another one (1) is a 8 hundred and fifty (150) over? That gives you a basis for 9 comparison of the bidders? 10 A: Without the variable regarding the 11 residual they would take on the equipment, yes. 12 Q: And the other advantage of having a 13 mechanism pegged to an external marker is that it takes away 14 the opportunity, not that anyone would take advantage of it, 15 but, it takes away the opportunity of a bidder arbitrarily or 16 changing rates on a going forward basis over time? 17 A: If that's built into the contract, there's 18 a possibility, yes. 19 Q: Thank you. In Volume 1, Tab 102, which is 20 document 20598, Mr. Berrill took you to Section 16 of the -- 21 of the master lease agreement. 22 And he used the term, that you negotiated this 23 provision in the -- in the agreement. And so on thinking of 24 that, I wonder if you could hold that in one (1) hand and 25 turn back to Tab 27, with the other, which is the draft of
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1 the master lease agreement, document 11126. 2 MADAM COMMISSIONER: And where is that? 3 MR. PATRICK MOORE: And that is at Tab 27 of 4 Volume 1, 11126, at page 11129. 5 6 CONTINUED BY MR. PATRICK MOORE: 7 Q: And it looks to me, Mr. Power, and my 8 point is, will you agree with me on this, that the draft of 9 Section 16, return of equipment, is identical to the final 10 version of Section 16 at Tab 102? 11 12 (BRIEF PAUSE) 13 14 A: Yes. 15 Q: And can we conclude, therefore, that there 16 was no negotiation on the content of that provision? 17 A: That's correct. 18 Q: When Ms. Ryley was asking you questions, 19 Mr. Power, about the Oracle transaction, she referred you to 20 Volume 3, Tab 58, can we go there together? 21 22 (BRIEF PAUSE) 23 24 Q: And that is Document 40456 and I'm 25 wondering, we may have others come and speak to us about the
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1 Oracle transaction, but because of your familiarity with 2 Oracle, I wonder if I could direct you to the top three (3) 3 paragraphs on Page 2 which appear to tell us something about 4 what Oracle is and why Oracle licenses had been acquired by 5 the City and why it might be a useful thing going forward to 6 acquire more and different ones and can I ask you whether, 7 after you've considered that, whether those first three (3) 8 paragraphs might be a useful starting point for the 9 Commissioner and all of us toward an understanding of Oracle? 10 11 (BRIEF PAUSE) 12 13 A: Yes, I would think so. 14 Q: It was during the cross-examination by Mr. 15 Capern that the announcement of the sixty (60) month term was 16 discussed and I wrote down, I hope I get it -- got it right, 17 but I wrote down that came as a big surprise to you? Do you 18 remember that? 19 A: Yes. 20 Q: And that was in connection with his 21 reference to you of Volume 1, Tab 70 document. Let's have a 22 look at that. That was the document bearing number 14232. 23 The 1 October 1999 e-mail from Ms. Viinamae to Mr. Andrew and 24 others, including yourself -- at least yourself by way of cc 25 and that, I think you told us, was your first knowledge of
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1 the sixty (60) month term and I'm wondering whether in terms 2 of after the surprise you took it -- you were reasonably 3 calm, I think, in your exchange with the Commissioner. 4 There was reasonable calm, at least in your 5 end, perhaps in IT generally, about the decision to move to 6 sixty (60) month term and I'm wondering whether that was in 7 part because you expected changed in this transaction over 8 time, in any event? And my reason for saying that is that 9 you had, at Paragraph 6, of course, of the RFQ specifically 10 put in reference for the reader and the bidders that there 11 was an intention to upgrade equipment throughout the term of 12 the lease. 13 A: Yes. 14 Q: And in your experience, lease transactions 15 often, perhaps almost always, did change during the term of 16 the lease? 17 A: Yes. 18 Q: Is that fair? 19 A: Correct. 20 Q: So while this was an unexpected change, it 21 was a change and therefore one that you just had to deal with 22 and did? 23 A: Yes. 24 Q: Book 4, Tab 128. That is the Document 25 6447. The 10 March 1999 retainer letter which as we see at
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1 the fourth page is apparently signed by Mr. Fecenko of the 2 law firm and by Mr. Garrett and by Mr. Doyle, for the City? 3 A: Yes. 4 Q: And I'm wondering, is that a document that 5 you would have seen around the 10th of March of 1999? 6 A: Yes. 7 Q: And when you saw it then, did you read in 8 the first paragraph the reference and I'll just read it for 9 you: 10 "This letter will set out the retainer 11 agreement between our law firm and the City of 12 Toronto entered into pursuant to your request 13 for external legal services in respect of Year 14 2000 issues, dated January 20, 1999 and our 15 firms response to same." 16 And the purpose of the retainer follows on 17 page one (1): 18 "Our firm is being retained to provide 19 legal services in relation to Year 2000 20 issues as requested from time to time." 21 You would have read that, Mr. Power? 22 A: Yes. 23 Q: And you would have been familiar, as 24 you've told us you were, with your ability as Ms. Viinamae's 25 designate to retain Mr. Fecenko and others at his firm, for
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1 carrying out the purpose of this retainer? 2 A: Yes. 3 Q: Now, what I'm wondering is, did you ever 4 sit down with Mr. Doyle or others at City Legal and talk 5 about what exactly the City had in mind in terms of what was, 6 and what was not a Year 2000 issue? 7 A: No, I don't think we did. 8 Q: And so no one ever told you, I take it, 9 Mr. Power, that where you had a transaction which was partly 10 Y2K or Year 2000 related and partly not, that you could or 11 could not retain Mr. Fecenko and others at his firm to 12 provide outside legal services? 13 A: Correct. 14 15 (BRIEF PAUSE) 16 17 MR. PATRICK MOORE: Thank you. 18 Those are my questions. 19 MADAM COMMISSIONER: I just have a few 20 questions. 21 Are you still a consultant? 22 THE WITNESS: I still do some consulting work, 23 yes. 24 MADAM COMMISSIONER: Okay. And I just wanted 25 to ask you about something that you said, this was on the
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1 first day, when Mr. Pat Moore was asking you some questions 2 about the sale and leaseback. 3 He was -- you said that with respect to 4 technology some companies are very careful about leasing 5 equipment that is not tier one (1) or tier two (2) equipment? 6 THE WITNESS: Yes. 7 MADAM COMMISSIONER: And so, I'm just curious 8 as to why then with respect to the sale and leaseback 9 equipment that you wouldn't have said specifically whether it 10 was tier one (1) or tier two (2) equipment? 11 THE WITNESS: In the RFQ? 12 MADAM COMMISSIONER: In the RFQ, yes? 13 THE WITNESS: I thought that -- 14 MADAM COMMISSIONER: It's your view that it 15 does say that? 16 THE WITNESS: I thought it does say that. 17 MADAM COMMISSIONER: Okay, maybe somebody 18 could take me -- 19 20 (BRIEF PAUSE) 21 22 MADAM COMMISSIONER: It may very well say 23 that. I just can't recall it saying that. 24 MR. BRYAN McPHADDEN: It's at Tab 19, Volume 25 1.
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1 MADAM COMMISSIONER: Thank you. 2 3 (BRIEF PAUSE) 4 5 MR. PATRICK MOORE: In the opening paragraph 6 on page 1, this may not be the only reference, but, there is 7 a reference there Commissioner. That's at page -- document 8 6105, under the heading introduction, which reads: 9 "In this request for quotes, RFQ, the City 10 of Toronto, the City, is requesting 11 respondents to proposal options to lease, 12 to the City, tier one (1) servers, 13 desktops, notebooks, et cetera." 14 MADAM COMMISSIONER: Okay. 15 MR. PATRICK MOORE: That's one (1) reference. 16 Perhaps Mr. Power can find us others. 17 18 (BRIEF PAUSE) 19 20 MR. PATRICK MOORE: Yes, there's another one 21 at paragraph 6, document page number 06118, and that's a 22 reference to the upgrades that we just spoke of. 23 "The City will ensure that it will acquire 24 only tier 1 equipment." 25 MADAM COMMISSIONER: Okay, I guess I was
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1 looking at 6116, and that is the already purchased or to be 2 purchased in 1999. And was wondering in the already 3 purchased or to be purchased, was there any reason that you 4 didn't put in that there were tier 1, or is it just because 5 it was in various other spots and there was no need? 6 THE WITNESS: That could be, but also the 7 listing of the manufacturer's equipment they're typically 8 described as tier 1. 9 MADAM COMMISSIONER: Okay. Okay, so one (1) 10 last question and you're done after this last question, okay. 11 As you probably know, at the very end I tend to ask witnesses 12 who have been here, if there is anything that they would like 13 to put in to assist me in making my recommendations. 14 At the end of the Inquiries I have to make 15 recommendations to City Council and you have a certain 16 expertise, if there's anything that you would like to say now 17 that would assist me in making my recommendations, I'd 18 certainly be happy to hear it? 19 THE WITNESS: One (1) of the things I found 20 curious working at the City, and I think it's still the same 21 today, is their decision and approval process, and just take 22 this -- this item we're dealing with here. By the time it 23 gets to the final approval, which is City Council, that is 24 sometimes the first time that they have seen the document or 25 anything to do with it.
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1 And in my view, it's way too late, because the 2 expectations have been created, the vendors have been 3 engaged, and other things are under way. So, they end up 4 asking all of the basic business case questions after the 5 fact, after everything has been committed, though not 6 necessarily approved. 7 So, I think if they could look at some way of 8 doing an approval process up front, while not necessarily 9 giving anybody, you know, unleashed authority to go and do 10 whatever they want to do, but approve these things in advance 11 with certain parameters, and then the City officials can come 12 back to them with the approval to contract for the service. 13 MADAM COMMISSIONER: So, for example, in this 14 one (1), if it had gone to City Council in the end of July 15 '99, and if they hadn't approved it, then it would have gone 16 back to staff and there would have been no other Council 17 mechanism to have this approved until maybe September -- 18 THE WITNESS: That's right. 19 MADAM COMMISSIONER: -- is that one (1) of 20 your concerns? 21 THE WITNESS: Yes. I also think that it could 22 have gone to Council as an approval in principle, for lack of 23 a better term, in the winter or the Spring, you know, before 24 the document even went on the street, like permission to -- 25 MADAM COMMISSIONER: So approval in principle
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1 for leasing, for example? 2 THE WITNESS: Yeah. 3 MADAM COMMISSIONER: Hmm hmm. And then 4 approval in principle for purchasing -- for having an RFQ? 5 THE WITNESS: Yes. 6 MADAM COMMISSIONER: And then only come to 7 them in the final analysis when they actually had a 8 successful bidder? 9 THE WITNESS: Yes, with the details, the cost 10 and -- 11 MADAM COMMISSIONER: All right. 12 THE WITNESS: -- the authority to contract. 13 MADAM COMMISSIONER: Okay. 14 THE WITNESS: With the bidder. 15 MADAM COMMISSIONER: Okay, thank you, anything 16 else? 17 THE WITNESS: No. 18 MADAM COMMISSIONER: All right. Any questions 19 arising out of mine? Well, have a very happy holiday and 20 thank you for coming in today. 21 THE WITNESS: Thank you very much. 22 MADAM COMMISSIONER: All right. 23 24 (WITNESS STANDS DOWN) 25
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1 MADAM COMMISSIONER: Mr. Moore, the next 2 witness is Mr. Beattie, I gather? 3 MR. PATRICK MOORE: Yes, Commissioner. 4 MADAM COMMISSIONER: Or would it make sense to 5 take the morning recess now, before Mr. Beattie gets here, 6 and then -- 7 MR. PATRICK MOORE: Yes. 8 MADAM COMMISSIONER: All right, well, why 9 don't we take the break now and we'll come back at 11:30. 10 THE REGISTRAR: Order. The Inquiry will 11 recess until 11:30. 12 13 --- Upon recessing at 11:07 a.m. 14 --- Upon resuming at 11:30 a.m. 15 16 THE REGISTRAR: The Inquiry will resume, 17 please be seated. 18 19 (BRIEF PAUSE) 20 21 MR. PATRICK MOORE: Commissioner, we now have 22 with us Mr. Dave Beattie, who I'd ask be sworn. 23 MADAM COMMISSIONER: Thank you. 24 25 DAVID BEATTIE, Sworn;
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1 MADAM COMMISSIONER: Good morning. 2 THE WITNESS: Good morning. 3 MADAM COMMISSIONER: It's not usually quite 4 this cold in here. 5 MR. BRYAN McPHADDEN: Just before Commission 6 Counsel begins, I -- it's necessary for me to leave, I have a 7 cross-examination to conduct on another matter, that's been 8 ordered to be conducted today. 9 MADAM COMMISSIONER: Okay. 10 MR. BRYAN McPHADDEN: So, I'll take my leave 11 at this time, but I may be joined later by Mr. Zoran Samac of 12 my office. 13 MADAM COMMISSIONER: Okay, thank you -- 14 MR. BRYAN McPHADDEN: Okay. 15 MADAM COMMISSIONER: -- Mr. McPhadden. 16 MR. BRYAN McPHADDEN: Thanks. 17 MR. PATRICK MOORE: Commissioner, as you may 18 know, Mr. Beattie swore an affidavit in this matter on the 19 27th of March, 2003, and that affidavit should be in a 20 binder, which I would ask be made Exhibit 24 in these 21 Proceedings. 22 MADAM COMMISSIONER: Okay. 23 MR. PATRICK MOORE: The binder will contain 24 the affidavit and the first fifty-two (52) tabs, will refer 25 to documents that some reference may be made to in the
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1 affidavit or in cross-examinations by counsel. 2 There are fifty-seven (57) tabs now in the 3 binder, by reason of some additions having been made to it 4 between Friday and today. So, if we are to deal with the 5 tabs, we will do that and give you the Begdoc number as we 6 do. 7 MADAM COMMISSIONER: Thank you. 8 9 --- EXHIBIT NO. 24 VOLUME I: Bound document titled "Dave 10 Beattie" tabs 1-57 and 11 affidavit of Mr. Beattie. 12 13 IN THE MATTER OF THE TORONTO COMPUTER LEASING INQUIRY 14 15 AFFIDAVIT OF DAVE BEATTIE 16 17 I, Dave Beattie, of the City of Toronto, in 18 the Province of Ontario, MAKE OATH AND SAY: 19 20 1. Attached to this affidavit, and marked as 21 Exhibit A, is a Binder of documents containing 22 52 Tabs. 23 2. I have been employed in the procurement field 24 for virtually all of my working life. I was 25 employed as a retail buyer by Beaver Lumber
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1 for 10 years. I have worked as a site buyer on 2 the construction of the Darlington generating 3 facility. 4 3. I accepted employment at the City of Toronto, 5 as a buyer, in 1985. Following amalgamation, I 6 became a buyer at the new City of Toronto. In 7 September of 1999 I was promoted to the 8 position of Supervisor, Client Services, a 9 position which I still hold today. 10 4. In May and June of 1999, I reported to Frank 11 Spizarsky. 12 5. Frank Spizarsky was away from the office, on 13 sick leave, extensively in 1999 and has since 14 retired from the position of Manager in the 15 Purchasing and Materials Management Division 16 (PMMD) of the City. 17 6. In Mr. Spizarsky's absence, I reported to Ms. 18 Anne Corbett, who was an Acting Manager in Mr. 19 Spizarsky's absence. Ms. Corbett has also 20 retired. Mr. Spizarsky reported directly to 21 Mr. Lou Pagano, the Director of PMMD. 22 7. As PMMD is a Division within the Department of 23 Finance, Mr. Pagano reported to the Chief 24 Financial Officer and Treasurer, a position 25 held by Ms. Wanda Liczyk following
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1 amalgamation and now held by Mr. Joe 2 Pennachetti. 3 4 The Procurement Process at the City of Toronto in 1998 and 5 1999 6 8. I have read the cross examination of Mr. 7 Michael Garrett by Ms. Rothstein on December 8 10, 2002, (Transcript pages 74-101), and I 9 agree that Mr. Garrett has accurately 10 described how City By-Laws govern the 11 purchasing process at the City, with one 12 exception. At page 97, line 12, Mr. Garrett 13 should have said "under" a million dollars, 14 not "over" a million dollars. 15 9. While I was a buyer at the amalgamated City of 16 Toronto, I was primarily responsible for 17 processing the acquisition of computer 18 supplies and equipment, office equipment, 19 communications and sound equipment, signage, 20 periodicals and books, and police supplies. I 21 could be, and from time to time was, assigned 22 responsibility for processing the acquisition 23 of other goods or services. 24 10. Where a department wished to acquire goods 25 and/or services valued at $7500 or more, it
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1 would initiate the acquisition process by 2 notifying PMMD. Most often, the department 3 would send a Purchase Requisition to PMMD. 4 Sometimes the department would initiate this 5 request by way of telephone call, memo, 6 letter, or e-mail to PMMD. 7 11. A PMMD manager would review these Purchase 8 Requisitions and notices to determine what the 9 initiating Department wished to acquire. This 10 manager would then assign the Purchase 11 Requisition or notice to the appropriate 12 manager, based on the goods and/or services to 13 be acquired. The assigned manager would in 14 turn assign it to one of their buyers. 15 12. I am not an expert on the goods and services 16 that Departments want to acquire or the 17 business needs or requirements that they seek 18 to fill. PMMD expects Departments to identify 19 their needs and the requirements of the goods 20 and services necessary to fulfill these needs. 21 The Department determines whether there are to 22 be any mandatory requirements that must be 23 communicated to bidders in the RFQ. As a 24 result, it is the Department that provides all 25 of the necessary detail in the quotation
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1 document to explain its needs and technical 2 requirements to bidders. The Buyer would 3 review the specifics as drafted by the 4 initiating Department, but only to ensure that 5 the Call is not obviously deficient or 6 otherwise in breach of PMMD requirements. More 7 particularly, I would review the material 8 provided by the department for the following 9 things: 10 a. to ensure that whatever was being 11 requested is described in a sufficiently 12 non-restrictive manner to allow for as many 13 bidders as possible to respond; 14 b. to ensure that the language used 15 reflects proper purchasing concepts, such 16 as the use of the words "quotation" and 17 "respondents" when using an RFQ, and the 18 use of "proposal" and "proponents" in the 19 case of an RFP; 20 c. in certain circumstances, where I had 21 prior experience with acquiring goods or 22 services, I could anticipate what questions 23 bidders may ask. In such circumstances I 24 ensured the bid document contains 25 sufficient detail to avoid such questions;
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1 13. Certain standard purchasing documents are used 2 with every bid document. These documents are 3 commonly referred to as "boilerplate." I 4 attached the "boilerplate" provisions to the 5 computer leasing RFQ. To help explain this, 6 Tab 22 contains what PMMD staff refer to as 7 the "front-end boilerplate." Tab 23 also 8 contains the following boilerplate documents: 9 a. the first page of the document 10 "Quotation Request" 11 b. "Supplier Name File Update" 12 c. "Notice of No-bid" 13 d. "Canadian Content", 14 e. "Workers' Rights Summary Sheet" 15 f. "Workers Rights" 16 g. "Year 2000 Compliance Representation and 17 Warranty" (2 pages) 18 h. "List of Sub-Contractors" 19 i. "Address Label" page 20 14. I note that the document appearing at Tab 23 21 does not appear to be in the usual order. 22 Normally, the boilerplate documents listed 23 above in sub-paragraphs (a) to (i) would 24 appear at the end of the bid document. 25 15. Once the initiating Department and PMMD have
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1 agreed on the form of the Quotation Call, the 2 Buyer would issue it by: 3 a. immediately sending the Quotation Call 4 to companies listed on the City's bidder's 5 mailing list (found at Tab 5 COT003908); 6 b. listing the Quotation Call on the City 7 of Toronto web site; and 8 c. where appropriate, publishing the 9 Quotation Call in newspapers; 10 16. Other companies could also contact the Buyer 11 directly to obtain the Quotation Call 12 documents. 13 17. Requests for Quotation contain a specific date 14 and time of closing and clearly states that 15 responses must be completed, properly signed, 16 and received on or before the date and time 17 specified or the quotation will not be 18 considered. See Tab 22, COT006102. 19 18. At the appointed time for closing, a buyer 20 (and not necessarily the Buyer assigned to the 21 Call) and one other PMMD staff person would 22 publicly open all bids received and read out 23 the identity of the bidders. In most 24 circumstances prices would be read out. In 25 some circumstances, where it is anticipated
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1 that a large volume of prices would be 2 involved, the Quotation Request boilerplate 3 document would state that prices would not be 4 read aloud at the public opening. Bidders 5 would be given the opportunity to make an 6 appointment with the responsible Buyer to 7 arrange to view the prices after opening or to 8 have the prices provided to them. 9 19. Nevertheless, in 1998 and 1999, when I 10 conducted a public opening, I occasionally 11 read out prices when the Quotation Request 12 document indicated that this would not happen. 13 This would have typically happened where a 14 bidder attended the public opening and time or 15 circumstances permitted me to do so. 16 20. I did not attend the public opening on June11, 17 1999, regarding Quotation Request No. 18 3406-99-01735, and have no specific knowledge 19 of what occurred at that opening. 20 21. Upon opening, the Buyer and the other PMMD 21 staff person would initial the first page of 22 each Quotation Response using different 23 colours of ink to confirm timely receipt of an 24 appropriately signed bid. They would also 25 initial every page of each Quotation Response
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1 that contains a price quote or dollar value. 2 22. Once the Quotation Responses were opened, the 3 responsible manager sent the original 4 Quotation Responses to the initiating 5 department, along with a cover memo or summary 6 document: 7 a. listing the names of the bidders; 8 b. identifying the need to give 9 consideration, where appropriate to 10 occupational health and safety issues; 11 c. highlighting the need to maintain the 12 integrity and confidentiality of the 13 original documents; 14 d. requesting the initiating Department to 15 examine only these Quotation Responses; and 16 e. where the lowest price is not 17 recommended, to provide detailed reasons 18 for the Department's recommendation. 19 23. PMMD would not have been involved in the 20 actual evaluation process. PMMD did not review 21 responses to determine whether or not a 22 particular response met the business 23 requirements set out in the RFQ. The 24 Department was responsible for carefully 25 analyzing the responses to determine whether
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1 or not they comply with the terms of the RFQ. 2 As a result, PMMD would not know whether or 3 not a response did or did not meet the RFQ 4 requirements. 5 24. The initiating Department would send its 6 recommendation and analysis to PMMD. PMMD 7 looked only to ensure that the process is 8 fair, complete and done pursuant to the City's 9 purchasing policies and guidelines. PMMD did 10 not scrutinize the initiating Department's 11 analysis or recommendation. 12 25. Depending upon the value of the acquisition 13 proposed, the initiating Department would 14 prepare a report to the appropriate Committee 15 for decision or for recommendation to City 16 Council. Council must approve a recommended 17 acquisition when a department is not 18 recommending the lowest bid, regardless of 19 value. 20 21 1997 Councillors' Computer Lease (Master Lease 784) 22 26. In December 1997 I worked as a Buyer at the 23 old City of Toronto. At that time, someone 24 working in information technology telephoned 25 me to put me on notice that the new City of
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1 Toronto would be acquiring computers for the 2 offices of the new Mayor and Councillors 3 post-amalgamation. My best recollection is 4 that this call came from Kathryn Bulko. She 5 told me that this would need to be done on an 6 urgent basis. 7 27. Shortly thereafter, I received a letter from 8 Wanda Liczyk dated December 20, 1997, 9 attaching purchase requisitions and 10 authorizing the acquisition of certain 11 computers for the new Mayor and Councillors of 12 the City of Toronto. According to the PMMD 13 date stamp on this letter, I received this 14 letter on December 22, 1997. This letter and 15 the requisitions are found at Tabs 42 to 45 of 16 my Book of Documents (respectively, COT032271 17 to COT032274). 18 28. Ms. Liczyk's letter stated that: 19 The acquisitions are being made through the 20 existing vendors of record, SHL and 21 Compugen Ltd. It is the intent to lease the 22 software and desktop computers. The vendors 23 will be providing leasing quotations as 24 part of their invoicing. 25 29. I was aware that SHL and Compugen had
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1 previously been approved through a competitive 2 process as successful bidders to provide IT 3 equipment for the old City of Toronto and 4 Metro Toronto. 5 30. Prior to this request, I had limited 6 experience with lease financing. I had worked 7 on bid documents for the leasing of a small 8 number of Apple computers for City 9 communications staff and for the rental of 10 photocopier equipment. I knew that the old 11 City of Toronto maintained a list of potential 12 bidders interested in providing lease 13 financing for equipment, including computer 14 equipment. I do not recall whether or not MFP 15 was on this list of potential bidders in 16 December 1997. 17 31. Immediately after receiving Ms. Liczyk's 18 letter, I discussed with my manager, Frank 19 Spizarsky, how to obtain competitive quotes in 20 a short period of time, during the holiday 21 season. I understand that Mr. Spizarsky 22 discussed this matter with Mr. Pagano. Given 23 these circumstances, we agreed that we would 24 obtain competitive lease quotes by telephone 25 using the "Phone Card" system that was in
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1 place at that time. 2 32. I believe that I then telephoned 3 representatives of the larger leasing 4 companies to request leasing quotes on the 5 equipment to be provided by SHL Systemhouse 6 and Compugen. The Compugen list of equipment 7 and purchase price is contained in documents 8 COT025472 (Tab 34) and COT025473 (Tab 35). The 9 SHL list of equipment is contained in document 10 COTO25480 (Tab 37). 11 33. It was my practice when telephoning bidders to 12 obtain quotes to request that those companies 13 fax me written confirmation of their quotes. I 14 would attach those confirmations to a written 15 "Phone Card" summarizing the information I 16 received in the phone calls. I do recall 17 faxing information received from this phone 18 quote to the IT department for its review, 19 evaluation and decision. I have conducted a 20 diligent search of files available to me at 21 the City of Toronto but have not been able to 22 locate the Phone Card or confirmations related 23 to this phone quote. I believe that I did 24 obtain competitive bids and that MFP was the 25 lowest bidder.
