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Mitel throws fit over Ottawa VoIP contract loss

First the carrot, now the stick: Since the city of Ottawa wouldn’t accept a “donation” of IP phones from Mitel in exchange for getting exclusive rights, Mitel is now claiming that it didn’t know the city’s computer network had been upgraded to carry VoIP calls; ergo, Cisco knew and had a competitive advantage.

In a late Friday letter, Mitel Networks chief exec Don Smith claims that they didn’t know that Ottawa had upgraded its data network for VoIP calls until oh, Wednesday of last week.  Piling on in the PR battle, Mitel chairman Terry Matthews is appearing on Tuesday before the city’s economic development committee and is expected (i.e. someone is talking off-the-record) to tell the committee that the city hasn’t been true to its own procurement process.

Needless to say, Matthews wants the city to cancel the current worth-up-to-$7 million (CN) bid awarded to Bell Canada and Cisco and launch a do-over.

Both sides are lining up lawyers to duke it out.  Bell Canada’s lawyers are demanding Ottawa finalize a contract for the new phone system while Mitel’s bottom-feeders have warned city officials that it faces “substantially less likelihood” liability if they cancel the current deal than stick with it.

According to an internal report by the city, investments made to upgrade its computer network didn’t offer any advantage to any of the bidders involved in the process; the city simply made basic “vendor agnostic” infrastructure improvements to support VoIP.

In May, Mitel first offered $2 million (CN) in free phone hardware to Ottawa as a “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.  Of course, Bell and Cisco weren’t pleased at the offer and a city official said the the offer smacked of “bid fixing” given that the phone contract had already been awarded to someone else.  Mitel withdrew the offer.

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