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Managing government contractors for sustainable service delivery

Petition

Johanne Gélinas,
Commissioner of the Environment and Sustainable Development
Office of the Auditor General of Canada

Attention: Petitions
240 Sparks Street
Ottawa, Ontario
K1A OG6

March 29, 2005

Dear Commissioner,

On behalf of over 40,000 union members in the apparel, manufacturing, laundry, food service and hospitality sectors, I am writing to file a petition pursuant to s. 22 of the Auditor General Act.

At the heart of this petition are contracts between the Cintas Corporation (Cintas) and the Canada Food Inspection Agency (CFIA), an Agency under the jurisdiction of the Ministry of Agriculture and Agri-Food. At present, Federal inspectors at 66 abattoirs and other food preparation plants in South-Western Ontario receive rented uniforms from Cintas.¹ Since at least September 2000, Cintas has been providing uniform and mat rental service to CFIA. During that time, we believe that Cintas has:

1.  Inflated the cost of the CFIA contract through additional charges that have no connection to goods or services provided to the Agency.

2.  Charged CFIA an "environmental charge"² that implied environmental compliance even while the company was not complying with environmental regulations.

3.  Used detergents in the performance of the CFIA contract that may contain potentially dangerous endocrine-disrupting chemicals.

We ask the following:

1.  The Ministry of Agriculture and Agri-Food initiate a contract review of past and current contracts between the CFIA and Cintas to determine if the "environmental charge", or other potentially deceptive billing resulted in overcharging of the CFIA.

2.  If it is found that Cintas levied additional charges on contracted service or products to CFIA that have no connection to goods, services or environmental compliance we ask that the Ministry of Agriculture and Agri-Food take necessary action to recoup any monies that Cintas may have charged under false or questionable pretenses.

3.  If it is found that Cintas did deceptively bill the CFIA through the "environmental charge", or other deceptive billing practices, what sanctions would be placed on Cintas by the Ministry of Agriculture and Agri-Food to ensure that Canadian taxpayers do not have the potential of being deceived and that they receive the best value for taxpayer money in current or future contracts?

4.  If allegations of Cintas' deceptive billing through the "environmental charge" prove to be true, will the Ministry of Agriculture and Agri-Food sever contract relations with Cintas?

5.  What specific action or investigations will be taken by the Ministry of Public Works and Government Services, Treasury Board, Contracts Canada or other relevant Government agencies to guarantee that Cintas is not applying the potentially deceptive "environmental charge" to other Federal government agency, Crown Corporations or Ministry contracts?

6.  We ask that the Ministry of Agriculture and Agri-Food make certain that CFIA investigates and reports back to UNITE HERE whether the uniforms and/or mats that it rents from Cintas are being washed with detergents that contaminate the environment with potentially dangerous endocrine-disrupting chemicals.

7.  What specific steps has the Ministry of Agriculture and Agri-Food and the CFIA taken to ensure that its uniforms and mats are not washed with detergents that may pose environmental risk as a result of endocrine-disrupting chemicals?

8.  Will the Hon. Minister of Agriculture and Agri-Food agree to a meeting with representatives from UNITE HERE in order to discuss the issues contained in this petition in further detail?

Below you will find supporting information and documentation regarding the claims outlined above.

1.  Inflated costs through additional charges:

Cintas has a history of deceiving both public and private customers by levying additional charges on its bills. One of the most misleading charges Cintas has imposed is the "environmental charge," which the company represents as necessary to comply with environmental laws and regulations.

Customers in the United States filed lawsuits alleging that Cintas intentionally deceived them about the "environmental charge" and its relationship to the costs of environmental compliance. On the one hand, Cintas told its investors that, "costs related to environmental compliance are not a material component of the cost of rental."³ Furthermore, the company spent, between 1999 and 2002, an average of $6.65 million a year on environmental compliance costs.⁴ On the other hand, records from Research Solvents v. Cintas indicate that over the same period the company collected approximately $60 million a year through the "environmental charge"(see Appendix A*).

In 2002, Cintas settled a class-action lawsuit alleging that the company intentionally misled customers about the "environmental charge." To settle the case, Research Solvents v. Cintas, Cintas paid approximately $14 million and agreed to stop imposing the "environmental charge" (see Appendix B*).

