Government could face legal action over US shipping deal
The Government is facing a legal challenge after awarding a contract to a foreign shipping company – without first putting the contract out to tender locally.
Lawyers for island-based importer Mailboxes Unlimited have written to Wayne Furbert, the Minister for the Cabinet Office, asking why the Bermuda Post Office did not send out a request for proposal to local companies to set up an online shopping platform.
The Government eventually awarded the contract to Florida-based shipper MyUS. The service is expected to be up and running this month.
In a letter sent to Mr Furbert last Friday, attorney Peter Sanderson questioned whether the MyUS deal breached government procedures.
Mr Sanderson, of BeesMont Law, wrote: “Our client has various concerns with the recent announcements regarding the MyBermudaPost shopping platform partnership with MyUS.”
Mr Sanderson said that concerns included a lack of public consultation before the contract was awarded, and “the wisdom of government becoming a direct competitor to privately run businesses, with the inherent conflict of interests that will bring when considering future laws and policies”.
Mr Sanderson added: “Our client believes that the decision to partner with MyUS may have been in breach of procedural fairness and/or a legitimate expectation that the Code of Practice for Project Management and Procurement would be followed.”
At a press conference this month, Sam Brangman, the Postmaster-General, defended the MyUS contract.
He said that a request for information was issued in 2018, which two Bermuda firms responded to.
Mr Brangman said: “Neither of those companies owned a US address or facility to accept our mail, hence we sought another opportunity for the benefit of the post office and our customers.”
But Mr Furbert later contradicted that statement, saying that Bermuda shipping firms did have facilities in the US.
In his letter, Mr Sanderson said: “The request for information of August 2018 merely requested information from interested parties for the purposes of ‘gathering information about the marketplace’.
“We do not see where this fits within the code, nor do we see any indication in the code that a lack of response to an RFI means that procurement policies no longer need to be followed.
“No reasonable person reading that RFI in 2018 would have concluded that it was their one and only opportunity to register their interest in this project.”
Mr Sanderson said that the contract was a “high-value procurement”, and that a number of steps should have been followed before a contract was awarded – steps he claims the Government bypassed.
Mr Sanderson said: “If these steps were not carried out, and/or the procurement did not otherwise comply with the code, then the arrangement with MyUS is liable to be set aside by the court.”
Mr Sanderson requested that Mr Furbert produce all documents setting out the details of the MyUs contract within 14 days. Mailboxes Unlimited has also submitted a separate request for details about the contract under public access to information regulations.
Mr Sanderson said: “Our client is considering its options in making such an application to the court. However, the merits and determination of such an application may hinge on review of the underlying documents.
“In the event that such documents are not forthcoming, our client will rely on this correspondence in any costs application before the court.”
Mr Sanderson concluded: “We look forward to hearing from you within 14 days, failing which we are instructed to apply to the court for leave to apply for judicial review.”
Kenny Thomson, the president of Mailboxes Unlimited, said he felt compelled to take action to highlight the unfairness of the system.
Mr Thomson said: “The sticking point on this issue is that Government has teamed up with a US firm rather than a Bermudian one.
“It is disheartening that an RFP wasn’t issued so that Bermudian businesses could compete for the contract.
“Mailboxes operates a fulfilment centre which could have provided these services for the BPO to the benefit of both entities. Our warehouse operation in New Jersey is administrated by myself and our Bermudian managers, here in Bermuda.
“In contrast, MyUS is a for-profit, non-Bermudian enterprise which will add a steep mark-up for the services it provides to the BPO, meaning more cash leaving Bermuda’s economy with the Bermuda Government’s signature on the cheque.
“In general, the role of government is to provide a framework on which businesses and investments thrive. Government should manage its expenses and tax its citizens the bare minimum to cover those expenses – then it should provide free or heavily subsidised services such as buses, the fire department, and, most importantly for this argument, the post office.
“What if it was announced that TCD was setting up a car shop to compete with Cardoza’s, Auto Solutions and all the other family-owned garages? With bottomless pockets, the ability to tax its own competitors and without fear of making a loss, Government could theoretically enter any industry and compete with an unfair advantage.
“The end result is not a better economy with more choices, but merely a larger, more powerful government, higher taxes and less opportunity for innovation.
“Do we want a small government and a big private sector, or a small private sector and a big government? Where do we draw the line?”
Last week The Royal Gazette spoke to Mr Furbert about the contract. Mr Furbert asked that this newspaper put its questions to him in writing. No response to those questions has been received to date.