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1 34. I cannot recall which companies I called. I 2 clearly did seek and obtain leasing quotes 3 from Mr. Rob Ashbourne of MFP Financial 4 Services (MFP). Mr. Ashbourne confirmed these 5 quotes in a letter dated December 23, 1997, 6 found at Tab 38 of my Book of Documents, 7 COT025486. Mr. Ashbourne wrote a subsequent 8 letter dated December 29,1997, confirming and 9 leaving open the MFP offer for acceptance by 10 the City until January 5,1998. See Tab 36, 11 COT025475. 12 35. Staff from the Information Technology division 13 advised me that they had selected MFP as the 14 successful bidder. I then prepared two 15 Purchase Orders to cover the three year lease 16 of computer equipment: 17 a. Purchase Order #MP94806 to MFP re: 18 Compugen goods in the amount of $367,461.36 19 to be delivered to Toronto City Hall, 20 COT011919; and 21 b. Purchase Order #MP94810 to MFP re: SHL 22 Systemhouse goods in the amount of 23 $579,444.84 to be delivered to Metro Hall, 24 COT011921 25 36. I therefore believe that a competitive process
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1 was followed in December 1997. Despite the 2 short time frame, computers were in the 3 Mayor's and Councillors' offices for the start 4 of the new City in January 1998. 5 37. I was not involved in or aware of any 6 additional acquisitions subsequently added to 7 this lease with MFP. To the best of my 8 knowledge any such acquisitions would not have 9 been authorized by the quotation process and 10 the Purchase Orders I have referred to above. 11 12 1999 Leasing RFQ - No. 3406-99-01735 13 38. Part of my role as a Buyer involved regular 14 meetings with sales people to listen to their 15 sales pitch in order to become more familiar 16 with the various goods and services they have 17 to offer. In preparing for this Inquiry it 18 has come to my attention that Rob Ashbourne 19 scheduled such a meeting with me for April 7, 20 1998 to present information about leasing with 21 MFP, Tab 32, COTO25137. Although I recall 22 attending that meeting, I cannot remember the 23 details of that meeting or any of the 24 information contained in the presentation 25 located at Tab 33 of my Book of Documents,
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1 COT025387. 2 39. I do not recall any other meetings, 3 information sessions or seminars put on by 4 MFP. 5 40. It has always been my practice, consistent 6 with City policy for staff in the Purchasing 7 Division, to refuse to accept gifts or 8 entertainment from any suppliers of goods or 9 services to the City. MFP has never attempted 10 to give me a gift or entertain me. 11 41. As of May 1999, my experience with leasing was 12 limited, as described above. I have never 13 received formal training in leasing principles 14 or practice. 15 16 Issuing the RFQ 17 42. On Thursday, May 27, 1999, Mr. Spizarsky sent 18 me an e-mail, which attached a draft quotation 19 document for Leasing Services from Brendan 20 Power ("Draft RFQ"). See Tab 20, COT005800, 21 attaching Tab 21 COT005801. This document was 22 drafted in the form of an RFQ, although some 23 of its language was imprecise. If a Department 24 intended to utilize an RFP to obtain 25 responses, the Department would have to
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1 provide more detail together with scoring 2 criteria and an invitation for bidders to 3 provide solutions to a stated need. 4 43. Mr. Spizarsky's e-mail instructed me that this 5 RFQ was to be issued as soon as possible. In 6 fact, the RFQ was issued within two business 7 days on Monday, May 31, 1999. 8 44. I understand that the request from Brendan 9 Power came to the PMMD by way of a letter, 10 probably dated May 19, 1999. To the best of my 11 knowledge there was no Purchase Requisition 12 accompanying the Draft RFQ. I note that the 13 header of the Quotation Request does not 14 contain a Requisition Number, as one would 15 expect if there was a Purchase Requisition, 16 but instead references a "Letter" (see Tab 22 17 and 23, first page of COT006102 and 18 COT006104). In my experience, this is not 19 unusual, particularly when the issuing 20 Department is under time pressure. 21 45. I understood the IT Division had hired Mr. 22 Power as a consultant, that he dealt with Year 23 2000 related issues, and that he had 24 previously worked for the provincial 25 government. It was not my job to question
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1 Brendan Power's knowledge, training or 2 experience in leasing or acquisition of 3 information and technology assets, or that of 4 any consultant hired by the City. 5 46. I reviewed the Draft RFQ provided by Mr. Power 6 to ensure that it was not obviously deficient 7 or otherwise in breach of PMMD requirements. 8 More particularly, I reviewed it to ensure 9 that: 10 a. it described the leasing services for 11 information technology products for the 12 Corporate Services Department in a 13 sufficiently non-restrictive manner to 14 allow as many bidders as possible to 15 respond; and 16 b. the language used reflected proper 17 purchasing concepts, such as the use of the 18 words "quotation" and "respondents" when 19 using an RFQ, instead of the words 20 "proposal" and "proponents", which were 21 inappropriate for an RFQ. 22 47. I have now compared the Draft RFQ (see Tab 21 23 COT005801) to the issued RFQ (Tab 22 and 23, 24 COT006102 and COT006104). 25 a. I am certain that I changed the word
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1 "proposal" to "quote" throughout the 2 document. 3 b. I may also have added the word "City" 4 ahead of the phrases "corporate contracting 5 authority" (fourth paragraph of section 1.1 6 on image COT005801, and again at fourth 7 paragraph of image COT005802), "ordering 8 department" (fourth paragraph of image 9 COT005802), and the words "to the City" 10 (seventh paragraph of image COT005802). 11 c. I am not certain who deleted section 12 2.13 "Questions/Inquiries" (image 13 COT005804). 14 d. I am certain that I did not delete 15 section 4 "Estimated Leasing Volumes". 16 e. I am certain that I did not make any of 17 the other changes that I have identified 18 between the Draft RFQ and the issued RFQ. 19 48. I also added the "boilerplate" sections to the 20 front and back of the Draft RFQ provided by 21 Mr. Power. 22 49. I did not focus on the paragraph in the Draft 23 RFQ that became paragraph 1.1.21 of the RFQ, 24 which referred to major software acquisitions. 25 I was not aware of the implications of that
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1 paragraph for the cost or the timing of lease 2 acquisitions. See Tab 23, image COT006107. 3 50. I did not focus on the paragraph in the Draft 4 RFQ that became paragraph 1.1.17 of the RFQ. I 5 did not consider whether or not 90 days would 6 be enough time to complete this Quotation 7 Call, report to Committee and then to Council, 8 put lease contracts in place and acquire 9 assets on lease. The "90-day window" is a 10 business issue, not an issue for PMMD 11 scrutiny. Whether or not 90 days is sufficient 12 to achieve the Department's objectives is for 13 them to determine. See Tab 23, image 14 COT006107. 15 51. I did not understand that the Information and 16 Technology wanted to select a Vendor of Record 17 for leasing all information and technology 18 acquisitions. I did not read the RFQ to mean 19 that the City intended to select a Vendor of 20 Record for leasing all information and 21 technology acquisitions through this RFQ. I 22 understood that the City intended to enter 23 into a 36-month lease in respect of up to 24 $43.15 million in computer hardware and 25 software.
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1 52. On October 11, 2001, KPMG interviewed me as 2 part of its work for the City of Toronto. KPMG 3 did not show me their notes from this meeting 4 or their summary of the meeting ("Interview 5 Summary") or ask me whether or not I agreed 6 with their version of events. See Tab 47, 7 COT012918. 8 53. I first saw the Interview Summary in the 9 summer of 2002, when preparing for this 10 Inquiry. The Interview Summary states that I 11 had the "understanding, as the buyer for the 12 RFQ, that this transaction was always designed 13 to be a sale-leaseback transaction". That 14 statement is incorrect. In June of 1999, I did 15 not even know what a "sale-leaseback" 16 transaction was, much less its potential 17 implications for the City. In May and June of 18 1999 I did not appreciate that certain terms 19 in the RFQ indicated that the Department 20 wished to engage in a "sale-leaseback" 21 transaction. See Tab 23, COT006116. 22 23 Issuing the RFQ and the addendum 24 54. The RFQ was issued on Monday, May 31, 1999, 25 (see Tabs 22 and 23, COT006102-06122). The RFQ
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1 was posted on the city website and was sent to 2 the suppliers on the City's bidders' mailing 3 list for computer lease proposals. See Tab 5, 4 COT003908. I recall that MFP and GE Capital 5 each picked up a copy of the RFQ from PMMD. 6 55. After the RFQ was issued and before it closed, 7 I received calls from prospective bidders with 8 questions about technology configurations and 9 estimated leasing volumes. As I was listed on 10 the RFQ as the Contact Person for inquiries of 11 this sort, this was not unusual. To respond to 12 these inquiries, I sought information from Mr. 13 Power. 14 56. By e-mail dated Friday, June 4, 1999, Mr. 15 Power sent me the City's standard hardware and 16 software configurations to answer these 17 inquiries. See Tab 6 COT003914. 18 57. On Monday, June 7, 1999, I issued an addendum 19 to the RFQ, which contained the information 20 sent to me by Mr. Power on detailed hardware 21 and software configurations and estimated 22 leasing volumes. I sent the addendum by fax to 23 all the companies that received the original 24 RFQ. Mr. Spizarsky signed the addendum. See 25 Tabs 2 to 4, COT003902, COT003903, COT003907.
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1 58. I did not scrutinize the addendum documents or 2 compare them to the RFQ. I therefore did not 3 know: 4 a. whether or not the $14,000,000 in the 5 "Estimated Leasing Volumes" portion of the 6 addendum (Tab 4) included the 9000 7 desktops (see chart Tab 23, image 8 COT006116) or the 13,000 desktops and 9 components described in the Usage 10 Assumptions paragraph of the RFQ (see Tab 11 23, at image COT006117). 12 b. that the total value of the Estimated 13 Leasing Volumes at Tab 4 was $43,150,000. 14 See Tab 4, COTO03907. 15 16 The Responses to the RFQ 17 59. The RFQ closed on June 11,1999. Six bidders 18 submitted formal responses. The responses now 19 available are as follows: 20 a. SHL Systemhouse Tabs 15 to 17, 21 COT005767, COT005768, COT005769; 22 b. Compaq, Tab 28, COT018043 ; 23 c. IBM Tab 29, COT018047; 24 d. Dell Financial, Tab 9, COT003979 ; 25 e. Bombardier, Tab 27, COT0018032 ; and
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1 f. MFP, Tab 31, COT023413. 2 60. After the tender process closed, I forwarded 3 original quotes to Mr. Power under a 4 memorandum in the name of Mr. Spizarsky over 5 my initials. See Tab 14, COTO05765. The 6 memorandum requested Mr. Power to "examine" 7 the quotations and to provide his 8 "recommendation". The memorandum refers to Mr. 9 Power's letter of May 19, 1999. I do not have 10 that letter and do not recall its content. 11 61. I did not read the responses carefully or 12 assess them with a view to participating in 13 their evaluation. I did not compare bidder 14 responses to the questions asked in the RFQ. 15 62. I have never heard of the term "blackout 16 period" in connection with the procurement 17 process. I understand that the following 18 applies: 19 a. After a bid document is issued, bidders 20 should not contact Department 21 representatives or anyone at the city 22 except the Buyer indicated on the bid 23 document; 24 b. After the bid closes, bidders should not 25 contact any City staff person regarding the
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1 evaluation unless City staff contact the 2 bidder for clarification; and 3 c. After the bids have been evaluated, and 4 the report finalized, bidders should not 5 contact anyone at the City until the 6 approval process is complete. 7 8 Preparing the Report to the Committee 9 63. I received an e-mail on June 29, 1999, from 10 Mr. Rabadi, addresed to Frank Spizrarsky and 11 me. See Tab 19, COT005788. Mr. Rabadi also 12 faxed me copy of a June 29, 1999 draft report. 13 See Tab 25, COTO12716. PMMD took the 14 following steps to respond: 15 a. Frank Spizarsky reviewed this fax from 16 the PMMD perspective. He made a number of 17 handwritten changes to the hard copy of the 18 document as seen at Tab 25. I summarized 19 Frank Spizarsky's changes that I thought 20 might be illegible in a fax cover page to 21 Nadir Rabadi dated June 29, 1999. See Tab 22 18, COT005787. 23 b. Mr. Rabadi had also asked a question 24 about clause 1.1.17. I responded to him on 25 June 29, 1999, as seen at Tab 30,
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1 COT018124. The handwriting on the bottom 2 left of the document is mine. I wrote "All 3 companies responded same way". By this I 4 meant that all companies had provided lease 5 rates for a period of 90 days. 6 64. I note that the draft report at Tab 25 refers 7 to the total cost of leasing not to exceed 8 $43.15 million for three years. See COT012717. 9 I did not focus on that information when I 10 received this document, as it was not my role 11 to critically assess the financial or other 12 bid responses. 13 65. On June 30, 1999, a new draft report was faxed 14 to me by the Finance Department. See Tab 46, 15 COT005770. I reviewed the draft solely to 16 confirm that Mr. Spizarsky's suggested changes 17 had been incorporated. 18 66. By this time I was satisfied that PMMD 19 concerns had been addressed in the draft 20 report. We left it to others to address their 21 specific concerns with the content of the 22 report. Although I received the following 23 e-mail messages, I did not review them: 24 a. July 2, 1999, Nadir Rabadi sent an 25 e-mail Jim Andrew, Lana Viinamae, and
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1 Brendan Power attaching another draft of 2 the report. I was one of several people 3 copied on this e-mail, and also received a 4 copy of the report by fax. See Tab 1, 5 COT003887 6 b. July 3, 1999, e-mail from Mr. Jim Andrew 7 to Mr. Nadir Rabadi. See Tab 26 COT014321. 8 c. July 5, 1999, email exchanges between 9 Mr. Rabadi and Ms. Viinamae. See Tab 24, 10 COT012257. 11 67. On July 6,1999, Mr. Spizarsky sent an e-mail 12 out addressing an issue of confidentiality. I 13 was copied on this message, but was not 14 directly involved in the issue and did not 15 respond. See Tab 40, COT031862. 16 68. On July 9,1999, Mr. Rabadi sent a signed 17 version of the report to others and me. The 18 cover e-mail is found at Tab 7, COT003923, and 19 the Report is at Tab 8, COT003924. I did not 20 review the report for content and did not 21 reply to the e-mail. The handwritten note on 22 the cover e-mail refers to preparation of a 23 "back up package". This is a standard package 24 I would prepare for Lou Pagano to assist him 25 to answer questions related to the procurement
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1 process at Committee and Council. I prepared 2 such a package for Mr. Pagano with respect to 3 this RFQ containing relevant documents from 4 this RFQ. 5 69. That concluded my involvement with this RFQ. 6 70. I did not attend at the Policy and Finance 7 Committee meeting on July 20, 1999, when this 8 report was considered. 9 71. I did not attend at the meeting of Council in 10 July 1999 where the Report, as amended, was 11 adopted. 12 72. I was not involved with the negotiation of 13 leasing contract documents. 14 73. I was not involved in acquisitions of assets 15 placed on to MFP leases after July 1999. 16 74. I was not aware of the change of lease term 17 from 3 to 5 years in October 1999. I was not 18 aware of the re-write of 838-1, PA1-1 and 19 PA1-2 into 838-5 through 9. 20 75. Having left my former job as buyer in 21 September of 1999, I did not see the Purchase 22 Requisition or the Contract Order document 23 when they were issued in September of 2000. 24 See Tabs 11 and 10, COT004161, COT004158. Once 25 Council had approved a quotation, it was not
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1 PMMD's practice to follow up with a department 2 to see where its requisition for a Purchase 3 Order was. 4 5 Suppliers' Briefing Documents 6 76. In my current job, I am responsible for 7 providing City of Toronto Departments and 8 Divisions and suppliers to the City with 9 information and documentation regarding 10 purchasing procedures and expectations. I also 11 give seminars on these matters. At Tab 52 of 12 my binder is a hand out which I require be 13 made available to all new suppliers and which 14 may assist the Commissioner to understand of 15 the steps now taken by PMMD to alert all new 16 bidders about the City's policies. 17 18 SWORN BEFORE ME at ) 19 the Town of Richmond Hill ) 20 the Province of Ontario on ) 21 March 27, 2003 ) 22 ) DAVE BEATTIE 23 ) 24 A COMMISSIONER, ETC. 25
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1 MADAM COMMISSIONER: And, Mr. Beattie is our 2 first witness to be testifying with the new affidavit 3 procedure. 4 Yes, Mr. Moore...? 5 6 EXAMINATION-IN-CHIEF BY MR. PATRICK MOORE: 7 Q: Now, Mr. Beattie, you -- do you have in 8 front of you your book of documents and your affidavit? 9 A: Yes, I do. 10 Q: All right, if you could turn up your 11 affidavit, I'm not going to take you through all of it, but 12 just for the assistance of all of us here and the 13 Commissioner, we see that in the first few paragraphs, 14 specifically 2 and 3, you set out something of the -- of your 15 personal background and experience in purchasing and we see 16 there that you've been a buyer at the City -- the old City of 17 Toronto from 1985 forward. 18 And at page 10 at paragraph 41, we see that 19 you had limited experience with leasing and that you never 20 received any formal training in leasing principles or 21 practice? 22 A: That's correct. 23 Q: I'm reading that correctly? 24 A: That's correct. 25 Q: Tell me, Mr. Beattie, I gather that from
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1 September of 1999 onward, you were no longer a buyer at the 2 City of Toronto, but, you were promoted to a new position, is 3 that right? 4 A: That's correct. 5 Q: What's the -- what was the job function 6 and title that you moved onto at that point? 7 A: Basically it was supervisor, client 8 services. And my position was that -- running the client 9 services department and that was basically the first contact 10 that any departments had with purchasing, they would touch 11 base with us first. 12 Q: And in that regard, was it your role and 13 that of your office to assist the clients to a full and fair 14 understanding of the purchasing process? 15 A: That's correct. 16 Q: And so your office was within the 17 purchasing and materials management division, at the City, 18 was it? 19 A: That's correct. 20 Q: And that's a division of the Department of 21 Finance? 22 A: It's a unit of purchasing, yes. 23 Q: And -- and from September of 1999 onward, 24 did you still have as your Director, Mr. Lou Pagano? 25 A: Yes, we did.
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1 Q: And from that time of that promotion 2 forward, Mr. Beattie, who was your immediate manager or 3 supervisor? 4 A: My immediate manager was Paul Hewitt and 5 he was manager of client and support services. 6 Q: From the time of amalgamation which is the 7 January of 1998, through until your promotion in September of 8 1999, who was your manager then, sir? 9 A: Frank Spizarsky. 10 Q: Now, returning to this paragraph 41 and 11 the fact that you never did receive any training in leasing 12 principles or practice, tell me, if you were still a buyer, 13 would you think it a good idea to have training and 14 experience in leasing matters? 15 A: Definitely. 16 Q: That's something that you would recommend 17 to your supervisors and to the City? 18 A: Yes, I would. 19 Q: Just so that we're clear on the nature and 20 the limitations of your experience in leasing matters, if you 21 can go with me to page 7, paragraph 30, you set out for us 22 some of your, as you call it, limited experience with lease 23 financing. 24 And you make reference there to having worked 25 on bid documents for the leasing of a number of Apple
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1 computers. 2 A: That's correct. 3 Q: Can you help us with when that was, sir? 4 A: It was probably prior to amalgamation, our 5 communications division were using extensively the MacIntosh 6 and Apple computers, and they wanted to lease a number of 7 them. 8 Q: Was it a small number or a larger number? 9 A: It was just a small number, probably half 10 a dozen. 11 Q: I see. And what was your involvement then 12 in that transaction? 13 A: Basically, issuing the RF -- I'm not sure 14 whether it was a request for proposal or request for quote. 15 We would have worked on that with them. 16 Q: All right. And that's the extent of it, 17 as far as you can recall? 18 A: Yes. 19 Q: Well, then let's talk some more if we 20 could about your present job and in that regard, if I could 21 take you to the document at Tab 52, of your book of 22 documents. 23 Is this a document that you're familiar with? 24 There's no Begdoc for it, Commissioner, but, this is the 25 document entitled, "Suppliers briefing"?
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1 A: Yes. The suppliers briefing is one (1) of 2 my primary tasks. And that basically with all our new 3 bidders, we give a supplier briefing, which we outline the 4 policies and procedures and just go through how to deal with 5 the City. 6 Q: And just by way of cross-referencing this 7 Mr. Beattie and to the Commissioner, you make some reference 8 to your new position at the City and the job function that 9 you're now performing at Paragraph 75, Page 18, of your 10 affidavit, but did you have, if I can just talk some more 11 about this Document at Tab -- is it 52; do have that right, 12 yes, 52, the Suppliers Briefing book, did you have some role 13 in the creation of this document, sir? 14 A: The majority of it was picked up from when 15 the previous managers would do briefings and also the old 16 City of Toronto we had, what we call, a video, and that was 17 shown to all prospective videos (sic), but you're right, one 18 (1) of my primary tasks was to complete this and include all 19 the different policies and procedures as well as a Code of 20 Ethics from both the PMAC, which was a Canadian purchasing 21 group, as well as the NIGP and US. 22 Q: I'm going to take you to that in a moment 23 Mr. Beattie, but I -- I am right in concluding that this -- 24 this document that -- that you completed was something that 25 you've done relatively recently, that is, since September of
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1 '99? 2 A: Yes, that's correct. 3 Q: How long has it been available for City 4 staff and suppliers as a reference document? 5 A: As a general reference, except for the 6 policies, as I mentioned before, that the previous managers 7 would give the new supplier a briefing to the suppliers back 8 then. 9 It wasn't in the complete form, we kind of 10 expanded and indicated and listed all the policies, samples, 11 forms, and the different, you know, objective and the mission 12 statements. 13 Q: So the point is then, that -- that this 14 brings together the forms and the practices and procedures 15 that the Purchasing and Materials Management Division had 16 been using, but it brings them all together in one (1) place 17 at one (1) time? 18 A: That's correct, and that was for the 19 primary reason is to make our bidders, our new bidders, aware 20 of the -- the policies and procedures of the City. 21 MADAM COMMISSIONER: And just so -- I think 22 Mr. Moore asked you how long has that been available in this 23 form -- 24 THE WITNESS: In this form, probably, when you 25 say this form, you have to remember --
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1 MADAM COMMISSIONER: Tab 52, the way that it 2 is here? 3 THE WITNESS: The way -- it was probably since 4 I came on with Client Service because it was -- there was, 5 sort of, a version of it, but it wasn't the same, as 6 extensive. 7 MADAM COMMISSIONER: And that was when; in -- 8 THE WITNESS: September of '99. 9 MADAM COMMISSIONER: Okay. And did -- was it 10 your idea to put this together, or how did it come together? 11 THE WITNESS: It was a combination of Lou 12 Pagano, our Director, and myself. We got together with our 13 Communications Group in Finance Department and they kind of 14 dressed it up a little, made it kind of colored, and put in, 15 kind of, a semblance of order so that there was a page 16 numbering and index and a spot at the back for the -- the 17 bidders to put any notes that they might have, as well as the 18 key contacts. 19 20 CONTINUED BY MR. PATRICK MOORE: 21 Q: And so, Mr. Beattie, I have it in mind, 22 but you can correct me if I'm -- if I've misinformed myself, 23 but I have it in mind that among the uses of a document like 24 this is that it's available if any prospective supplier to 25 the City wished to contact you and ask for it.
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1 A: That's correct. 2 Q: And if you're issuing, if your division is 3 issuing an RFP or an RFQ, is it the case that this document 4 is sent out to bidders with the RFQ or RFP documents? 5 A: Not at this time. It is basically -- this 6 is to bring the new bidders up to speed with what we do now. 7 In conjunction with this booklet, the seminar that I give is 8 -- is on doing business with the City, and it's not included 9 in this book. 10 Basically what it is, it walks them through 11 the different forms and procedures. We also give, kind of, a 12 little background on the breakdown for the purchasing, what 13 we purchase, how the typical purchasing process operates, the 14 different signing authorities, and the different levels, so 15 that the bidder has a better understanding on how to do 16 business with the -- with the City. 17 We also walk them through a typical request 18 for quotation, document starting right when the department 19 sends us a requisition and goes right through to the end when 20 a purchase order is issued, as well as, going through a 21 request for proposal. 22 Which also gives you -- give the bidders an 23 idea that our bidding on request for proposals, what we're 24 looking for, as far as input, the fact that we have a 25 different scoring matrix, and things like that just to bring
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1 everybody up to speed. 2 And after seminar we open it up to general 3 questions. 4 MADAM COMMISSIONER: And how often do you do 5 those? 6 THE WITNESS: Normally, probably four (4) 7 times a year and what happens is as the new bidders are 8 listed, usually every -- every two (2) months we'll pull off 9 a list of the new bidders and we'll mail them off an 10 invitation to come. 11 Generally, we have four (4) briefings a day. 12 There's a 9:30, 11:30, 12:30 and 2:00. So we -- we have 13 basically four (4) sessions and it's about a half hour 14 session. 15 16 CONTINUED BY MR. PATRICK MOORE: 17 Q: And are these sessions new since your 18 coming to your current job, sir? 19 A: Not really. As I mentioned before, prior 20 to amalgamation that the old City of Toronto, the managers 21 that was part of their job function was to conduct these 22 supplier briefings. 23 Q: It sounds to be more organized now? More 24 thorough? 25 A: Yes, I think so and as well, we did have
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1 -- what we call a feedback form so that any questions that 2 ans -- and also for future briefings, we ask the people to 3 sort of give us their information on what we could maybe do 4 to improve the next supplier briefing. 5 Q: And against the possibility, Mr. Beattie, 6 that there would be changes in staffing or personnel at the 7 supplier's side, would it be a good idea to provide even 8 existing suppliers with copies of the suppliers briefing 9 book? 10 A: Definitely. Also, you may not know but 11 all the policies we have are listed on the internet so any 12 potential bidder can look on the internet and get these. 13 Q: And is there an invitation in broad terms 14 on the internet, again for the benefit of new personnel at 15 suppliers that they might make themselves available of the 16 briefings that you've described to the Commissioner? 17 A: What they do -- it lists where to contact 18 to get information on a bidder's package. Like a -- we call 19 it a BAF, Bidders Application Form. Once this is filled out, 20 they automatically become added to the supplier briefing. 21 Q: And would it be a good idea to put an 22 invitation in broad terms on the internet to alert people at 23 the suppliers to the City that if there are changes and 24 people want to learn about the process at PMMD, that they can 25 come and have a free seminar?