Records from the CFIA indicate that the Agency has paid this dubious "environmental charge". Moreover, because Canadian customers were not party to the Research Solvents case, and many Canadian customers, including several public institutions, continued to pay the "environmental charge," we believe Cintas continued to levy the charge on CFIA after the settlement (see Appendix C*).

In February 2005, the United States government filed a lawsuit charging that Cintas was blocking an investigation into charges that the company defrauded the United States Postal Service, the General Services Administration, the Department of Defense, and other U.S. Federal Agencies. The U.S. government is currently investigating whether Cintas "violated the False Claims Act, 31 U.S.C. [secs.] 3729 et seq., by adding a randomly calculated `additional charge' or `environmental charge' to the invoices sent to federal agencies of the United States."⁵ (See Appendices D* and E*). These same types of charges appear on Cintas' invoices to CFIA.⁶ Other public entities in Ontario, including the City of London, have been billed "environmental charges." In a 2003 contract review, the City of London discovered Cintas charged the city "...an Environmental Charge and/or Service Charge that was not specified in the original contract."⁷ The City also determined that from February 21, 2002 to May 30, 2003, Cintas had overcharged the City $7,192.95 for mats, mops, coveralls and linen, according to an invoice summary (see Appendix F* for London documents).⁸

We urge the Ministry of Agriculture and Agri-Food to initiate a review of the CFIA's contract with Cintas. If the company has over-billed or added charges, the CFIA and the Ministry of Agriculture and Agri-Food should terminate its contracts with Cintas. Furthermore, we implore the Canadian Government and/or its agencies to make every effort to recoup any monies charged under false or questionable pretences.

2.  Paying "environmental charge" despite environmental non-compliance

Though CFIA and other Cintas customers continue to pay "environmental charges," Cintas has failed to comply with minimal environmental regulations and may be putting our natural resources and the public at risk. For example, customers in Ontario paid "environmental charges" purportedly related to environmental compliance. However, from January 2001 to April 2003 Cintas violated Municipal wastewater discharge parameters almost 100 times by exceeding:

• The parameters for Biochemical Oxygen Demand (BOD) 34 times
• Total Suspended Solids (TSS) 25 times
• Violating the parameters for pH levels 24 times
• Breaching parameters for animal/vegetable solvents and mineral/synthetic solvents 6 times each⁹

We urge the Ministry of Agriculture and Agri-Food as well as other Federal Ministries and agencies to monitor and examine Cintas wastewater compliance records and ensure that the company is not falsely charging any other public agencies or Crown Corporations for costs related to environmental compliance.

3.  Use of detergents in fulfilling the CFIA contract that may potentially contain dangerous endocrine disrupters.

Industrial laundries, like the ones Cintas operates, are one of the major releasers of chemicals called alkylphenol ethoxylates (APEs) into wastewater. APEs are contained in laundry detergents and break down in sewage treatment plants into a chemical, nonylphenol, that acts like the sex hormone estrogen. Nonylphenol can shrink fish testicles, and inhibit the development of fish ovaries. In 2003, the European Union banned industrial laundries from using APEs in detergents, but the use of these substances remains legal in Canada. A 2002 study, Occurrence of Endocrine-Disrupting Chemicals in Wastewater and Sludge Samples in Toronto, Canada (Appendix H*), found industrial laundries are the biggest source for emitting hormone-disrupting chemicals in the Toronto municipal sewage system. The study also found Cadet Cleaners Ltd., a laundry owned and operated by Cintas, released such chemicals into industrial wastewater. It is unclear to us what dangers these compounds may pose to our members who work in industrial laundries.

We are concerned that Cintas, the CFIA's uniform provider, may be putting Canadian waterways at risk. APEs could pose a risk to the marine life found in our waterways and may pose a risk to the health and well-being of our citizens. We ask that the Ministry of Agriculture and Agri-Food mandate CFIA to determine whether or not its uniforms and mats are being cleaned using APEs. Moreover, if they are, we ask that that CFIA search for ways to reduce its environmental impact by ensuring that its contractor cleans its uniforms and mats with compounds that do not contain APEs.

UNITE HERE respectfully requests that this petition be submitted to the Office of the Auditor General, the Honourable Andy Mitchell (Parry Sound-Muskoka), Minister of Agriculture and Agri-Food and the Honourable Scott Brison (Kings-Hants), Minister of Public Works and Government Services Canada.

We look forward to receiving a response from your office.

