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Mitel dumps (CN) $2M "free" phone offer to Ottawa

Mitel backpedaled on a $2 million (CN) offer of free phone hardware to its hometown city of Ottawa.  Mitel had offered up the “gift” in exchange for it and its partners to become the city’s sole supplier of VoIP technology after losing a bid on a contract to supply VoIP equipment and services.

The earlier IP telephony contract put out by Ottawa – and won by Bell Canada and Cisco –is worth $4 million to $7 million (CN) in VoIP equipment and services.

Mitel Chairman Terry Matthews made the offer to Ottawa Mayor Larry O’Brien in a letter. The mayor brought the offer for examination to the city council’s economic affairs committee, who voted to suspend the procurement process to figure out exactly what to do with the offer and what sort of strings were precisely attached.

The “donation” was defined as 10,000 newer Mitel phones to replace about 7,000 older Mitel phones plus another 3,000 phones bought from other companies. In exchange, Matthews wanted the city to work with Mitel as the “sole communications partner for current and any new locations over the next several years.”

Needless to say, Bell Canada and Cisco were not pleased at the “gift” offer.

A ruling by an independent “fairness” commissioner hired to act as a referee in the bidding process said that accepting the donation would “failure to meet a reasonable standard of fairness in procurement.”  Upon hearing of the ruling, Matthews immediately withdrew Mitel’s offer.

An official involved in the bid was worried that the offer smacked of “bid fixing,” but said the city would be more than happy to accept such a gift under different circumstances in the future.

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