Government orders LCBO to replace $10M paper bag contract signed with Quebec company | Globalnews.ca

Weeks after the LCBO announced a $10 million contract with a Quebec company to bring paper bags back, the Ford government is directing the Crown agency to immediately look for an Ontario supplier instead.

In a letter on Tuesday, Premier Doug Ford told the LCBO its choice of a Quebec company went “against our government’s direction” to find an Ontario producer to handle the service.

The premier has now directed the LCBO to start searching for a new paper bag supplier “as soon as possible” to make sure Ontario-made bags are available “at the soonest opportunity.”

“While our immediate priority is to promptly get paper bags back into stores using the selected vendor, I am directing the LCBO to also initiate a new tender process as soon as possible that will be limited to Ontario suppliers,” the letter, seen by Global News, said.

However, internal government documents obtained by Global News show while the idea of Ontario-made paper bags was tossed around in the premier’s office in April — and lauded by one staffer as “important” for the provincial paper industry — the direction was never communicated to the LCBO.

The timing of the new directive is also raising questions.

On Tuesday morning, Ontario’s finance minister insisted it was not the place of the government to get involved in details of which company should supply the LCBO’s paper bags.

Hours later, Global News was informed the premier sent a letter to the Crown agency with specific requirements for the kind of company that should make the brown paper bags used to carry home wine, spirits and beer across the province.

On April 7, Ford wrote to the LCBO and ordered the agency to “take immediate steps” to bring paper bags back to stores across the province.

The bags had been removed in September 2023 as part of an environmental push by the LCBO it said would dramatically reduce its carbon footprint but Ford said the impact on accessibility and affordability was unacceptable.

“As a government, we are focused on making life easier, more convenient, and more affordable for the people of Ontario,” Ford wrote in April. “The decision to remove paper bags has had the opposite effect.”

Communications written in the drafting of that letter, obtained by Global News using freedom of information laws, show staff in the premier’s office and other government departments weighed the idea of telling the LCBO to select an Ontario company to supply paper bags.

“I also spoke to (the Ministry of Finance) about seeing whether we can direct the LCBO to use Ontario-made paper bags,” a director in the premier’s office wrote in April. “Great minds!”

In a separate message, a staffer for the Ministry of Natural Resources and Forestry made the same suggestion and said it could boost the forestry industry.

“This is an important shift that would help the forestry sector in Ontario,” they wrote.

Despite apparent enthusiasm for an Ontario-made solution to the return of paper bags behind the scenes, the idea never made its way into Ford’s final public communication.

Aside from a letter in July from the finance minister, which asked the LCBO to use “local pulp and paper sources when appropriate” in its new paper bag plan, the government was silent on the issue over the summer.

Then, in October, the LCBO confirmed it had inked a $10 million deal with Rosenbloom Groupe Inc., a Quebec-based company, to provide paper bags.

“To ensure a fair and transparent process when selecting a paper bag vendor, LCBO published a public Request for Quote and over the last several months, was carefully assessing applications and working to complete the procurement process,” the agency previously said.

The decision to award the contract to a non-Ontario company came in for some criticism.

Ontario NDP Leader Marit Stiles told Global News on Tuesday the province should be using its purchasing power to support local businesses.

“Our procurement should always be focused on how we’re going to actually drive Ontario’s economy and create jobs here,” she said.

The finance minister, on Tuesday morning, was clear he didn’t believe his office should be involved in the details of procurement policy undertaken by a Crown agency like the LCBO.

“I support Ontario completely, and obviously Ontario-made,” Peter Bethlenfalvy said, emphasizing separate decisions to increase the amount of Ontario-made local products at the LCBO and to tell Crown agencies to spend advertising funds with Ontario-based organizations.

“They’re an arms-length agency, they have to operate their business. I let the management and the board do what they think is in the best interests of the agency.”

Asked if it was still an arms-length decision after the premier wrote a letter telling the agency to bring back paper bags in April, Bethlenfalvy said: “In terms of the contracts, that’s not something that my ministry is actively involved in — that’s part of an independent agency.”

On Tuesday, however, the premier’s office stepped in and Ford wrote a letter to the LCBO ordering them to change direction and redo their procurement with a focus on Ontario companies.

“I trust the LCBO will act quickly on this directive and begin working with Ontario producers to get this done,” Ford wrote.

“Please keep the government informed of your progress as this transition takes place and ensure that all procurement processes going forward are fully aligned with our government’s direction to prioritize local businesses and workers.”

A source said the government had not known a Quebec supplier would be chosen for the paper bag contract until after the decision was announced.

The government was apparently disappointed by the decision not to award the bag contract to an Ontario company and felt it went against directions given over the summer to focus on local products.

“Unfortunately, the LCBO’s recent decision to source paper bags from a company outside Ontario goes against our government’s direction, as outlined in a letter that the Minister of Finance sent to the LCBO on July 9,” Ford wrote in his recent letter.

“Ontario’s forestry sector is fully capable of meeting the demand for paper bags and ensuring that these products are made in Ontario by Ontario workers.”

Public bidding documents show the LCBO began looking for a bag supplier on April 22, months before the July 9 letter highlighting local priorities.

The government source said they wanted the LCBO to get out of the contract as quickly as possible, with an expectation that paper bags would be made in Ontario in the short, and not the medium, term.

The cost of potentially cancelling the contract or how the agency could get out of it early is unclear. The premier’s office said it did not have an estimate but expected the LCBO to keep the number low.

The LCBO said the Quebec contract would remain in place for now to ensure bags are still available in the coming weeks but did not offer specifics on the cost or timeline of potential cancellation.

“LCBO recognizes direction received from the provincial government to initiate a new tender process that will be limited to Ontario suppliers at the soonest available opportunity,” a spokesperson told Global News.

“In the meantime, the LCBO had completed an open procurement to reintroduce single-use paper bags at our retail locations. A contract with Rosenbloom Inc. remains in place and paper bags will be available for consumers in the coming weeks.”