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1 A: Definitely. This would be an excellent 2 idea. 3 Q: Now, can we return to this document at Tab 4 52 for a moment and if I could direct you to the first page 5 after the table of contents. There it sets out the mission 6 statement and I take it that's the mission statement of the 7 Purchasing and Materials -- Materials Management Division -- 8 A: That's right. 9 Q: -- and while it's set out there, is it the 10 case that that was the mission statement even before this 11 document was prepared? 12 A: Yes, it was. 13 Q: So among other things, it's always been, 14 during your time at the new amalgamated City of Toronto, the 15 intention: 16 "To provide leadership, quality customer 17 service and best value to the taxpayers of 18 the City of Toronto --" 19 As it says here in the mission statement: 20 "-- through the application of open, fair, 21 equitable and accessible business processes 22 and practices." 23 A: That's correct. 24 Q: That's the mission statement that you and 25 everyone in your department -- in your division lives by?
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1 A: Yes. 2 Q: Now, what I don't see there, Mr. Beattie, 3 and I'd welcome your comment on it. It doesn't go on to say 4 that -- that the application of this open, fair, equitable 5 and accessible business process also includes communication 6 clearly and completely in all tender process documents 7 provided to suppliers and reported upon to Council. It 8 doesn't say that? 9 A: No. 10 Q: Would you agree with me that communication 11 of the -- of the intent of the process both to the suppliers 12 on the one hand and to committees of Council and to Council 13 on the other hand is paramount? 14 A: Definitely. 15 Q: And so if you were the person making the 16 decision about the content of the mission statement, do you 17 think it would be worthwhile putting something like that in 18 your mission statement? 19 A: Yes, it would. 20 Q: Now, if we turn over the page, there's a 21 description there at some length of the Purchasing Policy and 22 I won't ask you to read every word of it but the third line 23 down after reference to the overall economy for the taxpayer, 24 it says: 25 "It is the policy of the Purchasing and
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1 Materials Management Division of the 2 Finance Department to provide effective and 3 efficient central purchasing." 4 And just stopping there, and because of your 5 long time as a buyer, Mr. Beattie, is it generally speaking, 6 the practice at the City of Toronto, since amalgamation, to 7 have a Central Purchasing Department? 8 A: Yes, that's correct. 9 Q: And that that Department has as -- I keep 10 saying Department, I guess I mean Division, we're on the same 11 wave length are we? And the -- the purpose of the Division 12 is to provide a purchasing service or a function for all 13 initiating departments throughout the City, and some of the 14 agencies, boards and commissions? 15 A: That's correct. 16 Q: But in your time as a buyer, was it the 17 case that you weren't a buyer for all of the agencies, boards 18 and commissions? 19 A: I'm not sure -- could you say that -- 20 repeat it again? 21 Q: I -- I guess I gave you a double negative, 22 but what I was trying to get at is that as a buyer for the -- 23 for the City when you were, did you act for each and every 24 one of the agencies, boards and commissions, or just some? 25 A: No, when -- when I was hired as a buyer in
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1 1985, pardon me, with the Municipality, with the City of 2 Toronto, we were the City of Toronto, but we were also the 3 purchasing agency for Metro Toronto at that time, and that 4 included the agencies, boards and commissions. 5 And you're right, not all commissions we 6 bought for. Like the TTC, they had their own purchasing, but 7 we bought for Exhibition Place, Toronto Police Service and 8 Toronto Atmospheric Fund. 9 Q: All right. And then you go on, on this 10 page, under Purchasing Policy, to speak to the basic 11 provisions of the policy. And one (1) of the basic 12 provisions is at the second bullet point, and that is a 13 competitive bidding system; is that set out correctly there, 14 that is one (1) of the goals? 15 A: Yes. 16 Q: And the second from the bottom of the 17 bullet points under that -- that same Provisions of the 18 Policy Section, reads: 19 "To be accessible and accountable to the 20 taxpayer, the client departments and -- and 21 suppliers." 22 And so, the taxpayer of course, that those are 23 the ratepayers of the City of Toronto; is that right? 24 A: That's correct. 25 Q: The client departments are the divisions
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1 or departments within the City who wish to access your 2 central purchasing capability, including those of the 3 agencies, boards and commissions that -- that you work with? 4 A: Yes, that's correct. 5 Q: And the suppliers would be all of the 6 suppliers generally and individually, who supply goods and 7 services to the City? 8 A: That's correct. 9 Q: But it talks about accessibility, and that 10 is being able to bid, an important feature of the bidding 11 process. But goes on then to use the word accountable. And 12 I'm wondering, Mr. Beattie, if you can help us what that 13 means, and how is the PMMD's accountability measured by each 14 of these constituents, the taxpayer, the client departments 15 and the suppliers? 16 A: Okay, to be accountable to the taxpayer, 17 obviously we're spending the taxpayer's money, so it's to our 18 -- to their benefit that we provide a competitive bid 19 environment, so that when the competitive bid is done, the 20 taxpayer knows that they are getting fair value for the money 21 that they're paying, as far as taxes go. 22 Q: And that goes back to what we talked about 23 earlier does it? A competitive process is fair and 24 equitable? 25 A: Yes.
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1 Q: And as I think you've agreed should be 2 recommended, one (1) that is communicated fully and fairly to 3 suppliers and the Council? 4 A: Definitely. 5 Q: Right. Now, I want to move to the bottom 6 part of this page, and that will take us to some other pages, 7 but at the bottom third of the page there's reference to the 8 Purchasing and Materials Management Division, with the 9 acronym, PMMD: 10 "Finance Department maintains membership in 11 the Purchasing Management Association of 12 Canada, known as PMAC, and the National 13 Institute of Governmental Purchasing, the 14 NIGP." 15 And each of those bodies, that is the City of 16 Toronto, the PMAC, and the NIGP, have their own Codes of 17 Conduct; is that right? 18 A: That's correct. 19 Q: And as a buyer at the City of Toronto when 20 you were, were you personally a member of PMAC and of NIGP? 21 A: Not of PMAC, but we -- basically the City 22 had membership in -- and a member of the NIGP. 23 Q: And -- 24 A: And basically, as you see here, we 25 subscribe to the code of ethics in both organizations.
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1 Q: Right. And so, one (1) of the -- one (1) 2 of the features as is set out in the bullet points of the 3 Codes of Ethics, is applicable to all staff involved in the 4 procurement process, is and I'm referring to the middle one 5 (1) at the moment: 6 "That the purchasing employee will not 7 accept at any time or under any 8 circumstances, directly or indirectly, 9 gifts or other things of value from 10 vendors." 11 And that, of course, cross references to page 12 10 of your affidavit, at paragraph 40. Firstly, let me just 13 ask, that is -- that bullet point, fairly and accurately sets 14 out one (1) of the rules that the members of the PMMD who 15 would buy? 16 A: That's correct. 17 Q: And if you turn to your affidavit, there's 18 specific reference at paragraph 40, to MFP, one (1) of the 19 parties with standing in this matter. And you say there: 20 "That MFP has never attempted to give you a 21 gift or to entertain you." 22 A: That's correct. 23 Q: And can we conclude from the fact that 24 you've told us that you adhere to these Codes of Ethics, that 25 you would not accept gifts or entertainment from any
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1 suppliers to the City? 2 A: Yes, that's correct, definitely. 3 Q: Now, at the top of the next page, there's 4 reference to the fact that, in August of 2000, the City 5 Council approved a Conflict of Interest policy that applies 6 to all employees. 7 And it replaced policies that dealt with 8 conflicts of interests or Codes of Conduct in the former 9 municipalities. 10 Was it your understanding, Mr. Beattie, as a 11 staff member within PMMD, that until the City rolled out, if 12 that's a fair way of putting it, the Conflict of Interest 13 policy in August of 2000, that you were bound by, among other 14 things the Conflict of Interest policy of the former City? 15 A: That's correct. 16 Q: And if we can look at the Conflict of 17 Interest policy of the now new amalgamation City, it's on the 18 next page, page 4, the number is on the bottom of the page, 19 halfway down, there's a title saying, "Receiving fees or 20 gifts". 21 And it broadly says, that it can't be done. 22 You can't take gifts from suppliers, although this one (1) 23 has an exception in the last sentence, which I'm sure you're 24 familiar with, but, let me just read it: 25 "The exceptions to this are promotional
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1 gifts or those of nominal value, e.g. 2 coffee mug or letter opener with the 3 company's logo, or occasional lunch." 4 See that? 5 A: Yes. 6 Q: And that's your understanding of what the 7 City expects of all staff? 8 A: That's right. And as far as purchasing 9 goes, even better. I myself will not even accept a small 10 value, because there is an implied implication that, you 11 know, you've somehow -- like I won't even accept a pen. 12 Q: Well, if you move with me to page 10, of 13 this same Tab and we look at the NIGP. 14 MADAM COMMISSIONER: I'm sorry, if I might, 15 Mr. Moore -- 16 MR. PATRICK MOORE: That's all right. 17 MADAM COMMISSIONER: -- just before you go 18 there, you seemed to suggest that it was a different thing 19 for Purchasing, but, then you were talking about yourself. 20 Do you know if it is for everyone in 21 Purchasing, that they won't even accept a -- 22 THE WITNESS: Oh, definitely. Lou Pagano has 23 a very strict rule. He will not allow any gifts to be given 24 to any staff in purchasing period. 25
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1 CONTINUED BY MR. PATRICK MOORE: 2 Q: Then if you go to page 10, you'll see the 3 Code of Ethics there set out for the NIGP, which may be 4 somewhat higher standard than the City's own, because at the 5 top it says: 6 "The institute believes and it is a 7 condition of membership, that the following 8 ethical principles should govern the 9 conduct of every person employed by a 10 public sector procurement or materials 11 management organization." 12 And if I could focus you to paragraph 6, it 13 reads: 14 "It believes that members of the institute 15 and its staff should at no time or under 16 any circumstances accept directly or 17 indirectly gifts --" 18 And then other enumerated things -- 19 "-- things of value which might influence 20 or appear to influence Purchasing 21 decisions" 22 That's -- that appears on the face of it to be 23 a somewhat higher standard. It doesn't even allow nominal 24 gifts. 25 A: Exactly.
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1 MADAM COMMISSIONER: I'm sorry, Mr. Moore. 2 I'm not quite -- I'm on Page 7. I thought you said number 6? 3 MR. PATRICK MOORE: Sorry, I had moved to Page 4 10 -- 5 MADAM COMMISSIONER: Okay. 6 MR. PATRICK MOORE: -- and then number 6. 7 MADAM COMMISSIONER: 10? 8 MR. PATRICK MOORE: Yeah. Sorry, 9 Commissioner. This is the NIGP -- 10 MADAM COMMISSIONER: Yeah. 11 MR. PATRICK MOORE: -- Code of Ethics. 12 MADAM COMMISSIONER: I understand. I was just 13 on the wrong page. Okay, Number 6. Okay. 14 15 CONTINUED BY MR. PATRICK MOORE: 16 Q: And the NIGP standard is likewise a little 17 bit higher than the PMAC standard which is set out at Page 8 18 at the bottom of the page under Rules of Conduct D, as in 19 Dog, "Business gifts and Hospitality" where you see that 20 "...business gifts, other than items of small intrinsic value 21 should not be accepted". That's in the first and second 22 lines under D. 23 24 (BRIEF PAUSE) 25
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1 Q: You're familiar with that? 2 A: Yes. 3 Q: And so is the upshot of all of this, Mr. 4 Beattie, that because Purchasing and Materials Management 5 Division lives by the NIGP code in addition to the PMAC and 6 the City's own code that for staff in PMMD, there's a 7 slightly higher code as regards accepting gifts than apply to 8 City staff generally? 9 A: Definitely. That's correct. 10 Q: Now, in your affidavit, Mr. Beattie, you 11 set out for us the role of the Purchasing and Materials 12 Management Division and that starts at Page 3 in Paragraph 12 13 and among other things, you say there that: 14 "The Department provides all of the 15 necessary detail --" 16 This is towards the top of the page that I'm 17 reading from. 18 "-- in the quotation document to explain 19 its needs and technical requirements to the 20 bidders." 21 And then farther down you list in Subs A, B 22 and C what you, as a buyer, would review the material 23 provided by the Department for. Do you see that, sir? 24 A: Yes. 25 Q: Now, do we take it then, generally, that
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1 you viewed your role not as -- as having the purpose of 2 defining the business need but rather facilitating the 3 process by allowing the department to use your division to 4 enter into a fair and equitable tender process? 5 A: That's correct. 6 7 (BRIEF PAUSE) 8 9 Q: And at Tabs 22 and 23 of your book of 10 documents, we see there the quotation request for the 11 particular quotation that we at this Inquiry are concerned 12 with, and that's the document starting 06102 is the number 13 faintly appearing at the very top in the center of the page 14 at Tab 22 and 06104 at Tab 23. That was a standard form of 15 tender RFQ document in use at the time, was it, sir? 16 A: Yes, that's correct. 17 18 (BRIEF PAUSE) 19 20 Q: And it contains, in addition to the needs 21 that the department identifies, as you describe it in your 22 affidavit, something that we've been calling here 23 "boilerplate". Is boilerplate a term that has a meaning to 24 you? 25 A: Yes, it's basically any type of document
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1 that PMMD would incorporate into the quotation document. 2 Q: And for instance, if you move through at 3 Tab 23, to -- I don't know if you can see the -- the faint 4 document number at the top, but 06111, Canadian Content. Is 5 that in the way of boilerplate that's added to RFQs? 6 A: Yes, that's correct. 7 Q: And it's followed by a Worker's Rights 8 Summary Sheet? 9 A: That's correct. 10 Q: And a Workers' Rights document. Those -- 11 at least in -- in these documents, as they've been put 12 together, those boilerplate pages are -- are appearing in the 13 centre of the document, was -- is that typical or are they 14 usually at the front -- 15 A: No, this is -- this is one (1) of the 16 things in my affidavit indicated, that normally the 17 boilerplate is added at the beginning and at the end. It 18 usually does not appear in the middle of the document. 19 Q: And if you can just quickly go back to Tab 20 52 again, would we be right in concluding that boilerplate 21 type of language appears from and following page 20? 22 A: That's correct, General Policies. 23 Q: And they run through to the end of that 24 supplier's briefing document? 25 A: That's correct.
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1 Q: Now, would they always be applicable to 2 every tender process, or would you select the ones that are 3 applicable and leave the others out? 4 A: We would select the ones that are 5 applicable. For example, the fair wage, Canadian content, 6 environmentally responsible, procurement, would probably be 7 the ones that would definitely appear. And then depending on 8 the scope of the contract, others would appear, for example, 9 live animal testing or purchase of coffee. 10 Q: Right. And then in a general way at pages 11 4 and 5 of your affidavit, you take the reader through the 12 quotation call to bid opening stages of the tender process, 13 and that would be paragraphs 15 through 19, for example? 14 A: Yeah, that's correct. 15 Q: And after the -- after the issuance and 16 then subsequent closing of the tender call, there's typically 17 an evaluation that takes place, and what -- at the time when 18 you were a buyer, what was your role in the evaluation 19 process? 20 A: We really didn't get involved, other than 21 the fact that we -- once the quotation's closed, we would 22 assemble it, prepare a letter to the Department and then send 23 all the quotations to them, requesting that they have a look 24 at it and make sure that they review what they were looking 25 for and return it to us with the recommendation of who they
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1 wanted us to award the contract to. 2 Q: And that's what you were getting at, I 3 take it, at paragraph 23 on page 6 of your affidavit. But 4 during the evaluation process, was it typical for -- or 5 indeed allowed, for personnel of the Purchasing and Materials 6 Management Division to have contact with suppliers? 7 A: Only if there was some issues that needed 8 to be resolved. 9 Q: And we'll come back to that later, but 10 that's the point that you're making at page 15, paragraph 62, 11 where you say you've never heard of the blackout period, but 12 you set out the rules that you govern -- that a buyer governs 13 him or herself by, during that period of evaluation? 14 A: That's correct. 15 Q: All right. 16 MADAM COMMISSIONER: What did you call it 17 then, if you didn't call it a blackout period? 18 THE WITNESS: We don't really -- like the 19 blackout period, I've never heard that terminology used 20 before, it would just be, you know, terms of reference type 21 of thing, and it's just an implied -- understood that once 22 the quotation is closed, that there'd be no contact. 23 MADAM COMMISSIONER: Understood by whom? 24 THE WITNESS: By the people bidding. 25 MADAM COMMISSIONER: How are they supposed to
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1 understand that? How do you know that they understand that? 2 3 (BRIEF PAUSE) 4 5 THE WITNESS: Yes, they do. 6 MADAM COMMISSIONER: It's not a trick 7 question. 8 THE WITNESS: No -- 9 MADAM COMMISSIONER: I'm just curious as to 10 how -- how would they know that they're not supposed to have 11 this contact? 12 I understand why you know, because you're -- 13 THE WITNESS: Yes -- 14 MADAM COMMISSIONER: -- a member of various 15 organizations, you have certain training. But, how would a 16 supplier know that? 17 THE WITNESS: I guess just basically from, you 18 know, discussions with the different buyers. 19 MADAM COMMISSIONER: Whose discussion with 20 different buyers? 21 THE WITNESS: The bidders discussion. In 22 other words -- 23 MADAM COMMISSIONER: I don't know what you 24 mean I'm sorry. 25 THE WITNESS: Okay, because the buyers name is
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1 listed on the quotation document, they generally call us for 2 information on what is happening. 3 MADAM COMMISSIONER: Right. 4 THE WITNESS: So, they -- if a bidder called 5 and said, you know, what's the situation, that would indicate 6 that it would still be under evaluation et cetera. 7 MADAM COMMISSIONER: Okay. 8 9 CONTINUED BY MR. PATRICK MOORE: 10 Q: On a going forward basis, Mr. Beattie, my 11 point of taking you to this blackout period provision in your 12 affidavit at section or paragraph 62, is this, would you 13 think it a good idea to add something in the supplier's 14 briefing document and posted on the web, that these rules, 15 that you've set out as a), b) and c) at paragraph 62 apply 16 for information purposes for suppliers? 17 A: Yes, definitely. 18 Q: Thank you. Now, it's not a focal point in 19 your affidavit, but, there is a document in your Book of 20 Documents at Tab 47, entitled Summary of Interview. 21 And it is an interview that you and others 22 participated in with KPMG, according to this document on the 23 11th of October of 2001. 24 Do you recall participating in that process at 25 that time, sir?
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1 A: Yes, I do. 2 Q: And did the interviewers at KPMG give you 3 a list of questions in advance of the meeting? 4 A: No, they didn't. 5 Q: Did they give you a transcription of the 6 exchange that occurred, the questions asked and the answers 7 given? 8 A: Not that I recall. 9 Q: Did they -- do you recall when they shared 10 with you or how you came to have access to this document at 11 Tab 47, document 12915? 12 A: I believe it was last summer. 13 Q: That would be the summer of '03 -- of '02, 14 I mean? 15 A: '02, yes. 16 Q: Right. And how did it happen that you got 17 a copy of it at that time? 18 A: I believe when I was interviewed by the 19 Commission Counsel. 20 Q: All right. So, did KPMG ever ask you to 21 comment or give feedback to them about the interview process 22 after it had been completed? 23 A: Not that I recall. 24 Q: And did you at any time write or contact 25 KPMG and discuss the content of what you saw in this summary
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1 after you got it? 2 A: No, I didn't. 3 Q: Now, I take it that at some time after you 4 got the document, in fact, quite recently you did prepare a 5 memo setting out some of your thoughts and concerns and 6 corrections, is that right? 7 A: That's correct. 8 Q: And is that the memo that appears now at 9 Tab 57 of your Book of Documents, sir? 10 A: That's correct. 11 Q: And although it's dated March 12th, are we 12 on the same wavelength that it was sent to Commission Counsel 13 by -- by the Paliare Roland firm, last week? 14 A: That's correct. 15 Q: Now -- 16 MR. HUGH MACKENZIE: It actually was sent at 17 5:17 yesterday evening -- 18 MR. PATRICK MOORE: To -- 19 MR. HUGH MACKENZIE: -- law firms -- 20 MR. PATRICK MOORE: -- lawyers for the parties 21 with standing. 22 MADAM COMMISSIONER: Sorry, it was sent 23 yesterday, is that what I'm hearing? 24 MR. HUGH MACKENZIE: Yesterday at 5:17 p.m., 25 yes.
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1 CONTINUED BY MR. PATRICK MOORE: 2 Q: Now, if we can move to another topic, Mr. 3 Beattie, you had as your affidavit explains at page 7, in 4 paragraph 26, some early involvement with leasing at the 5 amalgamated City of Toronto. 6 In regard to the leasing of the Councillors' 7 computers, do you recall that? 8 A: Yes. 9 Q: And as I understand it, that involvement 10 started with the -- with your receipt of a letter of 11 instruction from Ms. Liczyk, on or about the 20th of 12 December, 1997. 13 And if you can go with me to Tab 42, we can 14 talk more sensibly about that. This is Document 32271. Now, 15 the Document is dated the 20th of December, but there is, 16 running vertically towards the center of the page, what 17 appears to be a date stamp saying, 18 "Received December 22, '97, 11:15 a.m." 19 Do you see that sir? 20 A: Yes, that's correct. 21 Q: And is that a date stamp that you're 22 familiar with? 23 A: Yes, it is. 24 Q: And was that the date stamp that was in 25 use in your division at that time?
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1 A: Yes, it was. 2 Q: And so, from that, can we conclude that 3 your first involvement with this Counselor's computer lease 4 came about 11:15, on the morning of the 22nd? 5 A: That's correct. 6 Q: And there was some urgency associated with 7 that acquisition, was there? 8 A: Yes, there was, definitely. 9 Q: I think if you go with me now to Tab 38, 10 Document 25486, we will see that, that document is dated 11 December 23rd, 1997, and so from that it appears that within 12 one (1) day, one (1) business day, you had turned this 13 process around and had a bid, or an offer in, from Mr. 14 Ashbourne, on behalf of MFP? 15 A: Yes, that's correct. 16 Q: And then, at some length in your 17 affidavit, you explain how that process came about? 18 A: Yes. 19 Q: At Page 8, for instance, in your 20 affidavit, Paragraph 31, it appears that Mr. Spizarsky, who I 21 gather was your manager at that time, discussed the matter 22 with his and your boss, Mr. Pagano. 23 And that in light of the short time frame that 24 this had to be turned around in, it was decided to use a 25 telephone phone card system.
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1 A: Yes. 2 Q: Now, can you help us with what that is, 3 what was a phone card system at -- 4 A: Okay. A telephone phone card system at 5 the time with the old City of Toronto, basically was for 6 urgent requirements. 7 Normally, it was traditionally for lower 8 dollar value, but when Frank Spizarsky talked to Lou, we 9 agreed that, due to the time constraint, that we would do, 10 what they call a phone card, and basically, it's soliciting 11 phone bids from potential bidders, recording it in the card, 12 and basically faxing the information to the Requisitioning 13 department for them to make recommendation on who to go with. 14 Q: And in the second paragraph of Ms. 15 Liczyk's letter, at Tab 42, it says that the acquisitions are 16 being made though the existing Vendors of Record, SHL and 17 Compugen. If I could just stop there. 18 Is it your recollection that you made 19 inquiries for lease rate quotes from SHL and Compugen? 20 A: I'm not sure whether I did, but as you can 21 see, it said that the vendors were providing leasing 22 quotations, so I can't recall whether or not that was 23 included. 24 Q: In any event, whether you contacted them, 25 or whether they provided the quotations as part of their
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1 invoicing, you haven't been able to find any record of what 2 their quotations were? 3 A: That's correct. 4 Q: And indeed, if you contacted other 5 suppliers, other than those two (2) and MFP, there's no 6 record available that you can find of lease rates quoted to 7 you by them? 8 A: That's correct. 9 Q: But is it your evidence that there's 10 nothing unusual about using a phone card system for a 11 transaction like this one? 12 A: In -- in view of the fact that there was 13 time constraint, they wanted computers right away, I know. I 14 wouldn't think that would be out of the ordinary. 15 Q: And in any event, it was a competitive, 16 equitable process that you embarked upon? 17 A: Definitely. 18 Q: And that, of course, is the point I take 19 it of your evidence at Page 9 in Paragraph 36 of your 20 affidavit? 21 A: That's correct. 22 Q: All right and then if we look at the 23 documents at Tabs 43, 44 and 45, those are documents 32272, 24 32273 and 32274. Are those the purchase requisitions 25 supporting and underlying this Councillor computer lease
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1 transaction? 2 A: Yes, they are. 3 Q: And the notes on them, for instance at Tab 4 43 in the right hand side, make reference to MFP Technology 5 Services and to Mr. Ashbourne and beneath that lease rates 6 are set out. Do you see that, sir? 7 A: Yes. 8 Q: Does that tell us, on each of these three 9 (3) purchase requisition documents, about the lease rates 10 that you got from MFP? 11 A: That's correct. This requisition, as you 12 can see, wherever I filled it out would have been retyped 13 into a purchase order. 14 MADAM COMMISSIONER: This is your handwriting, 15 then? 16 THE WITNESS: Yes, this is my handwriting. 17 18 CONTINUED BY MR. PATRICK MOORE: 19 Q: And do you have a recollection now, Mr. 20 Beattie, as to whether you made those notations, that 21 handwriting on these purchase requisitions at the time you 22 spoke with Mr. Ashbourne and received his quote or did this 23 confirm end evidence the quote after -- 24 A: No, this was after the phone card system 25 was done then -- and we got concurrence from the Information
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1 Technology Division on which company to go with. That's when 2 we would issue the purchase order but not until after we 3 received that information. 4 Q: So what this tells us then is that by the 5 time you made these notations on the purchase requisition, 6 the competitive process had run its course and MFP had been 7 the successful lowest bidder? 8 A: Yes, that's correct. 9 Q: And you went forward on that basis? 10 A: Yes. 11 Q: And that process, as these requisitions, 12 if we do the math, tells us totals to just under a million 13 dollars of Councillors computers that were then put on lease 14 at the beginning of 1998? 15 A: That's correct. 16 Q: Now, at Page 9, Paragraph 37 you speak to 17 the fact that additional acquisitions were made and placed on 18 the Councillors' computer lease afterwards. From a 19 Purchasing standpoint, what is your belief as to whether 20 those additional acquisitions were authorized or not? 21 A: They definitely would not have been 22 authorized through the quotation process that was done 23 earlier. 24 Q: Now, then if we can turn next to the 25 leasing RFQ in 1999 and if I can take you back to the tender
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1 documents that got that process started at Tabs 22 and 23. 2 Let me begin by asking you as you turn those tabs up, Mr. 3 Beattie, did you know Mr. Brendan Power before this quotation 4 request was issued in May of 1999? 5 A: I knew only the fact that he had been 6 hired by the City as a Y2K -- Y2K consultant and was 7 assisting them in their endeavour to get the Y2K issue 8 resolved. 9 Q: And did you have any understanding of Mr. 10 Power's training, education or experiencing -- experience in 11 IT acquisitions? 12 A: I -- basically from what I understood, he 13 came from the Province; highly recommended from the Province. 14 Q: And was it part of your role and function 15 as a buyer to test Mr. Power or to inquire into his 16 abilities, training and experience? 17 A: Definitely not. 18 Q: And so, if we look at -- at the documents 19 at Tab 22 and 23, each of them have near the top of the page, 20 a reference to a requisition number and the word, or the -- 21 yes, the word -- letter, appears beside that. 22 Does that mean that rather than a purchase 23 requisition, this process was initiated by a letter? 24 A: That's correct. 25 Q: And you've made inquiries no doubt, for
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1 that letter, have you been able to find any letter that 2 started this process? 3 A: No, we have not been able to. 4 Q: Have you talked to Mr. Power, as to 5 whether he might have been the author of that letter? 6 A: I'm not sure what you mean by talked to 7 Mr. Power, back then or now? 8 Q: Back then -- 9 A: No. 10 Q: -- or now? 11 A: No. 12 Q: No. Okay. Before this process started, 13 we know from your affidavit at page 9, Section 38, that you 14 may have attended an information session or seminar, put on 15 by Mr. Ashbourne of MFP, and if I could take you to -- 16 firstly to your affidavit, just so you know where I'm 17 starting off from. There you set out for us the fact that it 18 was not unusual for you to attend information sessions of 19 this kind; am I reading that correctly? 20 A: That's correct. 21 Q: The -- the one (1) that we're talking 22 about, appears to perhaps have been referenced at Tab 32 of 23 your book of documents, if you could go to that, that's 24 document 21537. 25 MADAM COMMISSIONER: Tab 32?
