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Masha Krupp’s world imploded Sept. 27, 2016.
That was the day the Ottawa entrepreneur learned her 25-year-old firm had lost half its revenues in a heartbeat.
Canada Revenue Agency, for whom Masha Krupp Translation Group had been translating documents for more than a decade, had just informed her their relationship was over. Gone were assignments averaging 14 million words a year, and annual billings that topped $4 million. This lucrative business would now be taken over by CLS Lexi-Tech, a rival with Canadian headquarters in Moncton, N.B.
For Krupp, now 62, this was a monumental disaster. Her firm was suddenly leaking hundreds of thousands of dollars per month and the fate of more than 40 of her 80 full- and part-time employees was unknown.
Worse, the opportunities for mounting a recovery in this strange business of translation services appeared remote. Although the federal government shells out $204 million a year on translation and interpretation, about 80 per cent of this work goes through its in-house agency, the Translation Bureau.
This leaves $40 million or so a year for outside firms, along with whatever work the Translation Bureau contracts out. Many of these contracts were already being performed by private firms under long-term contracts.
At first Krupp chastised herself: She should have cut her costs even more on the CRA bid. A few days later, however, she put that thought aside for good.
During a debriefing by CRA officials on Oct. 11, 2016, Krupp was surprised to learn the agency’s evaluators had awarded her firm a perfect score on the financial component of the bid, worth half the total marks. She had got her costs right.
But Krupp was dumbfounded when CRA officials informed her that MK Translation Group had lost points in the area she felt her firm was strongest — relevant experience.
This was the trigger for Krupp’s decision two weeks later to lodge a complaint with the Canadian International Trade Tribunal — the federal body set up to handle procurement disputes. Colleagues warned her about trying to take on the powerful CRA, but she brushed those worries aside.
“I’m the daughter of World War Two refugees,” Krupp said of her Russian parents, “This helped me to keep things in perspective.”
During the next 13 months, Krupp directed her lawyer to battle the CRA — first at the trade tribunal, then at the Federal Court of Appeal. Along the way, she dug deep into her reserves and sought new contracts to save her company from financial ruin. In the end, these tactics proved correct.
That Krupp decided to take a stand was not surprising. The initial CRA contract in question, which runs to October 31, 2018, is worth $8.63 million. But it also contains renewal options to 2023. The estimated total value over seven years is $35 million.
But it was more than the money. CRA business had for years been central to MK Translation Group’s credibility and reputation — and the firm had just been ranked second on technical merit.
Here’s how it happened, according to documents filed with the trade tribunal.
During a three-month evaluation, CRA officials narrowed the field to CLS Lexi-Tech and MK Translation Group. A crucial piece of the technical evaluation involved testimonials from people who had previously used the bidders’ services. Krupp’s bid included recent projects involving Treasury Board, Department of Finance and, of course, CRA — along with references she believed were impressed with her translators’ work.
CRA evaluators later told Krupp during a debriefing that her company had lost a full point for each of the projects, which converted to a net loss of 1.5 points on the final scoring grid. It was enough to push MK Translation Group from winner to loser.
However, the tribunal concluded the process of awarding points during the competition was deeply flawed. Documents filed by the CRA revealed the reference checks had been conducted by different evaluators. Not only that, the documents noted, the evaluators had consulted “someone not named as a reference.” And, not least, grading options presented to the references had been inconsistent.
The tribunal ruled last March that the CRA’s procurement officials had “compromised the evaluation beyond repair.” The Federal Court of Appeal last month dismissed CRA’s application for a judicial review.
The tribunal also concluded it was impossible to determine who would have won the CRA contract had the evaluators consistently applied the terms outlined in the bid.
The odd scoring does not appear to have been part of an effort by evaluators to steer the contract to a particular winner.
“There is no evidence that forethought or bias animated this behaviour,” the tribunal concluded. “Rather, this appears to be a case in which evaluators took impermissible liberty with the task they were given to accomplish.”
The cost of redressing this flawed procurement will be considerable.
The tribunal ruled the contract should be re-tendered and that MK Translation Group should, in the meantime, be compensated for its “lost opportunity to profit”, divided by the number of qualified bidders. Thanks to the delay caused by CRA’s decision to challenge the tribunal’s ruling to the Federal Court of Appeal, that amount will be somewhat higher.
Depending on how negotiations go between the CRA and Krupp’s firm — and assuming the tax agency doesn’t seek leave to appeal to the Supreme Court of Canada — the cost to taxpayers could easily top $500,000.
