The provincial government discouraged Manitoba Hydro from bidding on a lucrative data network contract that was slated for tender this year, a decision that came as a blow to small, local internet service providers who were hoping to piggyback on the Crown corporation's bid.
According to documents obtained through freedom of information legislation, the government made it known to Hydro president and CEO Jay Grewal in early January that company subsidiary Manitoba Hydro Telecom (MHT) was not to participate in a planned request for proposals.
The prize was a data network contract that provides inter-office data connectivity to more than 600 provincial offices, A 10-year agreement between the government and Bell MTS was set to expire this year. According to Hydro documents, the contract was worth between $12 million and $14 million annually.
Correspondence between senior Hydro officials reveals that provincial Treasury Board secretary Paul Beauregard, a former executive with both Manitoba Telecom Service Inc. and BCE/Bell Canada, was the senior government official who delivered the news.
In an email from Grewal to two of her senior officials dated Jan. 4 , the Hydro boss said she "tested" the idea of participating in the RFP with Treasury Board (a sub-committee of the provincial cabinet responsible for fiscal management) and "as anticipated, Paul B confirmed that we are not to participate."
Three days later, Sharon Harrald, a Hydro vice-president, passed on the news to Chris Mankewich, managing director of MHT, a business unit of Manitoba Hydro International Ltd.
"Paul Beauregard confirmed to (Grewal) that we (MHT) are not to participate in the Manitoba Network RFP (directly or indirectly as a 3rd party)," she wrote in an email.
As it turned out, the RFP was never issued. The government exercised an option in its agreement with Bell MTS to extend the contract for 30 months — from July 1, 2020 to Dec. 31, 2022.
Local small and medium telecommunications and internet service providers are worried that the provincial government appears to be shutting them out of business opportunities. A chance to receive spinoff business through the Manitoba Network contract never materialized. More recently, another door seemingly closed as Hydro declared that MHT would not be taking on new business while an RFP is underway to find a third-party manager for it.
"They (the Pallister government) obviously had a long-term policy or plan to implement a more private footprint for internet service provision in Manitoba that did not include Manitoba Hydro Telecom as the steward or gatekeeper of data services and fibre asset control," said David MacKay, executive director of the recently formed Coalition of Manitoba Internet Service Providers (C-MISP).
The government appears to be establishing an environment of "anti-competitive business behaviour," MacKay said.
"Competition keeps pricing down and it keeps service levels up. Without the competition we move more towards an environment of either privatization or, worse yet, complete monopoly," he said.
Manitoba Hydro did not respond to a request for comment before deadline.
Blake Robert, director of media relations and issues management for the provincial cabinet, said "it is incorrect to state that Manitoba Hydro was 'forbidden' from bidding" on the Manitoba Network contract.
"The reason for extending the Manitoba Network agreement was strictly due to timing and the fundamental change in what Manitoba may need from the Manitoba Network in the wake of the COVID pandemic," he said in an email.
"Cabinet determined that government needed more time to rethink Manitoba’s future needs with respect to the Manitoba Network, and that issuing and awarding an RFP in the middle of this pandemic would have resulted in not properly scoping our future needs."
Robert said there is "no relationship" between the government's "request" that Manitoba Hydro Telecom pause entering into new deals and the decision to extend the current agreement for the Manitoba Network with Bell MTS.
He also denied that Beauregard, as a secretary to a committee of cabinet, is in any conflict of interest because of his past connections to Bell and MTS.
"Mr. Beauregard’s role in this instance was not in a decision-making capacity, it was to remind the CEO of (a) Crown Corporation of a previous decision of cabinet and was the subject of a cooperative process between central government and Hydro. Simply conveying the information presents no conflict of interest and in fact is a part of the expectations of Mr. Beauregard’s role," Robert wrote.
NDP MLA Adrien Sala, the party's Hydro critic, called the message from Beauregard to Grewal "a really ugly example of political interference in Manitoba Hydro by one of (Premier Brian) Pallister's hand-picked staff."
He said under the Crown Corporations Governance and Accountability Act, in effect since 2018, the government is required to make any directive to Hydro public within 30 days of issuing it, but it has apparently failed to do that.
In 2017, the same year Beauregard joined the government after serving as corporate secretary at MTS, Pallister told a legislative committee hearing that his new appointee would recuse himself on issues relating to his former employer, Sala said.
"The premier said on the record that Mr. Beauregard would not be involved in any decisions regarding Bell MTS, and now we know it's not true," the critic said.
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