Sincerely,

[Original signed by Alexandra Dagg]

Alexandra Dagg
Canadian Director, UNITE HERE
460 Richmond Street West, 2nd Floor
Toronto, Ontario
M5V 1Y1
T: 416.510.0887
F: 416.510.0891

*[attachments not posted]

¹CFIA Request for Proposal #V0536. November 7, 2003.

² The "environmental charge" has appeared on North American customer invoices under various names, including delivery\energy\environmental charge (as appears on CFIA invoices) or environ/delivery chg., environmental charge (as appears in Research Solvents v. Cintas) and Additional Charge, Environmental/Delivery Charge, Service Charge, Environmental Charge, Environmental/Energy/Delivery Charge, Stop Charge and Waste Water Charge (as appears in United States Postal Service Office of Inspector General Subpoena Duces Tecum).

³Cintas Corp. Annual Reports and 10-K documents-1999 to 2004.

⁴Cintas Corp. Annual Reports and 10-K documents-1999 to 2002 (averaged).

⁵United States of America v. Cintas Corporation; United States District Court, Ohio: C.A. No. 1:05CV082: Issuance and Service of the Subpoena.

⁶Many invoices had dollar totals for various line items cut off. The delivery\energy\environmental line item was present for all 14 invoices.

⁷City of London internal e-mail from Davis, Michael to Francis, Gwen; Smith Karen E. Sent Wednesday, June 18, 2003. Subject: Cintas Billing. Obtained through Freedom of Information.

⁸Obtained through Freedom of Information.

⁹A summary of Peel, Windsor and York Region compiled from Freedom of Information requests that are available upon request. A 2002 York Region document and summary is attached as Appendix G*.

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Minister's Response: Agriculture and Agri-Food Canada

August 12, 2005

Ms. Alexandra Dagg
Canadian Director
UNITE HERE
460 Richmond Street West
2^nd Floor
Toronto, Ontario
M5V 1Y1

Dear Ms. Dagg:

I am writing in response to the environmental petition (petition no. 139) that you submitted under Section 22 of the Auditor General Act concerning the Canadian Food Inspection Agency (CFIA).

As per the Auditor General Act, the CFIA is not subject to the Commissioner of the Environment and Sustainable Development petition process. I am, however, providing you with a response to the concerns you have expressed.

With respect to your questions regarding contracts between Cintas Corporation and the CFIA, I am pleased to inform you that the CFIA has undertaken a review of its current and expired contracts with Cintas Corporation. As a result of this review, the CFIA is satisfied that the rates being paid to Cintas Corporation are fair and reasonable and only charges in conformance with the contracts have been paid.

Furthermore, Cintas Corporation has informed the CFIA that, in the execution of contract number 3000289394/V0536 with the Agency for the provision of uniforms to inspectors in southwestern Ontario, it does not use detergents containing alkyphenol ethoxylates. In addition, it should be noted that a clause appears in all CFIA request for proposal documents and contracts requiring suppliers to comply with all laws concerning environmental protection.

I trust that this information is of assistance and I appreciate your interest in this matter.

Sincerely,

[Original signed by Andy Mitchell, Minister of Agriculture and Agri-Food]

Andy Mitchell

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Minister's Response: Environment Canada

August 15, 2005

Ms. Alexandra Dagg
Canadian Director
UNITE HERE Canada
460 Richmond Street West, 2^nd Floor
Toronto, Ontario
M5V 1Y1

Dear Ms. Dagg:

I am writing to provide Environment Canada's response to your petition No. 139 to the Commissioner of the Environment and Sustainable Development, concerning contracts between the Cintas Corporation and the Canadian Food Inspection Agency. Your petition was received in the Department on April 13. I also received a letter of endorsement for your petition from Mr. Robert Bouvier, President of Teamsters Canada.

The environmental infractions are related to the sewer use by law for the City of London. This is not an area under federal jurisdiction but rather a municipal matter. The issue of environmental fees rests between Cintas and the Canadian Food Inspection Agency.

With respect to nonylphenol and its ethoxylates (NP/NPEs), the main class of alkylphenol ethoxylates (APEs) used in laundry detergents, Environment Canada did not prohibit their use when we developed management options for these substances. An assessment was conducted under the Canadian Environmental Protection Act, 1999. Based on this assessment, the substances were declared toxic and were added to Schedule 1 of CEPA 1999. The NP/NPEs assessment did not conclude that these substances are persistent and bioaccumulative. This means the substances are considered for life cycle management as opposed to virtual elimination. Life cycle management options include pollution prevention, pollution control, and remediation.