Even this wouldn’t fully compensate Krupp’s losses to date.
In the immediate aftermath of her loss at CRA, she had to move quickly to plug a massive hole in her company’s cash flow. Krupp borrowed from family and friends, cashed in her registered retirement savings plans and jacked up her mortgage-backed line of credit.
She estimates net costs to date, including legal bills, at more than $1 million. The loss might have been even bigger had it not been for several pieces of good luck. For one thing, her translators still had a backlog of some 500,000 words at CRA to work through, representing more than $100,000 in billings.
And MK Translation Group was about to head into its busiest season on its other government contracts — the January to March quarter, traditionally when federal departments spend the most.
Krupp might have limited her losses had she been more draconian in her response to the sudden loss of revenues. Though more than half her 80 plus employees were dedicated to the CRA contract, she let go just a handful. Several more left on their own accord, clearly worried about the future at the firm.
Krupp re-assigned her CRA staff to contracts involving the Department of Finance, Treasury Board and others. Krupp cut back on the use of overtime and trimmed her use of independent contractors.
Then, something remarkable happened.
MK Translation Group started winning contracts at new departments — many of these after the tribunal ruling last March. It began with a steady stream of small contracts from the Translation Bureau.
Then came the big one last July, awarded by the Courts Administration Service, which serves a handful of legal bodies including the Federal Court of Appeal. The technical requirements suited Krupp’s suddenly under-utilized translators, many of whom had top-secret clearance.
“The mandatory requirements were so strict I thought there couldn’t be that many to qualify,” Krupp says. “I wrote the CAS bid myself.”
The initial $3.6 million contract runs to March 31, 2019 with three one-year extensions. Even sweeter, the incumbent on that contract was CLS Lexi-Tech, according to Public Accounts data. With one deal, Krupp nearly made up for what she lost at CRA. In all, MK Translation Group since last March has won federal contract topping $7 million annually including the CAS deal.
Of course, thanks to delayed billing cycles — two or three months is typical — the cash is only now starting to stream through her company’s books.
With any luck, compensation for her lost profit opportunity at CRA will soon follow.
Which leaves Krupp in not a bad spot. She has finally reduced her dependence on the CRA and developed a much wider base of contracts. Along the way she also learned who her friends and family really are.
查看原文...
That was the day the Ottawa entrepreneur learned her 25-year-old firm had lost half its revenues in a heartbeat.
Canada Revenue Agency, for whom Masha Krupp Translation Group had been translating documents for more than a decade, had just informed her their relationship was over. Gone were assignments averaging 14 million words a year, and annual billings that topped $4 million. This lucrative business would now be taken over by CLS Lexi-Tech, a rival with Canadian headquarters in Moncton, N.B.
For Krupp, now 62, this was a monumental disaster. Her firm was suddenly leaking hundreds of thousands of dollars per month and the fate of more than 40 of her 80 full- and part-time employees was unknown.
Worse, the opportunities for mounting a recovery in this strange business of translation services appeared remote. Although the federal government shells out $204 million a year on translation and interpretation, about 80 per cent of this work goes through its in-house agency, the Translation Bureau.
This leaves $40 million or so a year for outside firms, along with whatever work the Translation Bureau contracts out. Many of these contracts were already being performed by private firms under long-term contracts.
At first Krupp chastised herself: She should have cut her costs even more on the CRA bid. A few days later, however, she put that thought aside for good.
During a debriefing by CRA officials on Oct. 11, 2016, Krupp was surprised to learn the agency’s evaluators had awarded her firm a perfect score on the financial component of the bid, worth half the total marks. She had got her costs right.
But Krupp was dumbfounded when CRA officials informed her that MK Translation Group had lost points in the area she felt her firm was strongest — relevant experience.
This was the trigger for Krupp’s decision two weeks later to lodge a complaint with the Canadian International Trade Tribunal — the federal body set up to handle procurement disputes. Colleagues warned her about trying to take on the powerful CRA, but she brushed those worries aside.
“I’m the daughter of World War Two refugees,” Krupp said of her Russian parents, “This helped me to keep things in perspective.”
During the next 13 months, Krupp directed her lawyer to battle the CRA — first at the trade tribunal, then at the Federal Court of Appeal. Along the way, she dug deep into her reserves and sought new contracts to save her company from financial ruin. In the end, these tactics proved correct.
That Krupp decided to take a stand was not surprising. The initial CRA contract in question, which runs to October 31, 2018, is worth $8.63 million. But it also contains renewal options to 2023. The estimated total value over seven years is $35 million.