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1 MR. PATRICK MOORE: Tab 32 of Mr. Beattie's 2 book. 3 MADAM COMMISSIONER: Okay. 4 THE WITNESS: I think you mean 33. 5 6 CONTINUED BY MR. PATRICK MOORE: 7 Q: Well, I'll come to 33 in a second -- 8 A: Okay. 9 Q: -- but at Tab 32 there is a -- an entry, 10 it appears, from Mr. Ashbourne's DayTimer, under the date 11 April 7th of 1998. And on the right hand side a reference to 12 your name and at the bottom of that it looks like it says: 13 "Discussed leasing program." 14 And that taken with the document beginning on 15 the next tab, Tab 33, document 25387, which is: 16 "Leasing at the City of Toronto, review and 17 discussion dated April 7, 1998." 18 Reading those two (2) together, can we 19 conclude, Mr. Beattie, that the -- the presentation that you 20 speak of having attended in your affidavit, probably occurred 21 in April of 1998? 22 A: That's correct. 23 Q: And can you recall now that the content of 24 the affidavit, sorry, the content of the discussion or 25 seminar in April of 1998, may have tracked these copies of
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1 overhead slides that we see at Tab 33? 2 A: Yeah, I don't recall. 3 Q: So, that -- 4 MADAM COMMISSIONER: I'm just wondering, Mr. 5 Moore, when I look at Tab 32, of Mr. Ashbourne's DayTimer, it 6 looks like this meeting with Dave Beattie is scratched out. 7 MR. PATRICK MOORE: Yeah, we've wondered about 8 that too. But I believe it was Mr. Ashbourne's evidence that 9 a meeting went forward, and it's clearly Mr. Beattie's 10 evidence that at about that time he attended an information 11 session. I -- I suppose we can't put it any higher level 12 than that. 13 MADAM COMMISSIONER: All right. 14 MR. PATRICK MOORE: If you look at Tab 33, Mr. 15 Beattie, there beginning at page 25397, is a description of 16 quarterly program planning. And towards the bottom there's a 17 bullet point that says: 18 "MFP provides program pricing, lease rate 19 factor --" 20 MADAM COMMISSIONER: Sorry, which page is 21 that? It's just so hard to read on this -- 22 MR. PATRICK MOORE: Yes. 23 MADAM COMMISSIONER: -- I can't see it very 24 well. 25 MR. PATRICK MOORE: Yeah, sorry. It's -- it's
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1 page 25397, and I'll count them in from the first. 2 MADAM COMMISSIONER: I think I've got it. 3 Okay, hmm hmm. 4 5 CONTINUED BY MR. PATRICK MOORE: 6 Q: And then following are copies of slides 7 addressing acquisition and the next page is the acquisition 8 process described and so forth. 9 And my point of taking you to these, Mr. 10 Beattie, is to ask whether you now recall Mr. Ashbourne or 11 others on behalf of MFP, describing the acquisition process 12 in the way that it's set out here from provision of lease 13 rates through to actual acquisition? 14 A: I don't -- I don't recall. 15 Q: All right. And can you help us with 16 whether you recalled that seminar and the description of the 17 MFP acquisition process, when you first became involved in 18 this RFQ, approximately a year after the seminar in May of 19 1999? 20 A: Sorry -- what was the -- 21 Q: Did you remember the seminar and the 22 particulars of it, when you became involved with this RFQ? 23 A: Definitely not. 24 Q: All right. 25
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1 (BRIEF PAUSE) 2 3 Q: Now, if you go back to Tab 20, of your 4 Book of Documents, there's an e-mail 5800, and that appears 5 to be an e-mail to you sir, from Mr. Spizarsky on May 27th, 6 of 1999. 7 And he's asking you in that e-mail to open 8 this document and I'll come to that in a moment, 9 "And work with Brendan to issue it as soon 10 as possible. Brendan can be reached at --" 11 And there's an extension and Mr. Spizarsky 12 closes with: 13 "Please keep me apprized." 14 So, from that document and your recollections, 15 Mr. Beattie, does this mark the timing of your first 16 involvement with this RFQ? 17 A: Yes, that's correct. 18 Q: And if you move over one (1) Tab, to Tab 19 21, there is what appears to be a draft of an RFQ and it has 20 number 05801 and it appears to be dated May 26th, 1999, you 21 see that at the center at the top? Just under those 22 horizontal lines? 23 A: Yes. 24 Q: All right. And so can we conclude that 25 that's likely the document that the e-mail referred to?
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1 A: That's correct. 2 Q: And so on receiving an e-mail of that kind 3 and that instruction from Mr. Spizarsky, what would you do? 4 What did you first do? Did you read the RFQ for instance? 5 A: Not really. What -- from a Purchasing 6 standpoint, the first thing I would do to make sure that it 7 followed with our policy. 8 In this case, there was a lot of different 9 terminology proposals request. Because this was going out as 10 a request for quote, we had to make sure that any word 11 referencing proposal was removed and put in correct term. 12 So, that it read quotations throughout the 13 document. We were looking to make sure that it was non- 14 restrictive in the fact that as many potential bidders could 15 bid on it. 16 Q: The document is entitled, "a draft", you 17 see that at the very top of the first page? 18 A: Yes. 19 Q: And then it says, City of Toronto and then 20 it says, "request for quotes for leasing services". So, 21 that's an RFQ designation, as opposed to an RFP designation? 22 A: That's correct. 23 Q: The first thing that I need to ask you is, 24 is this the first form of draft for this RFQ that you saw? 25 A: Yes.
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1 Q: And did you ever see a 30 April 1999, 2 draft of a proposal or quote document, that was used -- that 3 you used as part of this tender process? 4 A: Not that I can recall. 5 Q: Now, as you may know, Mr. Power, attended 6 and gave evidence before you here at this Inquiry, and I'd 7 like to familiarize you with part of his evidence as it 8 applies to this process, the use of a quotation process and 9 the purpose of it and ask for your input. 10 This is from the transcript, Commissioner, of 11 March 27th commencing at page 152. I've shown this to Mr. 12 Beattie but I will read it into the record and then ask him 13 about it. 14 Commencing at Line 19, Page 152: 15 "Q: But what I'm saying, sir, is that -- 16 is that, generally speaking, had you had 17 your druthers, would you have gone with an 18 RFP instead of an RFQ? Is that right?" 19 Sorry, I misread that, Commissioner. It says: 20 "-- you would have gone with an RFP instead 21 of an RFQ. Is that right? 22 A: Yes. 23 Q: And part of that reason, sir, if I'm 24 right, is because of the fact that you were 25 looking for broader solutions than simply
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1 getting a truck of gravel? 2 A: Yes. 3 Q: And those as contained in the 4 introduction are examples of the types of 5 things that the broader program, the 6 broader solution that you were interested 7 in getting from proponents. Isn't that 8 right? 9 A: That's correct. 10 Q: Now, the reason I raise this with you, 11 sir, I have to ask you a couple of 12 questions. Did you ever tell any of Mr. 13 Spizarsky, Mr. Beattie, or Mr. Pagano that 14 you were looking to establish through this 15 RFQ, a vendor of record relationship? 16 A: I believe I did. I would -- I couldn't 17 see a circumstance where I wouldn't tell 18 them that. 19 Q: Well, I'm asking you, sir, whether you 20 can tell me that you did? 21 A: Oh, yeah. I can say I did. 22 Q: Who did you tell? 23 A: I guess it would have been Frank 24 because I had most discussions with him. 25 Q: And did you tell Frank that you were
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1 looking to do, with this document --" 2 MADAM COMMISSIONER: Yeah, what -- 3 MR. PATRICK MOORE: 4 "-- what you were looking --" 5 Thank you. 6 "-- what you were looking to do with this 7 document was establish a one leasing 8 company solution for the City for a three 9 (3) year period? 10 A: Quite possibly, yes. 11 Q: Quite possibly or did you? 12 A: I don't recall any very specific 13 conversation, no. 14 Q: And I take it you never had that kind 15 of conversation with Mr. Beattie? 16 A: I would think I would have had, yes. 17 Q: Are you saying you did or you think you 18 would have had? 19 A: Well, I can't say for certain I did 20 because I can't think of a day or a time 21 when it happened but -- 22 Q: So I'm going to suggest to you, sir, 23 that you didn't. I'm going to suggest that 24 Mr. Beattie is going to come here and say 25 that you did not and I'm going to go
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1 further to suggest to you, sir, that the 2 very reason why people in Purchasing said 3 this should be a quotation and not a 4 proposal is because they thought what you 5 were trying to do with this RFQ was to go 6 out and get prices for a specified amount 7 of leasing. In other words, you were going 8 to go out and get a fixed amount of assets 9 put on lease and that's what they thought 10 you were going -- you were doing this for. 11 Do you agree, sir, that that was the basis 12 upon which they might have been proceeding 13 here? 14 A: I couldn't say. I wouldn't know where 15 they would get that information." 16 Now, there's another reference to you on the 17 next page, halfway down at line 13, Commissioner. 18 "Q: All right. Is there any memo or 19 communication you can point to between you 20 and either Mr. Spizarsky or Mr. Beattie or 21 anybody else in Purchasing where you made 22 it clear to them that you were looking to 23 establish a vendor of record relationship 24 between the City and the successful bidder? 25 Is there any communication you can point to
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1 on that, sir? 2 A: I can't think of any at the moment, 3 no." 4 Now, my point of raising all of this with you, 5 Mr. Beattie, is that this document when it comes to you on 6 the 27th of May is entitled a "Request for Quotes". 7 So can I ask you to begin with, did you have 8 any discussion, you personally, with Mr. Power about whether 9 an RFQ or an RFP was the appropriate form or process to 10 follow? 11 A: Definitely not. 12 Q: And did you have any discussion with Mr. 13 Power at any time before this RFQ was issued on the 31st of 14 May and it closed on the 11th of June, about whether this was 15 more properly an RFP or an RFQ process? 16 A: Not that I can recall. 17 Q: And did you have any discussion with Mr. 18 Power about whether the intent of this process was to acquire 19 a vendor of record or one (1) vendor of record only, for a 20 specified period of time? 21 A: No, definitely not. 22 Q: Did you notice when you received this 23 draft RFQ, Mr. Beattie, that it spoke -- and I'm looking at 24 the second page at Tab 21, in the fourth paragraph down, it 25 spoke of a ninety (90) day window, or guarantee period, that
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1 the respondents must provide lease rates and hold them valid 2 for. Do you see that? 3 A: Yes. 4 Q: Did you see that then? 5 A: Not that I recall, no. 6 Q: And from your experience, would a ninety 7 (90) day guarantee period have been usual or unusual for a 8 tender process done through RFQ? 9 A: It's -- it's hard to say, because this -- 10 this was the call of the Information Technologies group. 11 Q: And other than the -- the Apple computer 12 lease acquisition, the small one (1) you told us about, and 13 your involvement with the Councillors' computers, was this 14 the next acquisition using lease financing that you had 15 anything to do with? 16 A: I believe it was; yes. 17 Q: Further down on that same page, the 18 paragraph starting with: 19 "The City may from time to time 20 negotiate..." 21 Do you see that one (1), sir? 22 A: Yes. 23 MADAM COMMISSIONER: I'm sorry, where? 24 MR. PATRICK MOORE: The -- it would be about 25 two thirds down on the second page at Tab 21.
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1 MADAM COMMISSIONER: Hmm hmm. 2 MR. PATRICK MOORE: "The City may from time to 3 time --" 4 MADAM COMMISSIONER: Yes. 5 MR. PATRICK MOORE: "-- negotiate." 6 MADAM COMMISSIONER: Yes, thank you. 7 8 CONTINUED BY MR. PATRICK MOORE: 9 Q: "-- separate corporate license agreements 10 for major software acquisitions." 11 Now, did you read that at that time, and did 12 that have a meaning to you? 13 A: No, it did not have a meaning, I did not 14 read it at that time. 15 Q: Did you have a sense, when you read this 16 document, of how much money this acquisition involved? 17 A: Not really. 18 Q: Did you have any discussion with Mr. Power 19 about what his sense was of -- of how much money this 20 acquisition might involve? 21 A: No, I didn't. 22 Q: And was that usual or unusual that you 23 didn't talk to the initiating department representative about 24 the -- the total asset acquisition value? 25 A: It was probably more unusual.
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1 MADAM COMMISSIONER: I'm sorry, I can't hear 2 you very well. 3 THE WITNESS: More unusual. 4 5 CONTINUED BY MR. PATRICK MOORE: 6 Q: You usually had a sense of it? 7 MADAM COMMISSIONER: Thank you. 8 MR. PATRICK MOORE: Sorry, Commissioner. 9 THE WITNESS: Sorry? 10 11 CONTINUED BY MR. PATRICK MOORE: 12 Q: You usually had a sense of the total value 13 of an acquisition? 14 A: Normally we would, yes. 15 Q: And that it wasn't spelled out here, or at 16 least you didn't take from your reading of it any knowledge 17 or understanding of it. Ordinarily would you think you would 18 contact the initiating department representative and -- and 19 ask how much is involved? 20 A: Yes, I would have. 21 Q: And ordinarily would you also ask, and 22 when is it going to be delivered, over what period of time? 23 A: Yes. 24 Q: And what is your explanation, or do you 25 have one (1), for not doing that in this case?
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1 A: I have no explanation. 2 MADAM COMMISSIONER: Did you do it in this 3 case? Did you do that in this case? 4 THE WITNESS: Do what? 5 MADAM COMMISSIONER: Contact the initiating 6 department and ask how much was involved or when it was going 7 to be delivered? 8 THE WITNESS: Not until after the phone calls 9 started coming in. 10 MADAM COMMISSIONER: Meaning what? I don't 11 know when the phone calls started. 12 THE WITNESS: Okay, that's a result of the 13 addendum. 14 MR. PATRICK MOORE: Yes. 15 MADAM COMMISSIONER: Okay. 16 THE WITNESS: That's when we started to know 17 the -- what the leasing cost. 18 19 CONTINUED BY MR. PATRICK MOORE: 20 Q: We know from the documents at Tabs 22 and 21 23, that this RFQ issued on the 31st of May of 1999, and we 22 know from Mr. Spizarsky's instructing e-mail to you, that 23 your first involvement came on the 27th. So, that's four (4) 24 days between your involvement and the issuance of this RFQ. 25 Were there -- was there a weekend in between?
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1 A: I believe there was. 2 Q: And so your involvement really involved 3 two (2) business days then? 4 A: Yes, that's correct. 5 Q: And in those two (2) business days, what 6 do you recall that you in fact did do on this RFQ? 7 A: Well, basically there was a lot of changes 8 made in -- where they had proposals with changes to 9 quotation. And that was basically it. 10 Q: And do you recall any discussions, 11 whatever, with Mr. Power, other than change this word to that 12 word, that sort of thing, anything about the form and content 13 of the agreement? 14 A: No, not that I can recall. 15 Q: When I say agreement, I mean, quotation 16 request. All right. At paragraph -- sorry, at page 13, of 17 your affidavit, and this is paragraph 53, you address sale 18 and leaseback, and I think you say there that you weren't 19 aware that there was a sale and leaseback component to this 20 transaction, and as you put it, you didn't know what that 21 was, much less it's potential implication for the City? 22 A: That's correct. 23 Q: When did you first find out that there 24 was, or may have been, a sale and leaseback component to this 25 transaction?
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1 A: When it started hitting the newspaper 2 about MFP. 3 MADAM COMMISSIONER: I'm sorry, I can't hear 4 you. 5 THE WITNESS: When, I guess the Councillors 6 started raising the issue. 7 MADAM COMMISSIONER: You said a date, I think, 8 I didn't hear what you said? 9 THE WITNESS: I'm not sure what the date was, 10 but whenever the controversy started erupting. 11 MADAM COMMISSIONER: I think you might be just 12 a little bit too close to the microphone. 13 THE WITNESS: Okay. 14 MADAM COMMISSIONER: Most people are too far 15 away. 16 17 CONTINUED BY MR. PATRICK MOORE: 18 Q: And when we look at your affidavit at page 19 12, paragraph 51, I see you say there that you understood 20 that: 21 "The City intended a thirty six (36) month 22 lease in respect of up to 43.15 million in 23 computer hardware and software." 24 And my question to you, sir, is when did you 25 come to that understanding, and by what means?
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1 A: Probably when I started getting the calls 2 about the leasing volumes. 3 Q: And that was after the RFQ had issued? 4 A: Yes, that's after the RFQ hit the street. 5 Q: And as the result of inquiries from -- 6 would it be from suppliers -- 7 A: Definitely. 8 Q: -- potential bidders on this transaction? 9 A: Definitely. 10 Q: All right. As the -- as a result of that, 11 did you have discussions with Mr. Power toward finding out 12 about leasing volumes? 13 A: From what I gather, I'm not sure whether 14 it was an e-mail or a phone call or just indicated that we 15 started to get calls from the leasing vendors and they wanted 16 a little bit more information on the configs -- 17 configurations, and also what the type of leasing volume they 18 were looking at so they could bid accordingly. 19 Q: And so, if we go to tab 2 of your book of 20 documents, there we see what you've referred to earlier in 21 answer to one (1) question to the Commissioner, the reference 22 to the addendum. 23 This is a 7 June, '99 document, with document 24 number 3902, are you with me there? 25 A: Yes.
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1 Q: And in fact, the next two (2) Tabs, Tabs 3 2 and 4, also contain information which is referenced in your 3 letter of June 7th. 4 And I'm specifically interested in taking you 5 to Tab4, Document 3907. There you see a table, Mr. Beattie, 6 of estimated leasing volumes? 7 A: Yes. 8 Q: And approximate values on the right hand 9 side of the table? 10 A: Right. 11 Q: Did you add those values up? 12 A: At the time I didn't. 13 Q: And so, was there something in the 14 information that you received that -- that found its way into 15 this addendum that issued in on 7th, June, that helped you to 16 an understanding that this was a $43.15 million transaction 17 as your affidavit says? 18 A: Yes, that's correct. 19 Q: And -- and what was it; was it this 20 estimated leasing volume -- 21 A: It was basically the questions I was 22 getting from the bidders, indicating that they needed some 23 kind of dollar value of leasing volumes so they could go out 24 and, you know, bid their -- base their bid accordingly. 25 Q: Right.
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1 A: And from what I gathered, this estimated 2 leasing volume was what we were going to be leasing over the 3 -- the term of the contract. 4 Q: And do you recall any specific discussions 5 with Mr. Power about, for instance, this table being the sum 6 total of all of the leasing for this contract? 7 A: Not really. The -- what this leasing 8 volume to me meant that this was the volume that was going to 9 be leased. And as far as how the number of boxes, software 10 came about, that this was based on -- in other words, this 11 leasing volume was the intent of the quotation request. 12 13 (BRIEF PAUSE) 14 15 Q: And when the tender process closed on the 16 11th of June, were you there present on that day? 17 A: No, I wasn't. 18 Q: And so if bids or parts of the bids were 19 read out, you wouldn't be able to tell us that had happened 20 or what was read? 21 A: That's correct. 22 Q: And then comes the evaluation process and 23 were you personally involved, Mr. Beattie, in the evaluation 24 of the bids received? 25 A: No, I was not.
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1 Q: If you turn to Tab 12 -- sorry -- that's 2 not the one (1) I want. Tab 14, sorry, I saw your name and I 3 stopped. 4 Tab 14 is an 11 June memo from Mr. Spizarsky 5 to Mr. Power and it's document 5765. And among other things, 6 it refers to there being six (6) bids and it requests that 7 those quotations be examined and it asks for a 8 recommendation. Do you see that? 9 A: Yes. 10 Q: In the bottom left-hand corner of that 11 page, are initials over the typed in initials, DB. Are those 12 your initials, sir? 13 A: Yes, that's correct. 14 Q: All right. So, can we take it from that 15 then that for Mr. Spizarsky, you assembled together the six 16 (6) bids and you sent them to Mr. Power for review and 17 evaluation? 18 A: That's right. And Mr. Power's copy would 19 have been signed by Frank. 20 Q: Right. But it's the result of your work 21 efforts? 22 A: That's correct. 23 Q: All right. And so then we know that over 24 time, there were draft reports prepared on the evaluation 25 with a recommendation to the Policy and Finance Committee.
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1 In a broad sense, were you aware of that 2 evaluation process being ongoing? 3 A: Yes, that's correct. 4 Q: And in fact, you were copied with some of 5 the reports as they were drafted and re-drafted along the 6 way? 7 A: That's correct. 8 Q: And so the ones that you did receive, what 9 did you do with them? 10 A: What we were looking for, is that they 11 conformed to the way typical recommendation letters were 12 issued, where they made mention to fair wage, that it -- 13 indicated they were going with a low bidder and just kind of 14 P&MD type of stuff that was done. 15 And we looked at it from a P&MD standpoint 16 only. 17 Q: And that's what you're getting at at page 18 16 of your affidavit, in paragraph 66, when you say: 19 "Although [you] received the following e- 20 mail messages, I did not review them." 21 And then you list several of them running from 22 July 2nd onward. 23 A: That's correct. 24 Q: All right. And so, specifically can I 25 take you to a draft of the report went, that was re-drafted,
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1 ultimately went to Policy and Finance. This draft is at Tab 2 25 and it's document 12716. 3 And if you go to the second page and read 4 recommendation number one (1), there it says: 5 "It is recommended that the City of Toronto 6 enter into a leasing contract with MFP 7 Financial Services Limited, for leasing 8 computer equipment and related software 9 with a total cost not exceeding $43.15 10 million for three (3) years on terms and 11 conditions as stated in the proposal 12 received from them." 13 Do you see that now, sir? 14 A: Yes, I do. 15 Q: Did you see that at some point, close in 16 time to the date of this document, the 29th of June, 1999? 17 A: Yes, I recall that. 18 Q: And is that one of the reasons why you 19 came to the conclusion that this was a $43.15 million 20 transaction? 21 A: That's correct. 22 Q: And then if you compare that to the 23 document at Tab 8 of your book of documents. This is 24 Document 03924. In this version of the document, Mr. 25 Beattie, they -- the recommendation has by now changed and it
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1 simply reads: 2 "The City of Toronto enter into a leasing 3 contract with MFP Financial Services 4 Limited for leasing computer equipment and 5 related software for three (3) years." 6 You see that the reference to not exceeding 7 $43.15 million no longer appears. 8 A: Yes. 9 Q: Did you notice that in July of 1999? 10 A: No, I didn't. 11 Q: Did you have any conversations with anyone 12 in IT in July of 1999 about why this change -- why the 13 deletion of the words "not exceeding $43.15 million" 14 happened? 15 A: No, I didn't. 16 Q: And you have no explanation to offer for 17 it here? 18 A: No, I don't. 19 Q: And then as you point out in your 20 affidavit at paragraph 70, you did not attend the Policy and 21 Finance Committee meeting? 22 A: That's correct. 23 Q: Paragraph 70, of course, is at page 17 and 24 you did not attend the Council meeting? That's at paragraph 25 71.
