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Public Service Procurement Canada – contract management – Phoenix and VW

Public Service Procurement Canada – contract management – Phoenix and VW

Published – Ottawa Unpublished November 17, 2017

In May 2014, the Environmental Protection Agency (EPA) in the USA began an investigation into VW. This lasted more than a year since VW originally argued that the testing was flawed.
In an article published December 10, 2015, BBC news reporter, Russell Hotten, wrote, “lt’s been dubbed the “diesel dupe”. In September, the Environmental Protection Agency (EPA) found that many VW cars being sold in America had a “defeat device” – or software – in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the US.”

As a result of the EPA investigation, Volkswagen agreed to pay around $15B to settle claims and invest in zero emission vehicles. Although this was an international scandal, most of the $15B came from the USA. The company stated that using ‘defeat devices’ that allowed cars to cheat in emissions tests broke USA laws.

However, the process in the United States is tougher than expected and the bill is expected to possibly reach $30B. Moreover, the VW is also recalling millions of cars worldwide at a price tag estimated at $8B. Recently, an Executive of VW in Europe was charged regarding the emissions scandal.

Since the Canadian news has been quiet, I decided to find out what Canadian Government procurement was doing about automobiles already purchased or about to be purchased. With that in mind, I sent the following Access to Information to Public Service and Procurement Canada in February,2017.

Since April 1, 2013: 1) Copies of all contracts, amendments, call-ups and other contractual documents in relation to Volkswagen Group Canada. 2) Number of diesel-equipped vehicles purchased and value of these vehicles. 3) Copies of all emails regarding diesel-equipped vehicles made by Volkswagen in relation to the emissions scandal. This includes details of any negotiations, settlements and penalties.

Of course, there was the anticipated delay due to ‘third party’ consultation. Finally in September I received a reply comprising 113 pages of documents. By far most of it was details on automobiles bought through the PSPC Standing Offer which addressed the first part of my request.
In relation to details of negotiations, settlements and penalties there was almost nothing. In an email September 22, 2105, PSCP wrote to VW, “The news is everywhere, what should we (as a client) expect, are all diesel models affected, will the production market stop for Canadian market also not just USA.” Further the email stated, “We might have to remove these from the S.O. (Standing Offer).”

In reply, Volkswagon advised “This situation does not present a safety hazard. Your drivers can continue to operate their vehicles and do not have to take any action at this time.” Later that same month in September 2015, a VW email advised PSPC that it was working with regulatory agencies in Canada and US to confirm facts and determine appropriate course of action.
In October, a PSPC office advised that Environment Canada had opened an investigation into Volkswagon’s alleged use of defeat mechanisms to circumvent emissions standards.
From there the trail goes cold. There are no further documents after October 2015 although the request was from April 1, 2013 to when PSPC received the Access Request in February 2017. The only action taken was not an action. It was a suggestion that PSPC might have to remove cars from the VW Standing Offer.

This is an example of inaction being the ‘action’ and how PSPC performs contract management. The goal seems to be that by ignoring the situation, it will go away. Or, as one officer likes to use as an internal tag line on his emails, “You don’t see with your eye, you perceive with your mind.” In other words, you don’t need to do something in writing (see), as long as you think about doing it. (perceive).

If this is a typical example of how PSPC performs contract administration on a relatively simple situation, how can it be expect to contract management a complex situation such as Phoenix?