Competitor Cries Foul over BC Government $2-Million No-Bid Contract

When the British Columbia government wanted someone to teach digital marketing skills to businesses during the early months of the COVID-19 pandemic, it handed the contract to an organization with no related experience.

At least that’s how the government’s $2-million contract with the Alacrity Foundation of BC appeared to Darian Kovacs, the founder of Jelly Digital Marketing & PR in Vancouver.

Other companies, including his Indigenous-owned firm with eight years in the field, were already teaching digital marketing and had more experience with it than Alacrity, but they were never given a chance to compete for the work.

“At the time of awarding three existed right in Vancouver: RED Academy, BrainStation and Jelly Academy,” Kovacs said in a message to The Tyee. “None were contacted or engaged with. Seems strange that only Alacrity was considered and they went and built something from scratch versus using existing programs.”

Alacrity’s president Lisa Payne says the foundation has years of experience helping Canadian businesses with digital customer acquisition and a record of achieving excellent results with its programs.

A spokesperson for the ministry responsible says it followed government policy to make the decision and award the contract.

Any time a public body is going to spend more than $75,000 on a service, the government’s policy is to post the opportunity on BC Bid and accept competing offers.

That step can be skipped in certain circumstances that are set out in the government’s core policies and procedures manual.

Those circumstances include when the contract is with another government organization, it can be proven only one contractor is qualified or available or there’s an unforeseeable emergency that means there’s not enough time for a competitive process.

“Direct Awards must not be used for the purpose of avoiding competition,” the policy manual says.

In this case, none of the normal reasons for skipping the bid process applied.

That’s clear in the Nov. 2, 2020, contract commitment form that Kovacs obtained by making a request under the province’s Freedom of Information and Protection of Privacy Act.

He made the FOI request after unsuccessful efforts to get a meeting with Ravi Kahlon, the minister of jobs, economic recovery and innovation, and talking with MLAs and other officials. “Nobody can get me an answer,” he said.

The justification given on the form in the FOI response was “Treasury Board Staff has approved Alacrity Canada as the service delivery partner for this economic recovery initiative.”

It described what Alacrity would do and how it would help companies “that can expect a boom in business as retailers adjust to the new realities of a post COVID-19 recovery environment,” but failed to explain why a direct award contract was needed.

At the bottom somebody wrote in pen, “See TBS for further justification.”

To Kovacs, that sounded like “code for something.”

Given that handwritten note and the fact Alacrity seemed to have the inside track on other contracts as well, he wondered, “What's the Alacrity connection to the province?”

According to a spokesperson for the Ministry of Jobs, Economic Recovery and Innovation, the Digital Marketing Bootcamp was piloted starting in 2019 and the province owns the rights to it.

“The agreement with Alacrity Canada to deliver the program... was funded through a government transfer based on the urgent need to support businesses and a proven program and partner to deliver, as well as the criteria that financial assistance was being provided to a specific target group or population,” they said.

Since the contract was entered as a “transfer” rather than a normal procurement, slightly different rules applied. There is still supposed to be competition to select a service provider, but the step can be skipped when “financial assistance is being provided to a specified target group or population.”

According to that section of the policy manual, “The engagement of a shared cost arrangement must demonstrate fairness and openness, transparency, value for money, competition and accountability.”

Under the terms of the agreement, Alacrity was to register a maximum of 2,500 business participants for the Digital Marketing Bootcamp and deliver the eight-week course to them. The province would pay $720 per participant.

The contract also included $200,000 for Alacrity to adapt the course materials to a self-directed online course that would be made available to B.C. businesses for free. If Alacrity wanted to provide the course to individuals or to businesses outside the province, it could charge a fee for that as long as it still gave priority to B.C. businesses.

The Alacrity Foundation of BC has existed since 2009 when it was formed as a not-for-profit aiming to promote entrepreneurship in the province, according to emailed responses to questions from its president Payne.

“Alacrity runs a number of programs towards this mission,” she said, “including offering grants to students to form companies, supporting the transition to clean technology, training in digital marketing to make B.C. businesses more competitive and supporting existing companies with attracting international investment and sales.”