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1 A: That's correct. 2 Q: And you were not involved in the 3 negotiation of the leases? That's paragraph 72. 4 A: That's correct. 5 Q: And you were not involved in the 6 acquisitions placed on these leases? That's paragraph 73. 7 A: That's correct. 8 Q: And, of course, at paragraph 74 you 9 confirmed that you were not aware of or involved in the 10 decision to change the term of these leases or any of them 11 from three (3) to five (5) years? 12 A: Yes, that's correct. 13 Q: And you were not involved in the re-write 14 of these leases which occurred in July of 2000? 15 A: No, I wasn't. 16 Q: And was it the case that you had no other 17 role in or involvement in this MFP/City of Toronto leasing 18 transaction after the matter went to Council in July of 1999? 19 A: That's correct. 20 Q: And did you have a role in the development 21 of the Contract Management Office and its forms and 22 processes? 23 A: No, I didn't. 24 Q: And is that because, as you point out at 25 paragraph 75 of your affidavit, that you had left your job as
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1 a buyer for the City in September of 1999? 2 A: That's correct. 3 Q: All right. Thank you, sir. Those are my 4 questions. 5 6 (BRIEF PAUSE) 7 8 MADAM COMMISSIONER: All right. Do we have 9 agreement on who is next? 10 MS. BAY RYLEY: Yes. 11 MADAM COMMISSIONER: You do? 12 MS. BAY RYLEY: I'm going -- 13 MADAM COMMISSIONER: It's all done? 14 MS. BAY RYLEY: -- I'm going next. 15 MADAM COMMISSIONER: You're going next? All 16 right and how long, Ms. Ryley, do you think you'll be? 17 MS. BAY RYLEY: I think about three-quarters 18 of an hour. 19 MADAM COMMISSIONER: Okay. All right. We'll 20 return at 2:30 with Ms. Ryley and ... 21 22 (BRIEF PAUSE) 23 24 MADAM COMMISSIONER: I'll see you then. 25 THE REGISTRAR: The Inquiry is adjourned until
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1 2:30. 2 3 --- Upon recessing at 12:57 p.m. 4 --- Upon resuming at 2:30 p.m. 5 6 THE REGISTRAR: The Inquiry will resume, 7 please be seated. 8 MADAM COMMISSIONER: Good afternoon. Good 9 afternoon, Mr. Samac. 10 MR. ZORAN SAMAC: Good afternoon. 11 MADAM COMMISSIONER: Nice to see you in this 12 environment. 13 MR. ZORAN SAMAC: It's been about a year, Your 14 Honour, nice to see you. 15 MADAM COMMISSIONER: The last trial I had, 16 while I was appointed to do this Inquiry was with Mr. Samac. 17 I'm sure he misses me. 18 All right, Ms. Ryley. 19 MADAM COMMISSIONER: This is -- Mr. Beattie, 20 this is Bay Ryley, she's the lawyer for Lana Viinamae. 21 THE WITNESS: Okay. 22 23 (BRIEF PAUSE) 24 25 CROSS-EXAMINATION BY MS. BAY RYLEY:
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1 Q: Good afternoon. 2 A: Good afternoon. 3 Q: Paragraph 9 -- sorry, page 9, paragraph 38 4 of your affidavit, you state there that part of your role as 5 a buyer involved regular meetings with salespeople to listen 6 to their sales pitch, in order to become more familiar with 7 the goods and services they offer. 8 Could you describe how attending presentations 9 like these by salespeople, assisted you with your role as a 10 buyer? 11 A: Definitely. Say, for example someone was 12 coming in with a new product, say for example a widget. They 13 would give us kind of a run down, they'd leave a brochure, 14 you know, describing the product and then we would keep that 15 on file for future. 16 And over the years you just became 17 experienced, so that if someone down the road decided they 18 need a widget, you could kind of recall that so and such a 19 company had a widget and you could pull the information out 20 for the Department to -- to use. 21 And over the years, that -- you know, I guess 22 salesmen calling up, coming in and meeting, you know, just 23 leaving brochures you know, for future -- you know, for 24 retention because at PMMD we had a catalogue system, so as 25 the catalogues were dropped off by the salespeople they would
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1 have kind of a central library, these catalogues would be 2 filed according to the commodity code. So, any of the buyers 3 or any of the Departments who were looking for any kind of 4 information could be -- could be called and pulled up at a 5 later date. 6 Q: Could we please turn to Tab 33 of your 7 binder? 8 MADAM COMMISSIONER: What was the last 9 paragraph that you had referred him to in -- 10 MS. BAY RYLEY: Paragraph 38. 11 MADAM COMMISSIONER: Thanks. 12 13 CONTINUED BY MS. BAY RYLEY: 14 Q: And this is -- Tab 33 is document number 15 25387. 16 And it's the overhead -- I -- I assume what 17 was on an overhead projector at a meeting that you likely had 18 with Mr. Ashbourne from MFP. 19 A: Okay. 20 Q: And on April 7th, 1998. And I -- I take 21 it you do recall meeting with Mr. Ashbourne? 22 A: Yes, the only reason I remember that is I 23 think at the time he was trying to meet with either one (1) 24 of my bosses, either Frank or Lou, and at the last minute 25 they were unable to attend, so I attended it with Rob by
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1 myself. 2 Q: So, it was just you and -- 3 A: Yes. 4 Q: -- Mr. Ashbourne, who were there? 5 A: Kind of a one (1) on one (1). 6 Q: But Mr. Pagano and Spizarsky, they were 7 both invited? 8 A: I'm not sure, it was either Frank or Lou 9 that was invited, yes. It more than likely would have been 10 Frank because Lou normally doesn't get involved in those 11 types of meetings. 12 Q: And why is that? 13 A: Because he's very busy with other -- other 14 items. 15 Q: And would he be -- would he have been 16 briefed by whoever attended from the purchasing division 17 on -- 18 A: It could have been, but, I'm not sure if 19 he was in this instance. 20 Q: In the normal -- usually would he have 21 been? 22 A: Yes. 23 Q: And are you aware of any other meetings 24 besides this one (1) that people from Purchasing division 25 might have had with MFP?
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1 A: No. 2 Q: This is -- it's twenty six (26) pages 3 long, I'm not going to review -- well, I'm not going to read 4 every bit of it, but, I just wanted to quickly review the 5 kinds of things that were discussed, just the headings there. 6 And it's not numbered, but, by the COT number 7 starting at 25390, there's a reference to other government 8 contracts. 9 The next page includes Solicitor General's 10 office and Community and Social Services office. Page 25394 11 talks about solutions -- MFP solutions that are offered by 12 leasing. 13 Over the next page, discussion or mention of 14 what program agreements can accomplish. Mr. Pat Moore took 15 you to 25397, about quarterly program planning. 16 The next page over about acquisitions -- the 17 next two (2) pages, approaches to acquisitions. And there's 18 details there in the bullet points. 19 MADAM COMMISSIONER: What's your question, Ms. 20 Ryley? 21 22 CONTINUED BY MS. BAY RYLEY: 23 Q: My question is, there is a lot of 24 information here, it's twenty six (26) pages long -- 25 A: Yes.
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1 Q: -- and at page 12 of your affidavit, sorry 2 paragraph 12 of your affidavit, page 2, states: 3 "I'm not an expert on the goods and 4 services that departments want to acquire 5 or the business needs or requirements they 6 seek to fill." 7 Are you there -- 8 A: Yes -- 9 Q: -- on paragraph 12? So, although you 10 wouldn't have been an expert on all the goods and services 11 procured by the City, you'd agree that from a presentation, a 12 detailed presentation like this, you would have gained some 13 knowledge about the service the MFP provided. In this cases, 14 financing by way of leasing? 15 A: Not really. 16 Q: Why is that? 17 A: As I said before, these were basically a 18 sales meeting type of thing, coming giving a briefing of the 19 product they had to offer. And from what I gather -- you 20 know -- looking at this, I don't recall ever seeing this. 21 So, probably after the meeting it would have 22 been probably filed with -- under MFP for future reference. 23 Q: At the meeting, do you recall seeing 24 these, would you have been shown these slides? 25 A: Probably, but, I don't recall ever, you
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1 know, looking at this. 2 Q: But, aside from the actual details of the 3 presentation you would think that you would have retained 4 some information about MFP and the service it provides? 5 A: Probably just, you know, like a cursory 6 glance, type of thing. 7 MADAM COMMISSIONER: I'm sorry, what? 8 THE WITNESS: Cursory glance, just you know, 9 the fact that he was trying to sell leasing services to us. 10 11 CONTINUED BY MS. BAY RYLEY: 12 Q: And when I -- when you were talking 13 earlier about these -- the meetings that you'd have with 14 sales people. You talked about keeping things on file? 15 A: Yes. 16 Q: Is this the kind of -- would you have made 17 notes on this presentation that you would have kept on file? 18 A: I probably would have filed it under, we 19 call it thirty-four (34), which was computers. So probably 20 would have been filed under the general file, under that. 21 22 (BRIEF PAUSE) 23 24 Q: If you could please turn to Tab -- sorry 25 Tab 23, which is the RFQ and that's document 06104.
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1 A: Okay. 2 Q: And if you turn to Page 6107 of Page 3. 3 A: Hmm hmm. 4 Q: This is the section that Mr. Pat Moore 5 took you to about major software acquisitions. Are you 6 familiar with this section now? 7 MADAM COMMISSIONER: 1.1.21? 8 9 CONTINUED BY MS. BAY RYLEY: 10 Q: I'm sorry. 1.1.21. 11 A: Okay. 12 Q: And at Paragraph 49 of your affidavit, 13 which is Page 12. 14 A: Okay. 15 Q: You state: 16 "I did not focus on the paragraph in the 17 draft RFQ that became 1.1.21" 18 A: That's correct. 19 Q: And looking at it now, though, would you 20 -- do you see anything wrong with it from a Purchasing 21 standpoint? 22 A: Looking at it now as opposed to before? 23 Q: Yes. 24 A: Definitely. 25 Q: And what -- what problems do you see?
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1 A: The fact that they were negotiating 2 separate agreements and with an RFQ you can't. It's 3 basically price. You can't change the scope of the contract. 4 Q: Mr. Pagano, when he was here he testified 5 that -- this is February 12th at Page 142: 6 "An RFQ is used --" 7 MADAM COMMISSIONER: Wait, wait, wait. 8 MS. BAY RYLEY: I'm sorry. 9 MADAM COMMISSIONER: 142? 10 MS. BAY RYLEY: 142. 11 MADAM COMMISSIONER: Okay. Well, just let me 12 get there. I'm not quite that fast. 13 14 (BRIEF PAUSE) 15 16 MADAM COMMISSIONER: February 12th? 17 MS. BAY RYLEY: February 24th. 18 MADAM COMMISSIONER: 24th. 19 MS. BAY RYLEY: Page 142. 20 21 (BRIEF PAUSE) 22 23 MADAM COMMISSIONER: Okay. What line? 24 MS. BAY RYLEY: And -- I'm sorry. 25 MADAM COMMISSIONER: Okay. What are you --
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1 MS. BAY RYLEY: It's what the -- the -- 2 3 CONTINUED BY MS. BAY RYLEY: 4 Q: He stated: 5 "An RFQ is used when a department knows 6 what it wants to purchase. It can give a 7 description of what the purchase is and 8 prices are bid based on that description." 9 A: That's correct. 10 Q: Okay. Would you agree with that -- 11 A: Yes. 12 Q: -- that statement? And would you say that 13 the section we've just been looking at, 1.1.21, is it -- does 14 it fit with that description of what an RFQ is? 15 A: What I know now, no. It doesn't. 16 Q: And why not? 17 A: Because as you mentioned before, an RFQ is 18 when you know what the product you're buying and an RFP is 19 when you're looking for a solution. 20 Q: What does looking for a solution -- 21 A: Well, we have -- there's requests for 22 quotations and requests for proposals. Requests for 23 quotations are when you know what you're looking for and you 24 have a quantity and it's very evident. A request for 25 proposal is when you're not sure what you're looking for and
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1 you're looking for the proponent to give you a suggested 2 solution to the problem. 3 Q: And looking at this section, the 1.1.21, 4 you'd agree and you've stated along these lines that -- that 5 it talks about -- sorry. The first line: 6 "The City may from time to time negotiate 7 separate agreements." 8 But there's no reference to a specific time, 9 is there? 10 A: That's correct. 11 Q: And although it refers to major software 12 acquisition, what those might include isn't specified, right? 13 A: That's right. Now, I'm speaking as -- as 14 I know it now, not as what I knew it then. 15 Q: And Mr. Brendan Power testified that he -- 16 he was surprised that this was an RFQ and it was his opinion 17 that this should have been an RFP. 18 MADAM COMMISSIONER: Just to go a little 19 further with that. Mr. Power said that it was Mr. Spizarsky 20 who told him that he should be doing an RFQ and not an RFP. 21 THE WITNESS: Okay. 22 MADAM COMMISSIONER: Okay, so. 23 24 25 CONTINUED BY MS. BAY RYLEY:
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1 Q: And from his -- he testified and this is 2 March 25th. 3 A: Yes. 4 Q: Page 137, Lines 5 to 10. And his -- his 5 -- what he said was, to elaborate on one (1) thought, it 6 should have been an RFP, he said, 7 "I thought it was -- it would be a very 8 informal way of doing business in this way" 9 I -- that's referring to an RFQ. 10 "It's one (1) thing to perhaps get 11 truckloads of gravel on quotes, but 12 committing the organization financially 13 over a long of period of time, I would 14 think, in my view, requires more thought 15 and preparation." 16 And do you agree with Mr. Power's opinion? 17 A: Not really, because what we were looking 18 for was a lease for over a period of time so that we would 19 know what the lease rates would be, and what the lease value 20 would be. 21 So, I don't see it being as an RFP. It could 22 have gone out either way. 23 Q: You don't agree that it should have been 24 an RFP? 25 A: Well, as you can appreciate, when we
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1 started working on it there was -- there was almost some -- 2 some of this terminology referred to an RFQ, some referred to 3 an RFP, and once we established that it was an RFQ that he 4 was looking for then I started changing all the words where 5 he had "proposal", to make it more consistent. 6 Q: So, just to be clear, what you don't, in 7 terms of Mr. Power's opinion, you don't agree with him that 8 it should have been an RFP? 9 A: Sorry, would you -- 10 Q: Okay. You -- Mr. Power's said he -- he -- 11 it was his view that -- that this should have been an RFP, as 12 opposed to an RFQ? 13 A: It's usually the using department that 14 determines what they want, either an RFQ or an RFP, not the 15 Purchasing department. 16 Q: But do you share -- would you share his 17 view, none the less, that it should have been -- 18 A: On what I know -- on what I know now, or 19 looking at it before? 20 Q: What you know now. 21 A: On what I know now, it probably definitely 22 should have been an RFP. 23 MADAM COMMISSIONER: I'm not sure, you say, it 24 probably should have, or it definitely should have? 25 THE WITNESS: It definitely should have.
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1 MADAM COMMISSIONER: Okay. 2 THE WITNESS: From what -- from what I know 3 now, and what I've read. 4 MADAM COMMISSIONER: Can you just help me -- 5 Sorry, Ms. Ryley. When you say, it's usually the using 6 department that determines whether it should be an RFQ or an 7 RFP -- 8 THE WITNESS: Yes. 9 MADAM COMMISSIONER: -- they're not 10 necessarily going to have that kind of experience. 11 THE WITNESS: That's -- 12 MADAM COMMISSIONER: -- How are they supposed 13 to know -- 14 THE WITNESS: Well, that's correct, but 15 normally, as we mentioned before, with an RFQ you know 16 exactly what you're buying, with an RFP you're not sure what 17 you're looking for and looking for solution. 18 And this was, at the time, this was very 19 evident that they knew exactly what they wanted, they wanted 20 a thirty six (36) -- go for a thirty six (36) month lease. 21 MADAM COMMISSIONER: Right. So, then why 22 wouldn't it be an RFQ? 23 THE WITNESS: It went out as an RFQ. I mean, 24 why wouldn't it be. 25 MADAM COMMISSIONER: I thought I just heard
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1 you say, "it should have been an RFP"? 2 THE WITNESS: No, no, because it -- they knew 3 exactly what they wanted, -- 4 MADAM COMMISSIONER: Right. 5 THE WITNESS: -- the leasing of computers for 6 thirty six (36) months, so that would indicate that they knew 7 exactly what they wanted. 8 MADAM COMMISSIONER: So, if you knew exactly 9 what -- 10 THE WITNESS: Remember -- 11 MADAM COMMISSIONER: -- you'd go for an RFQ, 12 or do you go with an RFP? 13 THE WITNESS: If you know exactly what you 14 want, normally it's a request for quote. 15 MADAM COMMISSIONER: Right. 16 THE WITNESS: Because you know what you want, 17 but a request for proposal is when you're looking for a 18 solution. 19 MADAM COMMISSIONER: Right. You've got me 20 totally confused Mr. Beattie. I understand what -- 21 THE WITNESS: Okay. 22 MADAM COMMISSIONER: Hang on. I understand 23 what you're saying, that this is when you would -- that you 24 use it for those circumstance, but I thought I just heard you 25 say to Ms. Ryley, that from what you know now, you think it
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1 should have been an RFP. 2 THE WITNESS: Well, because there was more 3 variables than -- 4 MADAM COMMISSIONER: Is it, no that it should 5 have been an RFP, or yes, it should have been an RFP? 6 THE WITNESS: Yes, it should have been an RFP. 7 MADAM COMMISSIONER: Yes, okay. 8 THE WITNESS: Because there was more 9 variables -- 10 MADAM COMMISSIONER: Okay. 11 THE WITNESS: -- once it came out, the 12 negotiation, et cetera. 13 MS. BAY RYLEY: We haven't had any bad jokes 14 yet about minding our P's and Q's when we're talking about 15 RFP's and RFQ's. 16 17 CONTINUED BY MS. BAY RYLEY: 18 Q: Could I -- you've said that now -- knowing 19 what you know now, that it definitely should have been an 20 RFP, and why -- why wouldn't you have had that view at the 21 time, what has changed since then? 22 A: At that time, or this time? 23 Q: What has changed -- why do you now have 24 the view it should have been an RFQ -- an RFP? 25 A: Okay, this is from reading all that's
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1 happening now? 2 MADAM COMMISSIONER: It's her question, not 3 mine. 4 THE WITNESS: Is that right? It's not back 5 then, it's now, right? 6 7 CONTINUED BY MS. BAY RYLEY: 8 Q: Okay. At the time that you were working 9 on the RFQ, did you have any opinion that it was 10 inappropriate and that, in fact, it should have been an RFP 11 at the time? 12 A: At the time, no, because as I mentioned, 13 it came over looking like an RFQ, but there was instances 14 where proposals and who the respondents were, were mixed up. 15 Q: So, what has changed between then and now 16 that makes you believe it should have been an RFP? 17 A: Well, the fact that they were looking for 18 software acquisitions and they were looking for other than 19 the thirty-six (36) month lease. 20 Q: Okay, and at the time you didn't notice 21 the 1.1.21 of -- 22 A: That's correct. 23 Q: The Commissioner was just referring to the 24 Department and I wanted to ask some questions about the 25 initiating department, or -- if you could please turn to Tab
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1 8. Document number 3924, to July 9th, 1999, I believe this 2 is the final version of the report that went to Council. 3 A: Okay. 4 Q: And on page 5, which is 3928 is the 5 document number. Do you see there at the bottom that it's -- 6 the report is signed by Wanda Liczyk? 7 A: It's very faint. 8 MR. WILLIAM ANDERSON: Yeah, just as a 9 correction, it's actually not signed by Ms. Liczyk. 10 MADAM COMMISSIONER: We have a better version 11 of this, but I think -- 12 MR. WILLIAM ANDERSON: It was signed by Mr. 13 Andrew on his own behalf and on behalf of Ms. Liczyk. 14 MADAM COMMISSIONER: Okay. 15 MS. BAY RYLEY: All right. 16 17 CONTINUED BY MS. BAY RYLEY: 18 Q: Here it was signed -- or it was signed for 19 both Ms. Liczyk and Jim Andrew as well, do you see the two 20 (2) -- 21 A: If it's -- 22 Q: -- signatures there? 23 A: -- I can't make out the first signature. 24 Q: But the names underneath are for -- 25 A: Yes, yes.
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1 Q: -- underneath the signatures. One (1) is 2 for Ms. Liczyk who was the CFO and Treasurer at the time? 3 A: Yes. 4 Q: Because she was from the Finance 5 Department? 6 A: Okay. 7 Q: And Mr. Andrew was Executive Director of 8 Information and Technology, he was obviously from Information 9 and Technology Department. And they both have signed or had 10 this report signed, because they were representatives from 11 the requesting Departments; correct? 12 A: Correct. 13 Q: So, there were two (2) requesting 14 Departments in this case, Corporate Finance and Information 15 and Technology? 16 A: That's correct. 17 Q: I think earlier this morning there was 18 discussion about the initiating department, singular, but you 19 agree that -- that there were in fact two (2) initiating 20 departments -- 21 A: I think the reason the Finance Department 22 got involved, because there was financial implications. 23 Q: And page -- page 3 of your Affidavit, 24 paragraph 12. 25
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1 (BRIEF PAUSE) 2 3 A: Yeah. 4 5 (BRIEF PAUSE) 6 7 Q: Sorry, I may have the wrong paragraph, you 8 stated that it was the role of Departments to identify their 9 needs and the requirements of the goods and services -- 10 A: That's correct. 11 Q: -- necessary to fulfill these needs? 12 A: That's correct. 13 Q: And -- and for this RFQ the respondents 14 were providing a quotation on the lease rates for Financing, 15 rather than a purchase price for computers as goods; right? 16 A: That's correct. 17 Q: So, this RFQ was -- was about the cost of 18 money, rather than the cost of equipment, wasn't it? 19 A: Yes. 20 Q: And you would expect that members of the 21 Finance Department would have exp -- expertise in the area of 22 financing methods? 23 A: Definitely. 24 Q: And you'd expect them to have more 25 expertise in that area than those in the -- in the
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1 Information and Technology Department? 2 A: I would assume so, yes. 3 Q: Sandy Pessione from MFP, testified that 4 with an RFQ, 90 percent of the evaluation method was price, 5 and 10 percent was subjective regiment. And I believe Mr. 6 Brendan Power agreed with this assessment, as well. 7 Do you have any reason to disagree with that? 8 A: No. 9 Q: In this case, price meant the lease rates 10 the respondents quoted, correct? 11 A: That's correct. 12 Q: It was Mr. Rabadi, from Finance who 13 evaluated the responses to the RFQ by evaluating the lease 14 rates, provided by the respondents? 15 A: I would assume, yes. 16 Q: And purchasing relied on -- on Mr. Rabadi 17 to determine what the lowest bid was? 18 A: If he was the -- doing the finance -- 19 financial, yes. 20 Q: Does it -- well, we'll go to 21 correspondence where -- from Mr. Rabadi, that shows that he 22 was evaluating these responses. 23 And page -- sorry Tab 7, there's a handwritten 24 note at the bottom that I believe is -- that's Mr. Spizarsky? 25 A: Yes, it is.
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1 Q: And the message say, and this is to you: 2 "I assume Dave the e-mail version of this 3 comes our garbled. Can you ask Nadir to 4 send us a fax or hard [sorry] or hand 5 delivered copy so you can prepare back up 6 package." 7 A: Yeah. 8 Q: And in your -- sorry -- 9 A: That should read, Dexter could pick up. 10 Dexter was our mail clerk. 11 Q: Okay. 12 A: And I'm not sure if you realize, but, we 13 were -- purchasing was at City Hall and Nadir's group was at 14 Metro Hall. And at that time, we were using two (2) 15 different e-mail systems. And any attachments would be 16 difficult coming from one (1) group to the other and that's 17 why he said, it came out garbled. 18 Q: And I just wanted to ask some questions 19 about a back up package, and that's in paragraph 68 of your 20 affidavit at page 17. 21 And you say that -- that: 22 "A back up package is a standard package 23 that I would prepare for Lou Pagano to 24 assist him to answer questions related to 25 the procurement process at committee and
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1 Council." 2 And I wanted to ask, what the back up package 3 would normally contain? 4 A: It -- the back up package you'd have the 5 quotation summary sheet, which was a sheet that was signed 6 off by the buyer doing the opening. 7 You would have a copy of the report. You 8 would probably have a copy of the respondent's reply. You 9 would have the fair wage sheet, indicating the companies that 10 were fair wage approved. 11 And you'd probably have the addendum or the 12 attachments that came over from finance, so that any 13 questions that Council or the policy -- depending on which 14 committee it was that had questions. 15 Q: And would it contain -- would it contain 16 the evaluation itself? 17 A: Not really. What it would -- it would 18 list is probably the attachments that was provided to the 19 report. 20 Q: Okay. There's another reference to the 21 back up passage on -- sorry -- I didn't say that Tab 7 is 22 document 3293. There's another reference to the back up 23 package at Tab 18, or a back up package, which is document 24 5787. 25 A: Yes.
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1 Q: And this looks like a note -- this is a 2 note from you? 3 A: Yes, when we're doing the report, on the 4 first report, when it came over to PMMD, Frank and I reviewed 5 it. And as you know, Frank is -- the tendency writing is not 6 the greatest to understand, so I always kind of translated. 7 So, as you can appreciate there was four (4) 8 changes that we made. And those were the four (4) changes. 9 And at the same time, I requested Nadir to have a back up 10 package, and this would be part -- this would have been the 11 attachments that Nadir would have provided for Lou to attend 12 the meetings. 13 Q: And what -- was this Nadir's -- Mr. 14 Rabadi's back up package? 15 A: It was the financial back up, basically. 16 Q: So, is that different from the back up 17 package you would provide Mr. Pagano, normally? 18 A: Normally, yes, because it was so detailed 19 and there was all kinds of abbreviations and changes -- not 20 changes, but, different debentures, et cetera, et cetera. 21 Q: And the one (1) referred to here, where it 22 says -- you say 23 "PS: We will also need a backup package, i.e., 24 how you arrived at the figures. Example: 25 Twenty-three dollars and fifty cents ($23.50)
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1 per $1 million times 14 million." 2 A: Yeah, that was referenced, as the report 3 had mentioned that there was going to be 43 million -- 4 approximately 43 million leased over the thirty-six (36) 5 months. So part of the -- part of -- part of the concurrence 6 with the department was that they were going with the low bid 7 and it added up to what they were going for. 8 Q: A low bid on the lowest lease rate? 9 A: Yes. 10 Q: And so the backup package, what was in Mr. 11 Rabadi's would have been in this backup package? 12 A: I believe all the different prices based 13 on the different scenarios that were presented. 14 Q: So it would have been a -- sort of a 15 justification of -- of his work? 16 A: I think it was probably everything that 17 was in the confidential report as appendixes. 18 Q: And why -- what would be the purpose of 19 asking Mr. Rabadi for this information? 20 A: Because we didn't do the analysis. They 21 did the analysis. 22 Q: And so by asking for a backup package, you 23 -- Purchasing -- the Purchasing division would -- wanted to 24 know how Mr. Rabadi arrived at the determination of who had 25 the lowest lease rates.
