CONFIDENTIAL

M E M O / N O T E D E S E R V I C E

Beginning on Monday, January 20, 2014, the City of Ottawa and Hervé Pomerleau Ontario Inc. (Pomerleau) will be engaged in a trial in the Ontario Superior Court of Justice in relation to a claim brought by Pomerleau arising out of the tender for construction of digesters at the Robert O. Pickard Centre in 2005. The trial is anticipated to last for as much as three weeks, depending on the evidence and submissions of the parties.

The City’s external counsel maintain the view that the City’s case is strong. Their opinion is bolstered by the fact that counsel for Pomerleau have not produced any expert report in support of the company’s damage claim, as well as the views expressed during the course of recent pre-trial proceedings.

While the City and Pomerleau have made efforts to settle the case, at this late stage, there would appear to be little likelihood of a negotiated resolution. As a result, the trial that is scheduled to begin next Monday is likely to proceed.

The Pomerleau case involves a claim against the City for alleged breach of contract in relation to a bid submitted for the construction of concrete digester tanks at the Robert O. Pickard Environmental Centre in 2005. Though it had submitted the lowest bid by a nominal amount, Pomerleau was not selected to undertake the work as their bid was deemed non-compliant by the City.. The situation that resulted in the rejection of the Pomerleau bid arose on account of Pomerleau having listed two suppliers for the delivery of the concrete tanks, despite the express tender requirement that bidders select a single supplier. At the time, the City had deemed one of the two suppliers listed by Pomerleau as failing to meet the experience criteria required by the tender documents. In an attempt to proceed as fairly as possible and aware of the prospect of an action at the instance of the next lowest bidder had the City made the selection for Pomerleau, the City asked Pomerleau to choose as between its listed suppliers. When Pomerleau chose the unqualified supplier, its bid was rejected as non-compliant. It subsequently brought the action on the basis that it should have been awarded the contract. The essence of Pomerleau’s claim is that the City should have told them that one of their suppliers was non-compliant and therefore not put the company in the position of losing the work if it made the wrong choice. It also claims that the issue of an unqualified subcontractor should have been dealt with through negotiation as opposed to the rejection of its bid. Pomerleau’s claim is for $12 million for loss of profit, as well as $1 million in exemplary damages. Including interest and costs, the total amount of the claim is approximately $15 million.

To / Destinataire Mayor and Members of Council File/N° de fichier:

From / Expéditeur M. Rick O'Connor,City Clerk and Solicitor

Subject / Objet Hervé Pomerleau Ontario Inc. Date: 17 January 2014

I trust the above update is helpful.

M. Rick O’ConnorCity Clerk & Solicitor

cc: K. Kirkpatrick, City ManagerN. Schepers, Deputy City Manager, Planning and InfrastructureM. Simulik, City TreasurerW. Newell, General Manager, Infrastructure ServicesS. Arpin, Mayor’s Chief of StaffJ. Byrne, Chief Procurement OfficerD. White, Deputy City Solicitor, Litigation and Labour Relations