NP/NPEs are being addressed through two pollution prevention planning notices under CEPA 1999 that were published on December 4, 2004, in the Canada Gazette, Part I. The Notices requiring the preparation and implementation of pollution prevention plans pertain to:

1. NP/NPEs contained in products from certain manufacturers and importers of soap and cleaning products, of processing aids used in wet textile processing, or of pulp and paper processing aids.
2. NP/NPEs used in the wet processing textile industry and effluents from textile mills that use wet processing.

The risk management objectives of these Notices are:

1. For NP/NPEs contained in products: reduce the total use of NP/NPEs in products manufactured in or imported into Canada by 50 percent from 1998 levels by 2007, and by 95 percent from 1998 levels by 2010.
2. For NP/NPEs used in the wet processing textile industry: reduce their use by at least 97 percent on a mass basis relative to a base year (no earlier than 1998).

Based on our information, Cintas would not be required to plan pollution prevention under these notices unless it directly imports products containing NP/NPEs above the threshold quantity established. However, the use of NP/NPEs in soap and cleaning products used by Cintas is expected to decrease as importers and manufacturers of these products comply with the requirements of the notice.

Yours sincerely,

[Original signed by Stéphane Dion, Minister of the Environment]

Stéphane Dion

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Minister's Response: Public Works and Government Services Canada

July 28 2005

Alexandra Dagg
460 Richmond St. W, 2nd Floor
Toronto, Ontario
M5V 1Y1

Dear Ms. Dagg,

Further to a letter of April 22, 2005 , I am writing to provide additional information in response to your letter March 29, 2005 to the Commissioner of the Environment and Sustainable Development, concerning CINTAS Corporation and the ensuing Environmental Petition No. 139. I have noted your petition regarding the CINTAS Corporation was also provided to the Honourable Andrew Mitchell, Minister of Agriculture and Agri-Food Canada, and the Honourable Stéphane Dion, Minister of the Environment.

My department's role was primarily in the awarding of contracts both to our own department and to other government departments. I wish to inform you that a review was carried out and contracts did not and don not contain provision for payment of charges the same as, or similar to, those referred to in the petition. As such, we have formulated a joint response with the Canadian Food Inspection Agency (CFIA), providing input for the development of their responses to the questions you forwarded. I trust that the joint petition response, which will be provided to you by CFIA, will address your concerns.

Please be assured that we are committed to working towards sustainable development strategies.

Yours sincerely,

[Original signed by Scott Brison, Minister of Public Works and Government Services Canada]

Scott Brison

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Minister's Response: Treasury Board of Canada Secretariat

September 29, 2005

Ms. Alexandra Dagg
Canadian Director
UNITE HERE!
460 Richmond Street West, 2nd Floor
Toronto, Ontario
M5V 1Y1

Dear Ms. Dagg:

Further to the letter of June 20, 2005, from Mr. Jamshed Merchant, Acting Assistant Secretary, Economic Sector, I am writing to provide additional information in response to the Environmental Petition No. 139 which you submitted to the Commissioner of the Environment and Sustainable Development.

You inquired in question five as to the actions the Treasury Board (TB) will take to guarantee that Cintas is not applying environmental charges to other federal government agencies, Crown corporations or ministry contracts without complying with environmental regulations. I would note that Treasury Board does not provide direct oversight on this type of issue, as performance issues such as environmental compliance are dealt with by the contracting authority.

As stated in Article 4.2 of the TB Contracting Policy, officials who are delegated such authority are to exercise it with prudence and probity so that the responsible minister is acting and is seen to be acting within the letter and the spirit of the Government Contracts Regulations and the TB's contracting directives.

In this case, Public Works and Government Services Canada awarded the contracts to Cintas Corporation on behalf of the Canadian Food Inspection Agency (CFIA); a review indicated that the contracts did not contain provisions for payment of charges the same as, or similar to, those referred to in the petition. The CFIA has also informed us that it is satisfied that only charges in conformance with the contracts have been paid.

I would like to thank you for bringing this issue to my attention. Treasury Board Secretariat officials will continue to provide support to departments on management issues, including compliance with Contracting Policies.

Sincerely,

[Original signed by Reg Alcock, President of the Treasury Board and Minister responsible for the Canadian Wheat Board]

Reg Alcock