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1 A: That's right and I also indicated earlier 2 the other things in the backup package would be fair wage 3 approval and also who quoted in the copy of the mailing list 4 on this quotation and the summary sheet. 5 Q: So it wouldn't have been sufficient from 6 Purchasing's point of view to just have Mr. Rabadi or whoever 7 was doing the evaluation to just give you the name of the 8 vendor -- 9 A: No. 10 Q: -- who had the lowest rate? 11 A: No, we needed to see. 12 Q: You need to know how the evaluator came to 13 their conclusion? 14 A: That's correct. 15 Q: Tab 19, the next one over, Document 5788. 16 It's an e-mail to you and to Mr. Spizarsky from Mr. Rabadi 17 and it's June 29th, 1999. 18 A: Okay. 19 Q: And if you look at the third paragraph, he 20 says: 21 "Please also evaluate the RFPs from the 22 financial --" 23 Does he mean RFQs there? 24 A: I think he means RFQs. 25 Q: Please -- what it says is:
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1 "Please also evaluate the RFPs from the 2 financial viewpoint and confirm that you 3 are in agreement with the decision to go 4 with MFP." 5 So here Mr. Rabadi's expectation was that you 6 and or Mr. Spizarsky would review what his work had been on 7 the evaluation? 8 A: That's correct. From what I gather, I 9 think I answered him on Point 2 and Number 3, I think Mr. 10 Spizarsky would have answered him. 11 Q: You think that Mr. Spizarsky would have 12 reviewed the analysis done by -- 13 A: Probably just cursory. 14 Q: What would the cur -- what would the -- a 15 cursory review? 16 A: The fact that the leasing rate for the 17 thirty-six (36) months was the lowest. 18 Q: So there was -- there was some involvement 19 from Purchasing angled to make sure that the low -- that the 20 lowest -- 21 A: Yeah, just verification, not detailed 22 checking. 23 Q: But more information than just the name of 24 who had the lowest lease rate? 25 A: Yes.
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1 Q: And back to the backup package for Mr. 2 Pagano, for him to answer questions at Council or committee, 3 he -- Mr. Pagano for that purpose and in general would have 4 wanted to be sure that the contract was being awarded to the 5 bidder with the lowest lease rates? 6 A: That's correct. 7 Q: And having -- having someone in Purchasing 8 checking how the figures were arrived at by the evaluator 9 would assist -- would be able to assist Mr. Pagano in being 10 sure that the lowest bidder was awarded the contract. 11 A: That's right but we didn't go into great 12 detail because we relied on the expertise of the financial 13 people. 14 Q: But you did more than just get the name of 15 the vendor from the evaluator, Mr. Rabadi? 16 A: Yes. 17 Q: Thank you. Those are my questions. 18 MADAM COMMISSIONER: Yes, Mr. MacKenzie? He's 19 Hugh MacKenzie and he represents Jim Andrew. 20 21 (BRIEF PAUSE) 22 23 MR. HUGH MacKENZIE: Good afternoon, sir. 24 THE WITNESS: Good afternoon. 25
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1 (BRIEF PAUSE) 2 3 MR. HUGH MacKENZIE: I'm hoping to be fairly 4 quick as well. 5 MADAM COMMISSIONER: Oh, I forgot to ask you, 6 how quick do you think you'll be? 7 MR. HUGH MACKENZIE: Probably after the break, 8 but forty (40) minutes. 9 MADAM COMMISSIONER: Okay, thanks. 10 11 CROSS-EXAMINATION BY MR. HUGH MACKENZIE: 12 Q: Sir, you've told us a little bit about 13 your experience in -- in leasing, and were you involved in 14 any way, in the -- the lease for Metropolitan Toronto Police 15 Force, when they leased IT equipment through MFP? 16 A: I can't recall. 17 Q: Okay. Were you involved in the City of 18 Scarborough lease with MF -- of IT equipment in the early 19 '90s? 20 A: Definitely not. 21 Q: Okay, were you aware of that -- 22 A: No, I was not. 23 Q: -- contract? Okay. And so you've told us 24 about the Apple computers -- 25 A: Correct.
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1 Q: -- and that was a handful of Apple 2 computers? 3 A: Yes. 4 Q: Okay. And in that particular example, was 5 an RFQ used or do you know? 6 A: I believe it was an RFQ. 7 Q: Okay. And then there's the -- the 8 Councillors' lease? 9 A: Yes. 10 Q: Okay. Now, the letter that's at Tab 20, 11 if you could look at that please? 12 A: I think that's the wrong tab. 13 Q: It's definitely the wrong tab. 14 A: Is that Wanda's letter? 15 Q: Wanda's letter, which is at Tab 42, my 16 apologies. 17 A: Okay. 18 19 (BRIEF PAUSE) 20 21 Q: That letter, sir, says in the second 22 paragraph: 23 "The acquisitions are being made through 24 the existing vendors of record, SHL, and 25 Compugen Limited. It is the intent to
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1 lease the software and desktop computers." 2 A: Okay. 3 Q: Now, this letter is to you. Was it -- you 4 received this letter, and what, if any, contact did you then 5 have with Mr. Spizarsky? 6 A: Okay, once the letter came in? 7 Q: Yes, sir. 8 A: I took it to Frank. I believe he went and 9 talked to Lou about it, and at that time that's when we 10 decided to do the phone card. 11 Q: Okay. Now, I think that there was a step 12 in between, because as I understand, sir, and this comes of 13 course from Mr. Andrew. SHL and Compugen, were not -- they 14 were not vendors of record for leasing, they were vendors of 15 record, one (1) for the City and one (1) for Metropolitan 16 Toronto, for purchasing computers and repair? 17 A: That's correct. 18 Q: Okay. So, that's your recollection now? 19 A: Yes. 20 Q: Do you recall that? 21 A: Yes, that's why they called them vendors 22 of record. 23 Q: Okay. 24 A: Although personally, I do not like to use 25 the terminology vendor of records.
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1 Q: Okay. But it's in this letter, that's the 2 terminology used. And as I understand it, SHL is the vendor 3 of record for the -- I think it's the City, and Compugen for 4 -- for Metropolitan Toronto? 5 A: For purchase only. 6 Q: For purchase only? 7 A: Right. 8 Q: And because of that, the decision was made 9 through Purchasing, to extend the -- the bidding process; is 10 that what happened, or do you recall? 11 A: Well, because SHL, and Compugen was based 12 on the suggested -- for the selected vendors, for purchase, 13 it was decided to go with this phone card, to go out and get 14 leasing rates for them. The purchase of the equipment we 15 already had the authority to proceed with, if we bought. 16 Q: And that's the reason that there -- for 17 instance there was a contract -- contact with MFP; is that 18 correct? Because this is a leasing deal, not a purchase 19 deal? 20 A: That's correct. 21 Q: Okay. 22 A: But there's other company than MFP that 23 were invited on this lease. 24 Q: And -- and do we know the names of those 25 companies or how many there were, sir?
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1 A: No, because the phone card records have 2 somehow disappeared. 3 Q: Okay. Were you involved in that process, 4 or was Mr. Spizarsky involved in this first? 5 A: I was definitely involved. 6 Q: Okay. And you worked with Mr. Spizarsky 7 through this? 8 A: I worked with Mr. Spizarsky, yes. 9 Q: Okay. Now, I just have to ask you, sir, 10 at any time during that process, did Mr. Andrew speak with 11 you or in any way involve himself in the -- in the leasing 12 with the bidding process? 13 A: Not to my recollection. 14 Q: Okay. In the May 31st, 1999 RFQ did Mr. 15 Andrew, in any way contact you or make suggestions to you 16 with respect to what party ought to be the successful bidder? 17 A: Definitely not. 18 MADAM COMMISSIONER: I'm sorry? 19 THE WITNESS: No, he didn't. 20 MR. HUGH MACKENZIE: I think your answer, sir, 21 was definitely not. 22 THE WITNESS: Definitely, not. 23 MR. HUGH MACKENZIE: Okay. 24 25 CONTINUED BY MR. HUGH MACKENZIE:
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1 Q: Is that answer a reflection of your view 2 of Mr. Andrew, definitely not? 3 A: I know, definitely, that he did not 4 contact me. 5 6 (BRIEF PAUSE) 7 8 Q: I'd like to turn, sir, or have you turn to 9 the PO's, 54 and 55 are the Tabs. 10 11 (BRIEF PAUSE) 12 13 Q: Sir, from those documents, can you tell us 14 who the party responsible for the management of the -- of 15 this particular lease would be? 16 MADAM COMMISSIONER: The Begdoc numbers 17 please? 18 MR. HUGH MACKENZIE: The Begdoc number at Tab 19 55 is 11920. And 11919. 20 21 CONTINUED BY MR. HUGH MACKENZIE: 22 Q: Let's just look at that at Tab 54, sir, 23 the first page. Okay it says: 24 "Ship to Metro Clerks." 25 A: That's correct.
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1 Q: Okay. Would the Clerk's Department have 2 been the party that managed these -- 3 A: No, I think it was the IT Division. There 4 should be copies of the req's. I think on index 43 and 44. 5 So, the Requisition department. You're correct, it is City 6 Clerk's and it looks like the requisitioner was Tom Rando 7 Q: And was he an employee of the City Clerk's 8 Department, sir? 9 A: I believe he was in the admin section, 10 yes. 11 MADAM COMMISSIONER: Where is Mr. Rando's 12 name? Oh, Rando, I found it. 13 14 CONTINUED BY MR. HUGH MACKENZIE: 15 Q: So, you're satisfied now, sir, that that 16 -- that IT is not involved in these -- in the management of 17 this lease? 18 A: They were involved indirectly, because I 19 remember getting a call from Kathryn Bulko, in the 20 Information Technology and that is in my affidavit. 21 Q: I saw that in your affidavit. How do you 22 recall that particular fact, sir? 23 A: It was a telephone conversation. I recall 24 it because it was almost Christmas time of that year. She 25 had called and said, Dave, we're trying to get Councillor's
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1 computers set up for their -- starting of their Council year. 2 So, that's how I recall that. We turned it 3 around in a couple of days on that one (1), too. 4 Q: Do you recall any of the substance of that 5 conversation? 6 A: Basically, just kind of a phone call 7 saying, that I would be getting a requisition. Now, whether 8 it was from IT or not, but as you can see, it did come from 9 the Clerk's department. 10 Q: And you have no notation with respect to 11 your conversation with Kathryn Bulko? 12 A: That's correct. 13 Q: In Paragraph 6, of your affidavit, Mr. 14 Beattie, you refer to Anne Corbett, and I'd like to take you 15 to a couple of things. 16 First, Tabs 10 and 11. First, can you tell us 17 sir, what is the document at Tab 10? 18 A: The document at Tab 10, looks to be a 19 blanket contract. 20 Q: Okay. And the date of it? 21 MADAM COMMISSIONER: Can I have the doc number 22 please, I just can't see them from here. This whole thing -- 23 MR. DAVID MOORE: It's 4158. 24 MADAM COMMISSIONER: Thank you. 25 MR. HUGH MACKENZIE: Thank you. Even with the
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1 lights I can't -- can't read it. I apologize. 2 THE WITNESS: It looks like it's the -- 3 MADAM COMMISSIONER: Okay, so blanket 4 contract? 5 THE WITNESS: Dated September 26th, I'm 6 assuming. 7 MR. HUGH MACKENZIE: Now, would this document 8 have come to you, sir? 9 THE WITNESS: No, I left PMMD the end of 10 September, '99. 11 MR. HUGH MACKENZIE: September, '99. Okay. 12 And at Tab 11, that's a document, a purchase requisition 13 dated -- 14 MADAM COMMISSIONER: 4161? 4161, I guess. 15 MR. HUGH MACKENZIE: Yes, 4161. 16 17 CONTINUED BY MR. HUGH MACKENZIE: 18 Q: September 15th, 2000, signed by Jim 19 Andrew. 20 A: Okay. 21 Q: Can you tell me, sir, do you recognize any 22 of the handwriting on that page, outside of Mr. Andrew's 23 signature? 24 A: Yeah, the okay, it looks like that's Anne 25 Corbett's initial.
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1 Q: Okay. That's Anne Corbett's initial? 2 A: Yes. The RFP number and report number 3 look to be Mike Malone. 4 Q: Mike whom, sir? 5 A: Mike Malone's. 6 Q: And who is Mr. Malone? 7 A: He is the buyer that issued the blanket 8 contract. 9 Q: Okay. And he's a buyer in -- in 10 purchasing? 11 A: That's correct. 12 Q: And the "Okay" at the bottom, which you 13 say appears to be the writing of Anne Corbett, what is it 14 that she was okaying, if you will? 15 A: I have no idea, other than the fact -- 16 just the fact that it is okay, means that it's probably a 17 note to Mike to proceed. 18 Q: Okay. Would it be okaying the number, the 19 total number of $40 million, to the left of her okay? 20 A: I can't answer that, I'm sorry. 21 Q: Okay. Sir, in your statement, which I'd 22 like to take you to now, to KPMG, it's Tab 47, I believe. 23 And the page, it's the third page in, it's 12917. 24 A: Okay. 25 Q: It says,
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1 "Mr. Pagano stated that the purchase 2 requisition should have been signed for 3 three (3) years, not five (5), based on the 4 terms of the RFQ. He did admit that this 5 change is something that Purchasing should 6 have caught." 7 Why would Purchasing, or should Purchasing 8 have caught that, sir, if you know? 9 A: I'm not sure. Whereabouts are we again? 10 MADAM COMMISSIONER: Right at the top. 11 MR. HUGH MACKENZIE: Right at the top, sir. 12 THE WITNESS: I am not sure what he meant by 13 that. 14 MR. HUGH MACKENZIE: Okay. 15 MADAM COMMISSIONER: I -- I took it that what 16 Mr. Pagano was saying, and he said it when he was here, that 17 the RFQ was for three (3) years, whereas, the purchase 18 requisition ended up being for five (5) years, from thirty 19 six (36) months to sixty (60) months, and I took it that it 20 was his view that Purchasing division should have caught 21 that, that discrepancy. 22 Do you agree with him, that the Purchasing 23 division should have caught that? 24 THE WITNESS: Now -- knowing now, or back 25 then?
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1 MADAM COMMISSIONER: Back then. He was saying 2 that back then the RFQ was for thirty-six (36) months. The 3 purchasing requisition was for sixty (60) months. 4 THE WITNESS: Definitely -- 5 MADAM COMMISSIONER: And the approval that 6 Council had given was for thirty-six (36) months. 7 THE WITNESS: That's right. 8 MADAM COMMISSIONER: So he was saying back 9 then, given that that Purchasing division should have caught 10 it. 11 THE WITNESS: Sorry. You're right then. 12 MADAM COMMISSIONER: Okay. 13 THE WITNESS: They should have. 14 15 CONTINUED BY MR. HUGH MACKENZIE: 16 Q: Sir, we've been looking at a document 17 that's dated September 15th. That purchase requisition -- 18 A: Yes. 19 Q: -- Tab 11. Okay. I understand that at 20 that point in time, over $60 million worth of computer 21 equipment had been purchased and placed on lease. 22 A: Okay. 23 Q: Okay. The requisition is for $40 million. 24 Now, could you tell me, that requisition what happens to it 25 from it being signed by Jim Andrew on September 15th, where
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1 does it go from there? 2 A: Okay. 3 Q: Tab 11, sir. 4 A: Sorry, Tab 11? 5 Q: That's where that document is, yes. 6 7 (BRIEF PAUSE) 8 9 A: Okay. I see it doesn't have an SAP 10 document number at the top that would indicate that they 11 probably wanted to set up as a blanket order -- as I said 12 open order contract for five (5) years. So theoretically 13 what would happen, it would come into Purchasing. The 14 manager and buyer would check to make sure that this was in 15 place based on this report and RFQ. Once they established 16 that and once it was approved then the blanket contract would 17 be set up for the value indicated. 18 Q: So it goes from Mr. Andrew? 19 A: Yes. 20 Q: Winds it way to Purchasing? 21 A: Yes. 22 Q: In Purchasing there's a determination as 23 to whether or not there is funding available? Is that -- 24 A: Well, what the problem is SAP is a 25 commitment-based system and because this came over as a
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1 blanket contract, a commitment doesn't come until the 2 department does a release against the blanket contract order. 3 Q: And what does that mean? 4 A: Basically it means that it's set up as a 5 blanket contract and the commitment, as I mentioned before, 6 does not happen until the department goes in and does what 7 they call a blanket contract release against a particular 8 account number and GL number. 9 Q: Is that document entered on to the SAP 10 system? Is that -- 11 A: No. In blanket contracts there's no 12 commitment. If this had been set up as an SAP requisition, 13 it would have -- basically with SAP it's a commitment-based 14 system. So once you've got the funds, once it's committed, 15 that's it. 16 So for example, if this was set up as a 17 requisition, that $40 million dollars would first off had to 18 have had the $40 million in the account for it to be set up 19 in SAP. Once that was set up, then that $40 million would 20 have been applied against the account number that it was set 21 up against. 22 Q: But already there had been over $60 23 million worth of purchases -- 24 A: Okay. 25 Q: -- at this point in time --
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1 A: Okay. 2 Q: -- as I understand. 3 A: Okay. I didn't realize that. 4 Q: Okay and what I'm wondering is what would 5 happen once Purchasing reviews that document, determines that 6 it's appropriate, that it complies with Purchasing's needs. 7 Where does it go then? 8 A: Basically it becomes -- it turns -- they 9 turn it into a blanket contract. 10 Q: For $40 million? 11 A: For $40 million. 12 Q: And is it posted then onto a financial 13 information system? 14 A: No, not the blanket contracts because 15 blanket contracts, there is no commitment in the system. 16 Q: If you could go down, sir, to the sixth 17 point -- bullet point on Tab 47, third page. This is your 18 statement again. Begdoc 12917 19 A: Okay. 20 Q: It says: 21 "Mr. Pagano -- Lou Pagano discussed how to 22 treat a PO, where a ceiling is in place, 23 $43 million." 24 Now, here as -- as we understand, there was a 25 ceiling in place, was there not, of $43 million?
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1 A: Okay, remember he's using PO, when in fact 2 this was a blanket contract. So, this was set up for the 3 amount, the first point is, the Department gets a release to 4 make the purchase. 5 Q: When you say the Department, which 6 Department is that? 7 A: The Department doing the actual release 8 against the blanket contract. 9 Q: Which Department is that? 10 A: I would assume that it's the Information 11 and Technology Division doing the release. 12 Q: Okay. If there is still money left on the 13 contract, i.e. the $43 million, now, in this situation there 14 isn't, because there's -- the $43 million has already been 15 vastly exceeded. 16 A: Okay. 17 Q: So then it says: 18 "Then Accounting will pay the invoice." 19 Now, whom in Accounting would pay the invoice? 20 A: It would be Accounts Payable, but that's 21 -- they would only pay it once the release had been released. 22 In other words, when you do a release against a blanket 23 contract, at that time the funds are committed. 24 25 (BRIEF PAUSE)
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1 Q: I'm -- I'm having problems, sir, trying to 2 understand how $63 million could be expended on a $43 million 3 contract, and it still not be caught? 4 MS. LILY HARMER: Madam Commissioner, if I 5 could just maybe be of some assistance. I don't know whether 6 My Friend has taken this into account, but if he's talking 7 about -- and I don't know where his numbers come from. 8 But if he's talking about $63 million of 9 computer equipment that has been put on lease, the actual 10 payments by the City would not be, in my understanding, $63 11 million, it would be the quarterly lease payments that were 12 -- that pertain to that amount of equipment, that dollar 13 value of equipment. 14 I don't know what the dollar number is, but it 15 may or may not have been, and I understand it was not 16 actually $40 million, it was something less, because 17 depending on what time frame we're talking about, that number 18 is accumulating more slowly than it would in the case of a 19 purchase. So, that complicates matters. I hope that assists 20 My Friend in framing his questions. 21 MR. HUGH MACKENZIE: Thank you. Yes, it does 22 help. 23 MADAM COMMISSIONER: Does that help? 24 MR. HUGH MACKENZIE: Yes. 25
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1 CONTINUED BY MR. HUGH MACKENZIE: 2 Q: Was there a record kept as to the value of 3 the computer equipment being placed on lease by Purchasing? 4 A: I can't recall. 5 Q: To the best of your knowledge, was there a 6 value kept or a record kept as to the value of computer 7 leasing -- computers on lease, by Accounting? 8 A: I would assume so. 9 Q: But you don't know? 10 A: I don't know. 11 Q: Okay. It then goes on, the fourth arrow 12 below that, it says: 13 "If the total purchase against the contract 14 exceeds the original PO, the system will 15 flag this discrepancy." 16 Could you explain that for me, sir? 17 A: Basically, say for example it was set up 18 for $40 million. As the draws are being done, there is a 19 ruling saying that the value has exceeded. And from what I 20 understand, I'm not an Accounting type, but they will become 21 aware of it, and they should start making inquiries. 22 Q: And that's an Accounting issue, as opposed 23 to a Purchasing issue, is it? 24 A: I believe so, yes. 25 Q: Okay. And to the best of your knowledge,
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1 nothing was flagged, there was no discrepancy flagged? 2 A: Not that I can recall. 3 Q: Okay. You then go on to say: 4 "The Accounting Department will become 5 aware of the problem first, and will then 6 notify Purchasing." 7 Who would be -- who -- who would the notifier 8 be from -- from the Accounting Department? 9 A: Probably the person that was making the 10 payment against the -- the contract, the lease. 11 Q: So there wasn't a specific designated 12 person who -- 13 A: I don't believe so, no. 14 Q: -- would do all that first? Okay. 15 MADAM COMMISSIONER: Is this a good time, Mr. 16 MacKenzie? 17 MR. HUGH MACKENZIE: Yes, please. 18 MADAM COMMISSIONER: Okay. 19 MR. HUGH MACKENZIE: Thank you. 20 MADAM COMMISSIONER: Come back at quarter to. 21 THE REGISTRAR: Order. The Inquiry will 22 recess until 3:45. 23 24 --- Upon recessing at 3:30 p.m. 25 --- Upon resuming at 3:35 p.m.
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1 THE REGISTRAR: The Inquiry will now resume, 2 please be seated. 3 4 CONTINUED BY MR. HUGH MACKENZIE: 5 Q: Mr. Beattie, when you received what you 6 considered the first draft that you believed you saw of the 7 RFQ on May 27th, it was received, as I understand May 26, '99 8 by Mr. Spizarsky, forwarded to you on the 27th, with an 9 e-mail saying, could you review this and help out, Mr. Power. 10 And there was urgency associated with that 11 request? 12 A: Yes, there was. 13 Q: Okay. Now, when you received that 14 document, is it part of the role of Purchasing to sit there 15 and make a determination as to whether or not, it should be 16 an RFQ or an RFP? 17 A: Not necessarily. 18 Q: Why not? 19 A: I think it's the using department that 20 provides the information to us. We might, sort of, direct 21 them saying, perhaps you should be doing this as an RFP or an 22 RFQ. 23 Q: But, what if the department doesn't know 24 which is the appropriate process? 25 A: Then I would say, you're probably right,
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1 then it would be the department. 2 MADAM COMMISSIONER: It would be what? 3 THE WITNESS: It would be purchasing's role to 4 maybe instruct the end user department. 5 6 CONTINUED BY MR. HUGH MACKENZIE: 7 Q: Wouldn't you agree with me though, that 8 the expertise in those sorts of determinations or in 9 resolving those kinds of issues, would rest in Purchasing, 10 rather than in the department? 11 A: Not necessarily. 12 Q: Okay. Are there purchasing people 13 scattered throughout the various departments? 14 A: No, we're all centrally located. 15 Q: Okay. So it's a centrally located 16 purchasing department 17 A: Yes, that's correct. 18 Q: And there's -- there is some limited 19 purchasing knowledge or system knowledge in the departments, 20 is that what you're telling us? 21 A: To a certain degree. 22 Q: Wouldn't you agree with me, sir, that the 23 role of Purchasing is to provide advice and guidance on all 24 aspects of the purchasing process and procedure to client 25 departments?
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1 A: Yes. 2 Q: Okay. Wouldn't you also agree that one 3 (1) aspect of that is to assist them in even the most 4 fundamental aspects of whether a request should proceed by 5 way of RFQ or RFP? 6 A: I would tend to agree, yes. 7 Q: And you would agree with me, as well, that 8 there are no hand outs or documents or materials that are 9 provided to the department? 10 A: I know we do have and we're working on a 11 Purchasing manual. 12 Q: I understood that from Mr. Pagano, as 13 well. But, in 1999, there wasn't such a manual and there 14 wasn't a booklet, much like the booklet that you talked about 15 this morning that you authored. There's nothing like that, 16 though, that goes from purchasing to the department, is 17 there? 18 A: At that time, no. 19 Q: No. For instance, there was some 20 discussion a little earlier about a black out period. And 21 you seem to understand what it was and when something like 22 that comes into effect and remains in effect. 23 However, would you agree with me, that there's 24 nothing, no information distributed into the departments that 25 deals with that as an issue?
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1 A: That's correct. 2 Q: And there's nothing in the RFQ or in any 3 of the handouts provided by purchasing to the department in 4 this case, either finance or IT that sets out that issue. 5 A: At that time, there wasn't, no. 6 Q: Okay. 7 A: But I think they're addressing it as we 8 speak. 9 Q: And I think that's a good thing to be 10 addressing. 11 12 (BRIEF PAUSE) 13 14 MADAM COMMISSIONER: What do you mean when you 15 say that, Mr. Beattie? When you say, I think they're 16 addressing this as we speak. Who's addressing what? 17 THE WITNESS: I think we -- we're starting to 18 get a handle on coming out with a Purchasing procedure. Part 19 of it will include services, we'll be going around to the 20 different departments. We've got the professional services 21 group, they're doing that now as we speak with the client 22 departments. They have what they call, kind of, a typical 23 RFP that guide -- gives a guide -- guidance to the 24 departments on how to operate and how to, sort of, issue an 25 RFP but again, that wasn't in place at that time.