Payne said Alacrity has had no indication it has received favourable treatment from the provincial government.

“We are confident the province made their decision to support the program based on the program's merits,” she said, adding thanks that the government chose to support a program that has benefited many people and businesses in the province.

“In our experience, the provincial and federal governments are rigorous, thorough and fair in their purchasing and grant programs,” she said. “We promote and bid on projects or work in partnership with the government to create programs that we believe will make a significant impact on the B.C. economy.”

Alacrity’s chairman and one of its founders is Owen Matthews, who shows up in B.C.’s political donation database as having given money to both the BC Liberal party and the NDP.

He’s the son of another Alacrity founder, Terry Matthews, a knighted Welsh-born billionaire best known for his role in founding Ottawa technology communications company Mitel and Newbridge Networks. The senior Matthews is the chairman of the investment firm Wesley Clover International and his bio says he’s been a founder or funder of more than 100 companies.

Alacrity is an incubator or “tech accelerator” that provides seed funding and helps out companies in their early stages. It and Wesley Clover are known for having connections to angel investors and other sources of investment.

Alacrity’s work for the province includes the management of B.C.’s Cleantech Scale-up program, which the province announced in April 2018 with three-year funding of $711,000.

The aim of the program, Alacrity’s website says, is to help clean technology companies commercialize “by connecting them with industry experts, potential customers and partners, international in-market advisors, marketing and business development consultants, and local sales specialists, all so they can achieve their global potential.”

That contract as well was done as a direct award.

According to the Jobs Ministry spokesperson, “Alacrity Foundation was awarded the contract based on their proven track record of delivering positive results for B.C. businesses and unique value proposition, including its international affiliates and in-market consultants.”

About a month after the contract was announced in 2018, Premier John Horgan and then-BC Green Party leader Andrew Weaver celebrated the one-year anniversary of the confidence and supply agreement that saw the Greens and the NDP working together so the NDP could form the government.

They marked the occasion with an event held at Alacrity’s Victoria office. The news release said, “The support for Alacrity is part of the progress made on CASA commitments to advance innovation and technology, and the collaborative work on the climate action strategy that continues.”

The province has since engaged Alacrity on another initiative, the Launch Online program, to administer $42 million in grants of $7,500 each to help small and medium-sized businesses get better at e-commerce and move more of their sales online.

The government announced the program in February, then upped funding for it a month later saying strong demand from businesses showed how much it was needed. It had started with funding for 1,500 businesses, but more than 3,500 had applied.

For that contract Alacrity did have to compete and the opportunity was posted on BC Bid for about two weeks late in 2020. Records show there were six bidders and that Alacrity’s winning proposal scored 82.9 points out of a maximum 170 available. It's unclear from the record what the competitors scored.

Alacrity was also among winning bidders for a recently launched federal program that is similar to B.C.’s Launch Online program.

Payne said Alacrity has had no inside track in provincial government decision-making. “Alacrity has spent years encouraging the support of digital customer acquisition methods to help make Canadian businesses more competitive,” she said.

“It is an area we are knowledgeable about and have been effective in deploying in support of B.C. technology companies. The Digital Marketing Bootcamp and Launch Online programs are examples of that. We believe the province selected these programs because they determined these to be the best ways to serve the people of B.C. and their businesses.”

Alacrity has had some success bidding on government contracts or applying for grants, but sometimes it loses as well, Payne added. “In each case, we respect the wisdom of our governments to select the proponents best suited to deliver that particular program.”

Payne said it’s easy to understand why the federal and provincial governments support its work given the organization’s track record of successfully delivering excellent results.

“In our experience, the province has been thorough in their grant-awarding decisions, we have consistently reported excellent results and we have won bids we deserved to win. We should be celebrating these wins for the economy and recognizing the government's role in supporting them.”

To Kovacs with Jelly Academy, contracts like the digital marketing one that went to Alacrity really need to be put out for competitive bids. “It just seems it would be fair. It would be nice and fair if they did.”

If the government would rather directly award such contracts, it should be transparent and give a clear explanation of why it is proceeding that way, he said.

“If you’re going to do it, at least be straight about it.”