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Furore in Leg over Doherty, tire processing RFP process

Daily Leg Update: NDP raises concerns about Kevin Doherty lobbying for California company that got tire processing contract at expense of Sask.-based Shercom.
Opposition critic Meara Conway speaks to reporters April 23.

REGINA - Once again, the Opposition NDP took aim at the government over the activities of former Sask Party Finance minister-turned-lobbyist Kevin Doherty, this time over a controversial contract awarded for tire recycling.

The NDP had recently been trying to link Doherty to what they have characterized as a “sweetheart deal” contract for his client Clearpoint to do private hip and knee surgeries for Saskatchewan patients in Calgary. Health Minister Everett Hindley has denied meeting Doherty on that particular topic, though he did admit meeting with him on Medavie and the topic of ambulance services.

On Tuesday, the Opposition turned their attention to Doherty’s involvement in lobbying for CRM - Crumb Rubber Manufacturers out of Newport Beach, California, the company that in 2023 won a controversial tire processing contract over Saskatchewan-based Shercom Industries out of Saskatoon.

Shercom had already held the contract for the whole province, and the awarding of the southern contract by Tire Stewardship of Saskatchewan to a California-based company drew considerable criticism from the province's business community. 

Shercom Industries CEO Martin Stangeland was quoted saying his own company was being “stabbed in the back in our own back yard,” in an interview with the Star-Phoenix in Nov. 2023 after the company's contract talks broke down with Tire Stewardship of Saskatchewan.

The awarding of the southern contract also prompted an independent investigation into a review of procurement practises by Tire Stewardship of Saskatchewan. In the end, the report by Cam Swan confirmed the CRM plant in Moose Jaw would be the southern manufacturer.

Now, attention has turned to Doherty’s involvement as a registered lobbyist for CRM, and whether that influenced the awarding of the contract. Opposition Leader Carla Beck raised the issue in Question Period, as recorded in Hansard.

Ms. Beck: — “…CRM [Crumb Rubber Manufacturers] tire processing of Newport Beach, California got the contract for tire recycling in Saskatchewan, and the Saskatoon business that had been doing that work lost it. And guess who was their lobbyist, Mr. Speaker? Mr. Doherty. Did the Premier meet with Mr. Doherty on this tire recycling deal?”

That drew a one word response from Premier Scott Moe: “No.”

Ms. Beck: — “Appreciate the short answer, Mr. Speaker. Now, Mr. Speaker, handing this contract to an American company when a Saskatchewan company was already doing the work, well it raises a lot of eyebrows, even more so when we look at the lobbyists registry and see again Kevin Doherty registered to lobby for this American company that got this lucrative contract.

“Now yesterday, the Premier said that he never met with Kevin Doherty on the surgical backlog. He’s already answered that he did not meet with Kevin Doherty on this particular contract or this deal, Mr. Speaker. But does he have any concerns with the deal as we’ve outlined?”

Hon. Mr. Moe: — “Mr. Speaker, my understanding is the contract, both of them were RFP’d by the organization that puts those contracts out. I’m not sure if, at the Trudeau campaign school, the Leader of the Opposition is suggesting that we should be sole-sourcing those contracts, Mr. Speaker.

“Because that’s simply not the case. In this particular case, Mr. Speaker, there was an RFP, and it’s my understanding that the company she’s referring to didn’t bid on it.”

Beck then referred to a quote from Saskatoon Chamber of Commerce which stated: “Our concern is the apparent unwarranted regulation of a once-free market that is now siphoning jobs and market opportunities away from our cities and reassigning them to business interests outside of our borders.”

“Mr. Speaker, did CRM tire get the contract because they had the best pitch or because they had the best lobbyist?” Beck asked.

“I think they got the contract because they were the only bidder in an RFP, Mr. Speaker,” Moe replied.

When government officials were asked for comment, media were referred to Stevyn Arnt, CEO for Tire Stewardship in Saskatchewan. In an interview, he described the RFP process that had taken place.

“In early 2021 we went to the marketplace with an RFP for a southern base processor... A party was identified during that process, but contract wasn’t finalized until the summer of 2022 and I think we issued a press release in December 2022 as well on that.”

That Dec. 2022 news release had stated: “A request for proposals in 2021 for a second processor in the southern part of the province resulted in the selection of CRM® by TSS. CRM®’s product line was of interest given their established markets for higher-valued end use products which displace other more carbon intensive alternatives thereby reducing the overall environmental impact of TSS’s program. Furthermore, because of the market demand for their products, CRM® is less reliant on incentive fees ensuring that consumers receive better value for the tire recycling fees collected. In addition, the program efficiencies with two processors will result in cost savings which will be utilized to clean up old tire piles around the province.”

As for Tire Stewardship in Saskatchewan, Arnt is saying they did not meet with Doherty or any other lobbyists, either, during the RFP.

“I will say during the entire RFP process for the southern-based contract that was put in place we had no discussions with any lobbyists,” said Arnt. 

As for the RFP process, “there were a couple of candidates that went through the entire process, and CRM was identified as a preferred candidate, and we finalized a contract with them.” Arnt also confirmed that Shercom “elected not to participate in that process.”

In speaking to reporters, NDP Critic for Ethics and Democracy Meara Conway spoke about the latest Doherty accusations in the Legislature.

“I think what we are trying to Pontiac to a pattern, a concerning pattern,” said Conway. “Obviously it’s most pronounced with the contracts that were awarded in Calgary. They were sole sourced — a $6 million contract for the hip and knee surgery and the $2 million extension for mammograms. We see a concerning pattern of behaviour around these sweetheart deals, and the involvement of Mr. Doherty, a former Sask Party Finance Minister. On these recent questions we were asking we’re looking for a little more transparency. We have heard from a number of stakeholders that they were concerned about how this all went down. The RFP appears to be pretty tailored, the feeling was, to one company, and then just the lack of transparency around the business case behind the changes that lead to that RFP.”

As for why this is coming up now, Conway said this:

“I think part of why this is coming out now is this discovery that Mr. Doherty was lobbying on behalf of this out of country company. He became a lobbyist just months before this contract was awarded. And I think that is one of the questions we have, is around why this RFP, what the business case was that led to this RFP. The Premier said one person bid on this RFP. We’re hearing from the community, the business community, that that RFP appeared tailored to one company. And again, I understand there was an FOI (Freedom of Information) around the report that was prepared that then led to this RFP, the business case for why the RFP was structured the way it was, and that entire report is redacted.”