But it was more than the money. CRA business had for years been central to MK Translation Group’s credibility and reputation — and the firm had just been ranked second on technical merit.
Here’s how it happened, according to documents filed with the trade tribunal.
During a three-month evaluation, CRA officials narrowed the field to CLS Lexi-Tech and MK Translation Group. A crucial piece of the technical evaluation involved testimonials from people who had previously used the bidders’ services. Krupp’s bid included recent projects involving Treasury Board, Department of Finance and, of course, CRA — along with references she believed were impressed with her translators’ work.
CRA evaluators later told Krupp during a debriefing that her company had lost a full point for each of the projects, which converted to a net loss of 1.5 points on the final scoring grid. It was enough to push MK Translation Group from winner to loser.
However, the tribunal concluded the process of awarding points during the competition was deeply flawed. Documents filed by the CRA revealed the reference checks had been conducted by different evaluators. Not only that, the documents noted, the evaluators had consulted “someone not named as a reference.” And, not least, grading options presented to the references had been inconsistent.
The tribunal ruled last March that the CRA’s procurement officials had “compromised the evaluation beyond repair.” The Federal Court of Appeal last month dismissed CRA’s application for a judicial review.
The tribunal also concluded it was impossible to determine who would have won the CRA contract had the evaluators consistently applied the terms outlined in the bid.
The odd scoring does not appear to have been part of an effort by evaluators to steer the contract to a particular winner.
“There is no evidence that forethought or bias animated this behaviour,” the tribunal concluded. “Rather, this appears to be a case in which evaluators took impermissible liberty with the task they were given to accomplish.”
The cost of redressing this flawed procurement will be considerable.
The tribunal ruled the contract should be re-tendered and that MK Translation Group should, in the meantime, be compensated for its “lost opportunity to profit”, divided by the number of qualified bidders. Thanks to the delay caused by CRA’s decision to challenge the tribunal’s ruling to the Federal Court of Appeal, that amount will be somewhat higher.
Depending on how negotiations go between the CRA and Krupp’s firm — and assuming the tax agency doesn’t seek leave to appeal to the Supreme Court of Canada — the cost to taxpayers could easily top $500,000.
Even this wouldn’t fully compensate Krupp’s losses to date.
In the immediate aftermath of her loss at CRA, she had to move quickly to plug a massive hole in her company’s cash flow. Krupp borrowed from family and friends, cashed in her registered retirement savings plans and jacked up her mortgage-backed line of credit.
She estimates net costs to date, including legal bills, at more than $1 million. The loss might have been even bigger had it not been for several pieces of good luck. For one thing, her translators still had a backlog of some 500,000 words at CRA to work through, representing more than $100,000 in billings.
And MK Translation Group was about to head into its busiest season on its other government contracts — the January to March quarter, traditionally when federal departments spend the most.
Krupp might have limited her losses had she been more draconian in her response to the sudden loss of revenues. Though more than half her 80 plus employees were dedicated to the CRA contract, she let go just a handful. Several more left on their own accord, clearly worried about the future at the firm.
Krupp re-assigned her CRA staff to contracts involving the Department of Finance, Treasury Board and others. Krupp cut back on the use of overtime and trimmed her use of independent contractors.
Then, something remarkable happened.
MK Translation Group started winning contracts at new departments — many of these after the tribunal ruling last March. It began with a steady stream of small contracts from the Translation Bureau.
Then came the big one last July, awarded by the Courts Administration Service, which serves a handful of legal bodies including the Federal Court of Appeal. The technical requirements suited Krupp’s suddenly under-utilized translators, many of whom had top-secret clearance.
“The mandatory requirements were so strict I thought there couldn’t be that many to qualify,” Krupp says. “I wrote the CAS bid myself.”
The initial $3.6 million contract runs to March 31, 2019 with three one-year extensions. Even sweeter, the incumbent on that contract was CLS Lexi-Tech, according to Public Accounts data. With one deal, Krupp nearly made up for what she lost at CRA. In all, MK Translation Group since last March has won federal contract topping $7 million annually including the CAS deal.
Of course, thanks to delayed billing cycles — two or three months is typical — the cash is only now starting to stream through her company’s books.
With any luck, compensation for her lost profit opportunity at CRA will soon follow.
Which leaves Krupp in not a bad spot. She has finally reduced her dependence on the CRA and developed a much wider base of contracts. Along the way she also learned who her friends and family really are.
查看原文...