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1 MADAM COMMISSIONER: Okay. Thank you. 2 3 CONTINUED BY MR. HUGH MACKENZIE: 4 Q: Sir, you've already reviewed with us the 5 RFQ of May 26, '99. The Begdoc is 5801, I believe, and you 6 told us or in your materials you've explained some of the 7 changes that you made. One of those changes is -- was to 8 have the language reflect the appropriate terminology. In 9 other words, it wouldn't say -- it would say quotations and 10 respondents rather than proposal and proponents? 11 We earlier, but it's not in your materials, 12 had a draft of this RFQ where, for instance, at 1.1.2. If 13 you could turn to Tab 23, sir. The Begdoc that I'm referring 14 to is 6105. It's the actual first page of the RFQ, sir. 15 A: Okay. 16 Q: And if you look at then 1.1.2, it now in 17 this version it says: 18 "The respondents --" 19 But in an earlier version we looked at some 20 weeks ago, it actually said the proponent. Were you involved 21 in making that kind of change, sir? 22 A: I believe I was, yes. 23 Q: Okay and the reason I ask that is in the 24 version that you've said was the first one you received in 25 the document at Tab 21. That particular change has already
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1 been made. It there says "The respondents". 2 3 (BRIEF PAUSE) 4 5 A: On Tab 21, it doesn't look like they've 6 -- they've just got -- it goes from 1.1 to 2 so I'm assuming 7 at that time they added all the dash numbers. 8 Q: And the 1.1.2, if you could just pick up 9 it says: 10 "The respondents must indicate any 11 additional costs." 12 Do you see that? So it's the -- there's then 13 the first paragraph under 1.1 starts: 14 "The city --" 15 The second one starts: 16 "The respondent must indicate..." 17 A: Yeah. 18 Q: That's the one to which I'm referring and 19 there it says respondents and if you look through that whole 20 page, all of the changes from proponent have been made to 21 respondents. So I'm wondering, sir, could there have been an 22 earlier version of this RFQ, sir, that you -- that you 23 received and on which you made those kinds of changes? 24 A: I can't recall. 25 Q: Okay. So there could have been an earlier
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1 version than this -- 2 A: Yes. There -- 3 Q: -- in which you were involved? 4 A: There could have been, yes. 5 Q: And, sir, as well as those kinds of 6 changes, changes of terminology to make it consistent. There 7 are, as well, more substantial changes. Did you make those? 8 A: Some I did and some I didn't. 9 Q: Okay. Do you know -- do you know whether 10 this particular draft, which is at Tab 21, was sent to 11 anybody else, and do you know whether anybody besides 12 yourself made the changes between this document at Tab 21, 13 5801, and the document at Tab 23? 14 A: Yes, it is quite possible. 15 Q: Okay, so, you don't know, but it is 16 possible? 17 A: I would assume, yes. 18 Q: So, it would not be fair for me to say all 19 of these changes from the one (1) document to the other were 20 made by you? 21 A: Definitely not. 22 Q: Okay. 23 MS. LILY HARMER: Madam Commissioner, if I 24 could just interject, I think Mr. Beattie's affidavit is very 25 clear in paragraph 47, as to the changes. He's gone through
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1 this exact exercise, and he sets out very clearly there the 2 changes that he made, where he had some uncertainty, he's set 3 that out. 4 So, I think that may be of assistance -- 5 hopefully that's of assistance, because I don't -- I think it 6 will be helpful to have that in front of the witness so that 7 he can look at that. 8 MADAM COMMISSIONER: Okay, thank you. Does 9 that help you, Mr. MacKenzie? 10 MR. HUGH MACKENZIE: Yes, I was still focussed 11 on an earlier paragraph, paragraph 12, where he specifies the 12 changes that he made. 13 MS. LILY HARMER: I believe that paragraph 12, 14 just let me look at it. I believe that's a general paragraph 15 saying, this is what I would do. 16 MADAM COMMISSIONER: Hmm hmm. 17 MS. LILY HARMER: And then the later paragraph 18 refers specifically to what he did do in this instance? 19 MADAM COMMISSIONER: Right, right. 20 MR. HUGH MACKENZIE: Thank you. 21 MADAM COMMISSIONER: Thank you. 22 MR. DAVID MOORE: Should we be reading that 23 later part of the paragraph, just to indicate that those are 24 the -- 25 MADAM COMMISSIONER: I'm sorry, Mr. Moore, I
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1 can't hear you. 2 MR. DAVID MOORE: I'm sorry, I shouldn't be 3 directing my comments that way in any event, I apologize. 4 I guess I could inquire through you, Madam 5 Commissioner, whether we should be reading paragraph -- the 6 paragraph in question, 47, as to be indicative if those are 7 all of the changes that the witness made, or whether it's 8 just examples of some of the changes, I wasn't -- I'm not 9 sure -- 10 MADAM COMMISSIONER: Okay. I took it to be 11 that those were all that he knew about. 12 MS. LILY HARMER: So, that and paragraph 48, 13 dealing with the boilerplates, yes. 14 MADAM COMMISSIONER: Okay. 15 MR. DAVID MOORE: Thank you. 16 MADAM COMMISSIONER: All right. 17 MR. HUGH MACKENZIE: Sir, you've -- you've 18 indicated at paragraph 47, that it was not you who removed 19 the estimated leasing volumes, but certainly that was a 20 paragraph that you read, because it was a paragraph contained 21 in the materials that you were reviewing, isn't that fair? 22 THE WITNESS: Sorry, would you repeat the 23 question again? 24 MR. HUGH MACKENZIE: Yes. 25 MADAM COMMISSIONER: It's 47(d), is what part
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1 he's referring to. 2 3 CONTINUED BY MR. HUGH MACKENZIE: 4 Q: 47(d) of your Affidavit. 5 A: Okay. 6 Q: And you say that you're certain that you 7 didn't delete Section 4, "Estimated Leasing Volumes"? 8 A: That's correct. 9 Q: Okay, is there some reason why you're so 10 certain about that, sir? 11 A: Because there was an addendum issued, once 12 I started getting calls, asking what the estimated leasing 13 volume was. 14 Q: Okay, and that just doesn't seem to have 15 been something that you would have eliminated; is that what 16 you're telling us? 17 A: That's right. 18 Q: Okay. And in that paragraph, it says: 19 "Approximately nine thousand (9,000) 20 desktops will be installed in the calendar 21 year '99 -- 1999. It is anticipated that 22 another four thousand (4,000) desktops --" 23 MADAM COMMISSIONER: Okay, Mr. MacKenzie, I 24 don't think either Mr. Beattie or I are where you are, so -- 25 MR. HUGH MACKENZIE: Okay, my apologies.
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1 MADAM COMMISSIONER: So, I'm just not sure. 2 Where are you? 3 MR. HUGH MACKENZIE: Just once again, Tab 4 21 -- 5 MADAM COMMISSIONER: Okay. 6 MR. HUGH MACKENZIE: -- and the Begdoc of the 7 page, my apologies, 5804. And the number is 4, "Estimated 8 leasing volumes". 9 MADAM COMMISSIONER: Thank you. 10 MR. HUGH MACKENZIE: And I was reading from 11 the last paragraph of that section. 12 13 CONTINUED BY MR. HUGH MACKENZIE: 14 Q: It says: 15 "Approximately nine thousand (9,000) 16 desktops will be installed in the calendar 17 year 1999, it is anticipated that another 18 four thousand (4,000) desktops will be 19 installed during the term of an agreement 20 resulting from this RFQ." 21 MR. ROBERT CENTA: Madam Commissioner -- 22 MADAM COMMISSIONER: yes. 23 MR. ROBERT CENTA: -- if I could interrupt for 24 just a moment, that paragraph that Mr. MacKenzie's reading is 25 not the last paragraph of Section 4, "Estimated Leasing
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1 Volumes". Actually, if you look at the end of the "Estimated 2 Leasing Volumes" section, you'll see five (5) period usage 3 assumptions on the -- on the line immediately above where Mr. 4 MacKenzie was reading, the Paragraph -- 5 MADAM COMMISSIONER: Oh, I see. 6 MR. ROBERT CENTA: -- beginning approximately 7 nine thousand (9,000) is actually in the first Paragraph of 8 Section 5. 9 MADAM COMMISSIONER: Right. Right. 10 MR. ROBERT CENTA: Usage assumptions, which, I 11 believe, appears in the R -- in the final version of the RFQ 12 as a separate paragraph. 13 MADAM COMMISSIONER: Right. 14 MR. ROBERT CENTA: So, it's not the first -- 15 the last, it's the first. 16 MADAM COMMISSIONER: Right. I think what 17 Beattie had said at the beginning was, City Hall and Metro 18 Hall had different e-mail systems and sometimes it came out a 19 little garbled. 20 MR. HUGH MACKENZIE: Yes. 21 MADAM COMMISSIONER: I guess this is one (1) 22 of the examples for us. 23 MR. HUGH MACKENZIE: This is certainly an 24 example of why IT equipment was required. Sorry, sir. 25 MADAM COMMISSIONER: Wasn't his fault.
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1 MR. HUGH MACKENZIE: Oh, I -- a little levity 2 is in order. 3 MADAM COMMISSIONER: It's only Monday. 4 5 CONTINUED BY MR. HUGH MACKENZIE: 6 Q: Sir, when you read that, and you did read 7 that, didn't you? 8 A: Which one is that; the estimated lease -- 9 Q: That's the part that starts, 10 "Approximately nine thousand (9,000) 11 desktops." 12 And then refers to another four thousand 13 (4,000) desktops after 1999. 14 A: I believe I did, on a -- only on a cursory 15 glance through. 16 Q: Okay. When you read that would you not 17 have drawn any conclusions about what you had read? 18 A: Not really, because as I mentioned, I just 19 basically gave it a, kind of, a cursory glance. 20 Q: But if you had read it in more than a 21 cursory manner, would you -- would you agree with me that -- 22 that what that would -- would do is tell you that perhaps an 23 RFQ is not the appropriate format? 24 A: Not necessarily. 25 Q: Okay. So, when you spoke with Mr. Power
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1 about leasing volumes did you express to him whether or not 2 the -- the estimated amount, the $43.15 million, contained or 3 did not contain these additional four thousand (4,000) 4 desktops? 5 A: Okay. As I mentioned earlier, when they 6 started getting calls about the estimated usage, the volume, 7 the estimated usage volume, now I see it as the 43 million, 8 now whether the four thousand (4,000) and nine thousand 9 (9,000) were made up of that, the estimated volume was what I 10 assumed to be the total leasing volume. 11 So that, you know, that when I talked to the 12 leasing people that's what they needed so they could go out 13 and, you know, secure the proper finances for that volume. 14 Q: So, that was an assumption you made, but 15 at no time did you follow it up? 16 A: No. 17 18 (BRIEF PAUSE) 19 20 Q: At Paragraph 22, sir, of your affidavit, 21 Page 6, Point E, it talks about where the lowest price is not 22 recommended. 23 And I just want to know a little bit about 24 price, because one of the responses, one of the bids, came 25 from a company called Bombardier, and in their -- their
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1 presentation and their materials there's a cover letter that 2 talks about something that they call, "Gotchas" and those are 3 additional price pitfalls, if you will, over and above the 4 base price. 5 And what they're saying is, that our price -- 6 our price on the surface is higher, but that we've eliminated 7 the pitfalls. 8 So, would you agree with me that if that were 9 the case, that what you might be comparing would be grapes 10 and bicycles? 11 A: Okay. First off, I didn't read the 12 Bombardier quote. 13 Q: Okay. Is there a reason why you wouldn't 14 read it? 15 A: Basically, when the quotes came in we 16 assembled them together, sent them over to the IT Division. 17 Q: Okay. 18 A: Because this was a -- a time constraint. 19 Q: Okay. 20 A: They wanted to get it out. And -- 21 Q: Sir, would -- oh, I'm sorry. Please 22 continue. 23 A: Go ahead. 24 Q: Would anybody in purchasing have read the 25 various bids, the responses?
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1 A: When it was opened, on the day of the 2 opening, the buyer and the assistant or some other person 3 from PMMD, they basically initial the price page as well as 4 the front page, review it to make sure that it's complete and 5 when it comes up to the correct buying group, then that's 6 when we send out the letter. 7 Q: My concern is this. You've got the 8 object, or one (1) of the principle objects of Purchasing is 9 to ensure the best possible price for the commodity or items 10 being purchased, is that fair? 11 A: Yes. 12 Q: Okay. And here where you're dealing with 13 such things as gotchas in some of the responses, but, not 14 necessary in others of them, I'm wondering how Purchasing can 15 assure itself that the lowest or best price is the price 16 that's selected? 17 A: Yeah, I would -- I would -- say in this 18 case, when the recommendation came from the financial people, 19 that the lowest lease rate was the price that they had picked 20 and as a result was the lowest price being recommended. 21 Q: So you don't know what, if any, 22 consideration was given to those other items? 23 A: That's correct. 24 Q: Such as the gotchas. 25 A: That's correct.
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1 (BRIEF PAUSE) 2 3 Q: Sir, have you recollection of meeting with 4 people from the CMO, Kathy Bulko, Lana Viinamae, Paula 5 Leggieri, to discuss the CMO the forms that they were going 6 to be using, the interface if you will, between the CMO and 7 Purchasing? 8 A: I recall when I moved over to client 9 services, I recall being invited to a meeting at that time, 10 to start that process, but, I don't recall what was discussed 11 after. 12 Q: But, you did attend at that meeting? 13 A: It was the first meeting, yes. 14 Q: Okay and was that the only meeting at 15 which you attended? 16 A: Yes, it was. 17 Q: Okay, why was that? 18 A: Lou wanted us to be involved from client 19 services during the amalgamation, client services pretty much 20 was involved in a lot of the meetings where we were rolling 21 out what we call the SAP system. 22 Q: When was that SAP up and running for the 23 IT equipment that was under lease with MFP? 24 A: I can't recall the exact date. 25 Q: Okay.
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1 MR. HUGH MACKENZIE: Those are my questions. 2 Thanks very much, sir. 3 MADAM COMMISSIONER: Mr. Anderson, are you 4 next? How long do you figure you'll be? 5 MR. WILLIAM ANDERSON: Maybe a little longer 6 -- I may be a little longer than the balance of the 7 afternoon, but, fairly close. 8 MADAM COMMISSIONER: Okay. Well, why don't we 9 go to 4:30 and at 4:30 let me know how much longer you'll be, 10 and if it's a short time, we'll just finish you up. 11 Mr. Anderson is the lawyer for Wanda Liczyk. 12 13 (BRIEF PAUSE) 14 15 MR. WILLIAM ANDERSON: Just as a point of 16 clarification from a question which occurred earlier today 17 regarding the signatures on the final version of the report 18 that went to Policy and Finance Committee. There is now a 19 book that has been put together called Policy and Finance 20 Committee Reports. 21 Now, I do not believe it has been tendered as 22 an exhibit yet in this matter, but for the record I'd 23 indicate that at Tab 20 of that book, when we get to it and 24 the specific Begdoc numbers 32206, it actually shows the 25 signatures on the Policy and Finance report which clearly
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1 indicate that both of the signatures on the report are, in 2 fact, Mr. Andrew's. 3 MADAM COMMISSIONER: Thank you. 4 5 (BRIEF PAUSE) 6 7 CROSS-EXAMINATION BY MR. WILLIAM ANDERSON: 8 Q: Mr. Beattie, I understand in your position 9 as a buyer with the City of Toronto you had very little 10 involvement with Ms. Liczyk? 11 A: That's correct. 12 Q: And Ms. Liczyk did not involve herself in 13 the bidding process between applicants for contracts with the 14 City of Toronto? 15 A: That's correct. 16 Q: And she didn't involve herself in the 17 bidding process with respect to the specific RFQ that we've 18 been talking about that was ultimately awarded to MFP? 19 A: No, she didn't. 20 Q: Okay. Now, when Mr. Pagano gave his 21 evidence earlier in this hearing he indicated that the 22 Purchasing Department was in a state of some flux during that 23 time and that there was a very high turnover of personnel. 24 Do you agree with that observation? 25 A: Yes.
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1 Q: Can you give us your view or perspective 2 about why that was occurring? 3 A: I think the fact amalgamation happened. 4 You're getting all of a sudden seven (7) municipalities 5 coming together. Different styles, different procedures. 6 People just not happy with the status quo. Jobs weren't -- 7 you know, they weren't getting the same as what they were 8 getting at the other municipalities. 9 Q: And did it have anything to do with the 10 amount of work that was being done in the Purchasing 11 Department? 12 A: I think that was probably, you know, one 13 (1) of the major factors. We were producing a lot of 14 documents. 15 Q: And was there a lot of stress that was 16 created as a result of the requirement to turn work around 17 quickly? 18 A: To a certain extent, yes. 19 Q: And you indicated in your affidavit that 20 Mr. Spizarsky didn't attend at work that frequently during 21 the year 1999. Was he around during May, June and July of 22 1999? 23 A: I believe he was, yes. 24 Q: Was he there consistently or was it sort 25 of on an ad hoc --
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1 A: I can't recall. 2 Q: Okay. Do you recall him not being there 3 regularly during that time period? 4 A: Not really. 5 Q: You don't recall -- 6 A: I don't recall. 7 Q: -- one way or the other? 8 A: No. 9 Q: Okay and when he wasn't there, who would 10 you report any difficulties to if you were having 11 difficulties with respect to your work? 12 A: It would probably be the acting manager 13 that was involved at that time. I think it was Anne Corbett. 14 Q: Okay and she has also since left the City? 15 A: Yes. 16 Q: Did you apply for the position outside of 17 the Purchasing Department when you moved over in September of 18 1999? Did you actively seek another position outside of the 19 Purchasing Department? 20 A: No, it was within the Purchasing 21 Department. 22 Q: Yeah. 23 A: Joe Lanahose(phonetic) was from 24 Scarborough. He had retired. He took an early retirement 25 and that -- that was an opportunity for me to advance my --
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1 Q: Were you actively looking to leave the 2 position -- 3 A: No. 4 Q: -- as buyer? 5 A: No. 6 Q: No? Okay. If you could turn to Tab 19 of 7 your book of documents. Now, this is a document that we 8 looked at earlier. I'm going to have some difficulty reading 9 that Begdoc number clearly. 10 MR. PATRICK MOORE: 5788. 11 MADAM COMMISSIONER: 5788. 12 MR. WILLIAM ANDERSON: Thank you. 13 14 15 CONTINUED BY MR. WILLIAM ANDERSON: 16 Q: In this document, Mr. Rabadi refers to the 17 RFQ as an RFP, right? 18 A: Yes. 19 Q: And at Tab 40 of your same book of 20 documents and that's Begdoc 31862. In the middle of that 21 page, there's an e-mail from Mr. Pagano to Mr. Rabadi, and if 22 you'll look at that second line it says: 23 "You should not attach the RFP of the 24 recommended lessor to the report." 25 And he refers to the RFQ as an RFP; right?
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1 A: Right. 2 Q: Was there some confusion at that time, 3 with respect to the nature of the document that was actually 4 being evaluated? 5 A: I don't believe so. 6 Q: In some ways was this seen as a hybrid 7 type of a situation, where there were specific objective 8 factors, which were being measured, and also subjective 9 factors that were being measured? 10 A: I -- I don't know. 11 Q: No. Did you ever have a discussion with 12 -- with Mr. Pagano about the nature of the document, and 13 whether or not it ought to be an RFQ or an RFP? 14 A: Not that I can recall, no. 15 Q: And, Mr. Rabadi was fairly familiar with 16 the process of evaluating RFQs and RFPs at this time? 17 A: I believe he was; yes. 18 Q: He would know the difference between those 19 two (2)? 20 A: Most definitely. 21 Q: Definitely? 22 A: I would say. yes. 23 Q: Okay. And obviously Mr. Pagano would know 24 the difference between the two (2)? 25 A: Yeah.
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1 Q: And those terms weren't used 2 interchangeably? 3 A: Not really. 4 Q: No. So, if Mr. Pagano was referring to a 5 document as an RFP, it might have been because he saw it as 6 being akin to an RFP? 7 A: Or else he saw Nadir's earlier e-mail 8 mentioning RFP, and he just answered it because of that. 9 Q: Mr. Pagano actually reviewed the draft of 10 the RFQ before it went out -- 11 A: Yes. 12 Q: -- correct? 13 A: That's correct. 14 Q: He was familiar with the fact that it 15 was -- 16 A: Yes. 17 Q: -- an RFQ? 18 A: Yes. 19 Q: Okay. If you could turn now to Tab 21 of 20 your book. And you've been referred to the second page of 21 this draft on a few occasions. And I'd like to take you back 22 to the paragraph that you talked about: 23 "The City may from time to time negotiate 24 separate corporate license agreements for 25 major software acquisitions."
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1 MADAM COMMISSIONER: Do you see where that is? 2 It's page 2, just before to instructions to respondents? 3 THE WITNESS: Oh, yes, okay, thank you. 4 MADAM COMMISSIONER: All right. 5 6 CONTINUED BY MR. WILLIAM ANDERSON: 7 Q: You read this document thoroughly when you 8 received it from Mr. Spizarsky; correct? 9 A: No, I didn't read it thoroughly. 10 Q: Okay. Why didn't you read it thoroughly? 11 A: I believe it was the Department that was 12 putting down the requirements. 13 Q: Okay, is -- 14 A: And as I said earlier, basically we were 15 looking at it from a Purchasing standpoint, what was missing. 16 Q: Who was assigned the responsibility from 17 the Purchasing Department to finalize the draft RFQ with Mr. 18 Power? 19 A: It was probably myself. 20 Q: Okay. And as part of that responsibility, 21 would you not be required to review drafts of the RFQ, and 22 then approve them as to form and content before they were 23 released to the public? 24 A: Only as it refers to the form and content 25 from a Purchasing standpoint, because remember the Department
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1 is the expert on these cases. 2 Q: In order to ensure a fair, competitive 3 process, would it not be expected of the Purchasing 4 Department to review the entire RFQ? 5 A: I would say, yes, now. 6 Q: Yeah, but at that time you didn't believe 7 that -- 8 A: No. 9 Q: -- it was necessary, or did you not have 10 time to do it? 11 A: No, I believe because of the expertise 12 that they were indicating that Brendan had -- 13 Q: Okay, well, let's talk about that for a 14 minute then. You understood at that time that Mr. Power was 15 an external consultant to the City of Toronto? 16 A: Yes, brought in to assist the Y2K roll 17 over. 18 Q: Right, and he had experience with leasing 19 and computer leasing specifically? 20 A: To my knowledge, yes. 21 Q: And you relied on him to provide you with 22 that expertise? 23 A: That's correct. 24 Q: Okay. But you personally, and as a member 25 of the Purchasing Department with the City of Toronto, would
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1 be more familiar with the Purchasing protocols of the City of 2 Toronto, than Mr. Power? 3 A: That's correct, but Brendan knew exactly 4 what the City wanted in terms of this lease. 5 Q: Okay, well, Mr. Power, in this draft 6 document, indicates that there were going to be major 7 acquisitions of software at some point in the future; 8 correct? 9 A: That's what -- 10 Q: And that would be in some ways, 11 conceptually the same, as creating the vendor of record; 12 would it not? 13 A: Not really. 14 Q: No. Doesn't this document contemplate 15 that the recipient of this contract would enter into future 16 negotiations over the leasing of major software acquisitions? 17 A: That's not my take on it, no. 18 Q: Okay, sir, what is your take on that 19 phrase then? 20 A: It was a thirty-six (36) month lease with 21 option to purchase at the end period. 22 Q: And you derived that interpretation 23 because you didn't review this document thoroughly, is that 24 right? 25 A: If you say so.
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1 Q: Well, you're giving your evidence, sir, 2 and I'm just trying to understand and appreciate your state 3 of knowledge at the time that you reviewed this document. 4 And if you only reviewed it in a cursory way, then that's 5 fine. 6 A: That's what I said earlier, that I did 7 review it in a cursory way. 8 Q: And the same would be true with the final 9 version of the RFQ that was actually released to the public? 10 You only reviewed that in a cursory way? 11 A: It was reviewed, but, then it went back to 12 the department for final sign off. 13 Q: You'd agree with me, in fairness to Mr. 14 Power, he certainly wasn't trying to mislead you or the 15 Purchasing department with respect to the nature of future 16 acquisitions through this particular selected vendor? 17 A: That's correct. 18 Q: Okay. And I think you've now agreed that 19 had this document draft document that became the RFQ, if that 20 had been reviewed thoroughly, this document may very well 21 have been properly put to the public as an RFP, is that 22 right? 23 A: Yes. 24 Q: And who would bear responsibility for that 25 decision, would it be you or Mr. Spizarsky or Mr. Power?
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1 A: It's probably a combination of all three 2 (3). 3 Q: That's fair. Now, in your evidence 4 before, you used the phrase and I don't think we've heard it 5 before, a scoring matrix? 6 A: Yes. 7 Q: There was no scoring matrix with respect 8 to the analysis of this RFQ, was there? 9 A: No, because it was an RFQ not an RFP. 10 Q: And do you ever have a scoring matrix with 11 an RFQ, as opposed to an RFP? 12 A: Generally not, no. 13 Q: How is it that you would then evaluate the 14 subjective elements of an RFQ, if there was no scoring system 15 or matrix? 16 A: By price basically. 17 Q: Part of any RFQ, I believe, average RFQ, 18 10 percent of that would be subjective. How do you evaluate 19 the subjective elements? 20 A: What is your definition of subjective 21 elements? If you're going out for -- to purchase a truck, 22 with a tilt cab, the specification is prepared, indicating 23 what we are looking for and the bidders are asked to quote on 24 that, filling out the specifications. 25 When it comes back, in my mind, it's black and
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1 white. There's really no subjective on an RFQ. 2 Q: Right. Pretty clear though from this 3 draft RFQ, that there were elements of the RFQ which were 4 subjective. For example, the ninety (90) day lease rate 5 factor that had to be held in place, and the mechanism for 6 changing that, right? 7 A: Right. 8 Q: So, someone had to do an analysis or an 9 evaluation of that? 10 A: That's correct. 11 Q: Did the Purchasing department ever 12 indicate to the department that was doing the analysis of 13 this, or any one else, what kind of a scoring matrix or a 14 grid, should be used in order to evaluate that? 15 A: No, not to my knowledge. 16 Q: Do you think in hindsight, it probably 17 would have been better to have proceeded that way? 18 A: In hindsight, I would probably say that 19 this should have gone out as an RFP. 20 Q: Okay. And then there would have been a 21 scoring matrix for the entirety -- 22 A: Scoring matrix and it would have been 23 spelled up front exactly how the scoring matrix would have 24 been evaluated on. 25 Q: Okay. If you could turn to Tab 25 of your
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1 Book of Documents. 2 3 (BRIEF PAUSE) 4 5 Q: And that's -- 6 MADAM COMMISSIONER: 12716. 7 MR. WILLIAM ANDERSON: Thank you. 8 9 CONTINUED BY MR. WILLIAM ANDERSON: 10 Q: Tab 25 is a draft of the Policy and 11 Finance report which you actually received, correct? 12 A: That's correct. 13 Q: Okay. And as of June the 29th, 1999 there 14 was already a recommendation that MFP be awarded the contract 15 for leasing, right? 16 A: I'm not sure. 17 Q: Well -- if you turn to page 2, of that 18 same report, recommendation number one (1): 19 "The City of Toronto will enter into a 20 leasing contract with MFP Financial 21 Services Limited." 22 A: Yes. 23 Q: All right. And it's your understanding 24 that that recommendation was based upon Mr. Rabadi's analysis 25 of all of the bids that were tendered?
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1 A: That's correct. 2 Q: Okay. So before your reviewed it, that 3 decision or the proposed decision was already in place? 4 A: That's correct. 5 Q: Okay and you're not aware of any -- you 6 don't have any knowledge that MFP ever contacted Mr. Rabadi 7 and put any pressure on him or tried to influence him in 8 order to select MFP as a successful bidder? 9 A: Not that I can recall. 10 Q: Now, on that Page 2 -- 11 MADAM COMMISSIONER: Okay. Just in fairness 12 on that, you say not that you can recall. The question was 13 you have no knowledge whether MFP put pressure on Mr. Rabadi 14 to select then you said not that I can recall. 15 THE WITNESS: How about -- not that I can 16 understand that he -- or how would I know? I don't. 17 MADAM COMMISSIONER: So you have no knowledge? 18 THE WITNESS: I have no knowledge, right. 19 MADAM COMMISSIONER: It's not that you recall 20 have no knowledge. 21 THE WITNESS: Right. 22 MADAM COMMISSIONER: You have no knowledge. 23 THE WITNESS: I have no knowledge. 24 MADAM COMMISSIONER: Okay. 25 THE WITNESS: Sorry.
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1 CONTINUED BY MR. WILLIAM ANDERSON: 2 Q: Now, in this document under the background 3 section, the last paragraph. Considering the urgency of the 4 Y2K project, equipment worth and then above that it says 5 $15.1 million. Whose handwriting is that? 6 A: It definitely is not Purchasing. 7 Q: Definitely not Purchasing? 8 A: Yes because you can see started at Number 9 1, when Nadir sent over -- sent this over, we reviewed it and 10 we started at Number 1 -- 11 Q: Yes. 12 A: -- Number 2, Number 3 and Number 4. We 13 had the four (4) changes. 14 Q: Now, I don't have your fax cover sheet in 15 front of me but my recollection was that you only typed out 16 the parts of Mr. Spizarsky's changes that you thought would 17 be hard to read. 18 A: Well, there was only the changes -- all 19 the changes, whether they were Frank's or myself. 20 MR. DAVID MOORE: The document is Tab 18 if My 21 Friend wants to refer it. 22 MADAM COMMISSIONER: Tab 18? 23 MR. DAVID MOORE: Tab 18, yes. Begdoc 5787. 24 THE WITNESS: So as you can see there was four 25 (4) changes.
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1 CONTINUED BY MR. WILLIAM ANDERSON: 2 Q: Well, let's go to Tab 18 if we could 3 because I think it indicates that there may have been more 4 than that. 5 A: Okay. 6 Q: Do you have that in front of you? 7 A: I've got -- yeah. Number 1 -- 8 Q: Okay. Let's go back to the first 9 paragraph. 10 A: Yeah. 11 MADAM COMMISSIONER: Just wait for the 12 questions, Mr. Beattie. It'll make it a little bit easier 13 for us. 14 15 CONTINUED BY MR. WILLIAM ANDERSON: 16 Q: "Nadir has discussed the following of 17 Frank's changes that might not be readable 18 along with numbers that relate to location 19 in report." 20 And those are the four (4) numbers that you 21 are talking about -- 22 A: Yes. 23 Q: -- right? 24 A: That's correct. 25 Q: Then it goes on and it says:
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1 "All other changes are pretty clear." 2 That sort of indicates that there were 3 probably more than just the four (4) changes? 4 A: Yes. 5 Q: Okay. Well, is it possible if you could 6 turn now back to Tab 25, that that $15.1 million, which to me 7 is quite legible, is something that Frank might have put into 8 that draft report? 9 A: No, this would have come from the IT 10 division because they're the ones that would have known what 11 the equipment was worth. 12 Q: Well, do you have any information or 13 knowledge that Mr. Spizarsky may have made inquiries of the 14 IT Department to find out the quantum of assets which had 15 already been purchased? 16 A: No, that's not Mr. Spizarsky's writing. 17 Q: And you're absolutely clear about that? 18 A: Yes. 19 Q: And do you believe that that number was on 20 this report before you received it or was it -- 21 A: Yes, I believe it was when received it. 22 Q: Okay. So you understood at that time that 23 there were fifty (50) -- or $15.1 million worth of assets 24 that had already been purchased. 25 A: I didn't understand that. That came from
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1 the IT Department. 2 Q: Right and the IT Department advised you in 3 this report that there already had been a purchase of $15.1 4 million of assets? 5 A: Okay but you remember all -- we were 6 looking at the report for -- it was from a PMMD standpoint. 7 Q: From a, sorry, what standpoint? 8 A: From a PMMD standpoint. The way it was 9 written according to PMMD. 10 Q: I see. So it didn't concern you at all 11 that $15.1 million had already been purchased by the City and 12 would have to be re-invoiced to the vendors? 13 A: No, it didn't occur at that time. 14 Q: Is that not part of the Purchasing 15 process, though? 16 A: Not when we're writing a report, no. 17 Q: When would it becoming part of the 18 Purchasing process? 19 A: I don't think it ever would be. 20 Q: Okay because my understanding is that if 21 invoices had already been received by vendors and then they 22 would have to be either repaid or somehow reissued to MFP, 23 that would be part of the Purchasing process? 24 A: No, not to my knowledge it wouldn't. 25 Q: Whose responsibility would that be, then?
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1 A: Probably the IT division. 2 Q: Would you agree with me, sir, that by 3 virtue of this paragraph, and if you'd like an opportunity to 4 re-read it, the Purchasing department had knowledge, as of 5 June the 29th, 1999, that there were assets which had already 6 been purchased by the City, which it then had to be 7 transferred onto the lease with MFP, according to the 8 recommendation here. 9 A: Reading it now, yes. 10 Q: Okay. And at that time, I take it, you 11 would have reviewed the entire report, but that wasn't 12 something that jumped out at you as being inappropriate? 13 A: Exactly. 14 Q: Okay. And in hindsight, if you were 15 reviewing this report today, is that something that might 16 concern you about the nature of this transaction? 17 A: Today, yes, it would. 18 Q: Okay. 19 MADAM COMMISSIONER: And why is that, Mr. 20 Beattie? 21 THE WITNESS: Because I've just read it, and 22 it just says that 15.1 million has already been received. 23 MADAM COMMISSIONER: Yes, well, why would that 24 concern you? 25 THE WITNESS: Because I see now, that it would
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1 be as if -- said before, it was, you know, sale/lease back. 2 MADAM COMMISSIONER: Okay, because it was a 3 sale/lease back. 4 THE WITNESS: Yeah. 5 MADAM COMMISSIONER: And why would a sale/ 6 lease back concern you? 7 THE WITNESS: Because I was under the 8 impression that when this went out it was a three (3) year 9 lease -- 10 MADAM COMMISSIONER: Right. 11 THE WITNESS: -- with an option to purchase. 12 MADAM COMMISSIONER: Right, but why would it 13 concern you if there was a sale and lease back in it? 14 THE WITNESS: Because I don't believe this was 15 included in the RFQ. 16 MADAM COMMISSIONER: The sale and lease back? 17 THE WITNESS: Yes. 18 MADAM COMMISSIONER: And why do you not think 19 the sale and lease back was not included in the RFQ? 20 THE WITNESS: Sorry, I -- I take that back. 21 Knowing now -- reading it now, I know that it -- 22 MADAM COMMISSIONER: Now you know it -- 23 THE WITNESS: -- it was in -- 24 MADAM COMMISSIONER: -- it was in the RFQ? 25 THE WITNESS: Yes.
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1 MADAM COMMISSIONER: So, now that you know it 2 was in the RFQ and that it was a sale and lease back, and Mr. 3 Anderson asked you, in hindsight might that concern you about 4 the nature of the transaction, and you said, yes, it would. 5 Would it still concern you? 6 THE WITNESS: Yes, because I didn't pick it up 7 at the -- in the first place. 8 MADAM COMMISSIONER: It concerns you that you 9 didn't pick it up, or that it was in there at all? 10 THE WITNESS: That I didn't pick it up on the 11 first go round. 12 MADAM COMMISSIONER: What was it that you 13 think you should have picked up? 14 THE WITNESS: What we were just talking about, 15 the 15.1 million. 16 MADAM COMMISSIONER: Okay. 17 18 CONTINUED BY MR. WILLIAM ANDERSON: 19 Q: So, you would agree with me now, in 20 hindsight, that this draft report indicates that there was an 21 element of a sale/lease back in the transaction? 22 A: Yes. 23 Q: Okay. Do you still have Mr. Pagano's 24 documents in front of you? 25 A: Yes, I do.
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1 Q: If you could turn to Volume 2, of his 2 documents, to Tab 87. 3 4 (BRIEF PAUSE) 5 6 Q: Now, I don't believe that this document 7 has a Begdoc number, but it may -- 8 MADAM COMMISSIONER: No, I don't think it 9 does. 10 11 CONTINUED BY MR. WILLIAM ANDERSON: 12 Q: If you could turn to the second last page 13 of that Tab, maybe you can help us with Mr. Spizarsky's 14 handwriting here. 15 Now I take it that this meeting of September 16 the 16th, 1999, was the meeting that you were referring to 17 when answering questions by Mr. MacKenzie? 18 A: Is this in regards to the CMO Office? 19 Q: Yes. 20 MADAM COMMISSIONER: What is it that you 21 wanted him to answer? 22 MR. WILLIAM ANDERSON: Oh, okay. 23 24 CONTINUED BY MR. WILLIAM ANDERSON: 25 Q: Can you let -- can you advise, is this, in
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1 fact, the meeting that you were referring to? 2 A: I believe it was, yes. 3 Q: Okay. Who was in attendance at that 4 meeting? 5 A: Okay. It was, I'm assuming, it's Lana, 6 Brendan Power, Line Marks, from the upper right hand side. 7 Q: Yes. 8 A: Myself, Kathy Richmond (phonetic), who I 9 believe took over from me when I moved to Client Services. 10 Q: Okay. And what was the purpose of this 11 meeting? 12 A: I am not sure -- 13 Q: Do you want to try to read the notes, 14 would that be of any assistance? 15 A: Sure, yeah. The first line looks like: 16 "IT purchases leasing." 17 Q: Right. 18 A: And then it says: 19 "Perhaps --" 20 MADAM COMMISSIONER: Client services? 21 THE WITNESS: Yeah: 22 "-- client services should refer to --" 23 MADAM COMMISSIONER: Be referred to. 24 THE WITNESS: "-- be referred to the first 25 point of contact."
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1 Because that -- definitely we're usually the 2 first point of contact for the clients: 3 "To explain how system -- someone -- 4 perhaps client services --" 5 Something: 6 "-- should be --" 7 Something. 8 Q: By client, does that mean other 9 Departments within the City of Toronto? 10 A: Well, Client Services was the unit I was 11 with -- 12 Q: Right, now you're the first point of 13 contact with whom though? 14 A: With the clients within the Departments, 15 as well as the Department -- the clients -- outside 16 suppliers. 17 Q: Okay. And this document is actually 18 referring to people inside the City of Toronto? 19 A: I believe it was; yes. 20 Q: And you were supposed to be the first 21 point of contact in order to explain the leasing program to 22 them, how to use them? 23 A: No. 24 Q: No. 25 A: I think this was something to do with
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1 setting up -- we were rolling out the SAP system. 2 Q: You think this meeting was exclusively in 3 relation to setting up the SAP system? 4 A: That's what I believe, yes. 5 Q: Okay. Could you continue to review that 6 and read that for us? 7 A: Looks like it's: 8 "Reserve fund to be set up." 9 It looks like: 10 "Like vehicle fleet reserve." 11 And then I think it says: 12 "One big PO to MFP." 13 Is that winning concept or leasing -- 14 Q: Leasing company. 15 A: "Leasing company. MFP will pay for 16 suppliers and bill the City quarterly. No 17 more individual PO's for computer equipment 18 services." 19 Q: And do you remember these things being 20 discussed at the meeting? 21 A: Not that I recall, no. 22 Q: Do you recall how long this meeting was? 23 A: No, I don't. 24 Q: Okay. 25 A: Then it goes on:
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1 "But approval form to be prepared for sign 2 off, like the Y2K approval form." 3 Q: And you agree with me, that has nothing to 4 do with the SAP? 5 A: Pardon? 6 Q: That has nothing to do with setting up the 7 SAP? 8 A: I'm not sure. And then it looks like: 9 "Suggest Manager of Purchasing 10 configure --" 11 Or something. 12 MADAM COMMISSIONER: That's this form. I had 13 written there before that it was this form. 14 15 CONTINUED BY MR. WILLIAM ANDERSON: 16 Q: Oh, can approve this form. 17 A: Yeah, can approve this form. 18 Q: What is that? Did you ever see a copy of 19 that form? 20 A: Which form is that? 21 Q: The form that they're referring to here, 22 the approval form? 23 A: I don't believe so. I know we -- we 24 worked extensively with the Y2K form, but -- 25 Q: Okay, the principle?
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1 A: It looks like: 2 "All purchase must be from quote tender 3 proposal issued by PMMD." 4 Q: And that's the purchase of the actual 5 hardware or software; is that right? 6 A: I would assume, yes. And then: 7 "IT review all IT request." 8 Q: Right. And the last line? 9 A: I think it's: 10 "I --" 11 Something: 12 "-- the above with LP." 13 MADAM COMMISSIONER: Reviewed. 14 THE WITNESS: Probably, "reviewed the above 15 with LP". 16 17 CONTINUED BY MR. WILLIAM ANDERSON: 18 Q: Were you -- were you involved in any 19 review of this process -- 20 A: Not that I can -- 21 Q: -- with Mr. Spizarsky and Mr. Pagano? 22 A: -- not that I can recall, no. 23 Q: All right, and you can't recall this 24 meeting in any particular detail, can you? 25 A: No, but I've noticed my name is mentioned
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1 there. 2 Q: Right, and you believe you were at the 3 meeting? 4 A: Yes. 5 Q: Okay. Would you agree with me that what 6 was contemplated at this meeting was setting up a leasing 7 program on a go forward basis? 8 A: Okay, as I mentioned earlier, SAP was just 9 getting implemented -- 10 Q: All right. 11 A: -- so it could also be how they were going 12 to handle it through SAP. 13 Q: Right. There might have been a tying in 14 with the SAP system, but the meeting in fact contemplates 15 much more than that, doesn't it? 16 A: Yes, yes. 17 Q: Okay. If you could turn back a couple 18 pages. 19 MADAM COMMISSIONER: Just help me, Mr. 20 Anderson, how long you think you might be? 21 MR. WILLIAM ANDERSON: It actually will 22 probably depend on the answer to this next question, 23 because -- 24 MADAM COMMISSIONER: Okay, well why don't we 25 ask --
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1 MR. WILLIAM ANDERSON: -- if he can't 2 remember anything -- 3 MADAM COMMISSIONER: I say, ask the question. 4 And which page are you at now? They have numbers on the 5 upper right hand corner? 6 MR. WILLIAM ANDERSON: Actually it's the last 7 page of that tab. 8 MADAM COMMISSIONER: Okay. 9 10 CONTINUED BY MR. WILLIAM ANDERSON: 11 Q: This is an agenda, or purports to be an 12 agenda from the meeting conducted on December the 9th, 1999. 13 A: Okay. 14 Q: Your name is listed at the top of that 15 agenda and there's a check mark beside it, which there was 16 some evidence, although possibly not great evidence 17 indicating that that might indicate who attended at this 18 meeting? 19 A: Okay. 20 Q: Do you recall attending a meeting on 21 December the 9th, 1999 to discuss the leasing program? 22 A: I recall that I think both Paul and myself 23 from client services, were invited to attend, based on the 24 SAP application. 25 Q: Okay. So, when you gave your evidence
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1 before that you had no further involvement with the leasing 2 program after July 27th, 1999, that wasn't entirely accurate? 3 4 (BRIEF PAUSE) 5 6 A: That's correct. 7 Q: Okay, and then you gave some evidence that 8 you had -- you were at one (1) meeting in September of 1999 9 with respect to the leasing program, right? 10 A: I believe so, yes. 11 Q: But, you were actually at least two (2) 12 meetings with respect to the leasing program, the second one 13 (1) being December 9th? 14 A: But, only from a client services 15 standpoint and SAP. 16 Q: Okay. But, during these meetings the 17 people from the IT Department were disclosing to you and 18 other people, that they were implementing a leasing program 19 to be used on a go forward basis at the City of Toronto, is 20 that not right? 21 A: I believe it was, yes -- 22 Q: Okay -- 23 A: -- but, like I said, I was there from a 24 client services standpoint. 25 Q: Were you there as Mr. Pagano's
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1 representative? As part of the entire department? 2 A: Yes, but -- 3 Q: He asked you to attend? 4 A: -- not from a PMMD standpoint. It was 5 more of the client services. 6 Q: Did you report back to Mr. Pagano with 7 respect to the nature of these discussions? 8 A: Not myself, no, because the meeting was 9 hosted by Frank. 10 Q: Oh, so Frank would have reported back to 11 Mr. Pagano? 12 A: I would assume, yes, because he was the 13 one (1) that arranged the meetings. 14 Q: Okay. And the first point of this 15 meeting, do your recall any of this happening, circulating 16 and reviewing drafts of the program and identifying questions 17 or concerns with respect to the program? 18 A: Not really, no. 19 Q: Do you have any independent recollection 20 of what transpired at this meeting, December the 9th? 21 A: No, I don't. 22 23 (BRIEF PAUSE) 24 25 Q: If you can now turn to the first page of
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1 that same Tab, I just want to ask you whether or not, you 2 have any recollection of attending this meeting? 3 I believe this was June the 14th, 2000 -- 4 A: This is Tab 88? 5 Q: The same Tab. 6 A: Okay. 7 Q: 87 -- 8 A: Okay -- 9 Q: -- and at the first page. It appears from 10 these notes, and again these are Mr. Spizarsky's notes, 11 aren't they? 12 A: I don't know. 13 Q: Well, that's his handwriting isn't it? 14 A: I'm sorry -- 15 MADAM COMMISSIONER: He's gone to the wrong 16 Tab. 17 It's Tab 87 -- 18 THE WITNESS: Oh, Tab 87, sorry. 19 MADAM COMMISSIONER: The first page. 20 THE WITNESS: Sorry. Yes, that's Frank's 21 writing. 22 23 CONTINUED BY MR. WILLIAM ANDERSON: 24 Q: Okay. And we're on the same page now, the 25 number at the top is 14/6/2000?
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1 A: Right. 2 Q: Is that right? 3 A: Yes. 4 Q: Okay. And it indicates on the right-hand 5 side, that you were at that meeting? 6 A: Yes. 7 Q: Do you now recall being at this meeting? 8 A: No, I don't. 9 Q: Okay. Can you review those notes and 10 maybe give us an indication of what they say? 11 A: Okay, it looks like, they were looking to 12 set up blanket contracts for the four (4) suppliers that were 13 supplying us with computers. 14 Q: Right? 15 A: And they've got that below that, it says, 16 "All requirements not on price agreements 17 to [something or other] payment be on a 18 requisition so we can issue a quote." 19 Q: Does that assist at all, in a recollection 20 of what was being discussed at this meeting? 21 A: Not really. 22 Q: Were there -- I'm sorry -- 23 A: At the bottom you can see Mike -- reviewed 24 with Mike and Kathy. 25 Q: Right?
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1 A: They were in my group at the time, also. 2 Q: And does it indicate that they were 3 actually at the meeting, anywhere? 4 A: I don't know if they were at the meeting, 5 but, I know that they were -- it was reviewed with them. 6 Q: Was this another meeting with respect to 7 the ongoing leasing program that the CMO was administering? 8 A: I can't recall. 9 10 (BRIEF PAUSE) 11 12 Q: If you could now turn to Tab 42 of the 13 same book of documents and this will just take me one second. 14 The Document 29768. Are you there? 15 A: Yes. 16 Q: Okay. Do you know what -- do you 17 recognize this document? 18 A: I've seen it before. It looks like it's, 19 as it says, "Information Technology Division leasing approval 20 form". 21 Q: And you weren't in the Purchasing 22 Department or acting as a buyer when this was filled out, 23 were you? 24 A: I don't believe so. Do you know what the 25 date is.
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1 Q: Well, it's blacked out. I don't know if 2 anyone has a version of this document where you can actually 3 read the date. No. I believe it was sometime in -- 4 actually, I don't recall. It was the second Councillor 5 computer acquisition. Who is indicated as the individual 6 that ordered the computers for the City Councillors? 7 MADAM COMMISSIONER: It must have been after 8 October 26th, 2000 because it says: 9 "See quote October 26, 2000" 10 MR. WILLIAM ANDERSON: Yeah. 11 MADAM COMMISSIONER: So you know it's at least 12 after that. 13 MR. WILLIAM ANDERSON: I think it was 14 approximately three (3) years after the -- 15 THE WITNESS: Yeah. 16 MR. WILLIAM ANDERSON: -- first computers went 17 on lease. 18 MADAM COMMISSIONER: Hmm hmm. 19 20 CONTINUED BY MR. WILLIAM ANDERSON: 21 Q: Who is indicated as the department 22 approval, the person requisitioning these new Councillor 23 computers? 24 A: This one here, you mean? 25 Q: Yes. Down at the bottom left hand corner.
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1 Is that Novina Wong's signature? Do you recognize that? 2 A: Yeah, she's -- she's the City Clerk, I 3 believe or was the City Clerk at the time. 4 Q: What is the role of the City clerk? 5 A: I believe she is the head of the 6 department. 7 Q: And what department is that? 8 A: Corporate Services. 9 Q: Clerk's Department? 10 A: Clerk's Department. 11 Q: And she's the head of -- she's the same 12 level as a commissioner, isn't she? 13 A: I believe so, yes. 14 Q: A senior official at the City of Toronto? 15 A: That's correct. 16 Q: Okay and the Clerk's department is the 17 repository for all the City Council resolutions? 18 A: I believe that's correct. 19 Q: Okay and you'd indicated before that the 20 second round of purchasers for -- purchases for the 21 Councillor's computers wasn't approved by virtue of the 22 quotes that you did in late 1997? 23 A: I'm not -- when you say not approved? 24 Q: That there was no approval process to 25 enter into a subsequent round of purchases for Councillor's
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1 computers and to put them on lease? 2 A: We had they call Open Market Authority at 3 the time. 4 Q: Okay but pursuant to the first analysis 5 and the quotations that you received for the Councillor's 6 computers in 1997, it didn't follow that someone could go out 7 and order more computers? 8 A: Oh, definitely. 9 Q: Right. 10 A: That's correct. 11 Q: And this is the document that purports to 12 rely upon a City Council resolution giving that 13 authorization, isn't it? 14 A: I'm not sure. 15 Q: Okay and you would expect Novina Wong as 16 the City Clerk to be familiar with the resolutions that were 17 passed by City Council and to rely upon resolutions in their 18 ordinary and proper interpretation? 19 A: I would imagine, yes. 20 Q: Yeah. Okay. Those are all of my 21 questions. Thank you. 22 23 (WITNESS RETIRES) 24 25 MADAM COMMISSIONER: Okay. Who's next
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1 tomorrow? 2 MR. DAVID MOORE: I'm not sure if I'm next or 3 whether Mr. McPhadden is going to be back or -- 4 MADAM COMMISSIONER: Okay. 5 MR. ZORAN SAMAC: Mr. McPhadden will be back 6 tomorrow. 7 MADAM COMMISSIONER: And is he prepared to ask 8 questions, then because he'll be -- 9 MR. ZORAN SAMAC: He's going to review the 10 matter tonight. He may or may not have questions -- 11 MADAM COMMISSIONER: All right. 12 MR. ZORAN SAMAC: -- tomorrow. 13 MADAM COMMISSIONER: Well, it'll be between 14 him and MFP as to who goes first tomorrow. All right and Mr. 15 Moore, assuming you're next can you give me some assistance 16 as to how long you think you might be? 17 MR. DAVID MOORE: If you asked me at the 18 beginning of the afternoon, I would have said between one (1) 19 and two (2) hours and I think I'll still stick with that. 20 I'm going to actually go through the notes of what other 21 Counsel have asked and that'll have an impact upon that but I 22 certainly -- I won't be more than two (2) hours and so I 23 would assume to finish this witness tomorrow. 24 MADAM COMMISSIONER: All right and Mr. Centa, 25 are you in a position to assist with this one?
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1 MR. ROBERT CENTA: Not knowing what Mr. Moore 2 intends to ask about, we would expect to be less than half an 3 hour. 4 MADAM COMMISSIONER: Less than half an hour. 5 So we should be ready with the next witness then. That's my 6 real question. Okay. All right. See you tomorrow at ten 7 o'clock. 8 THE REGISTRAR: The Inquiry is adjourned until 9 ten o'clock tomorrow. 10 11 --- Upon adjourning at 4:50 p.m. 12 13 Certified Correct 14 15 16 17 18 ___________________________ 19 Carol Geehan 20 Court Reporter 21 22 23 24 25