Suspended Vice-Admiral Mark Norman leaves court following a hearing on access to documents in Ottawa, Friday, Nov. 23, 2018. New court documents show public servants discussing the risk to taxpayers as successive federal governments have turned to sole-source contracts to buy desperately needed equipment for the Canadian Forces and others. (Adrian Wyld/The Canadian Press)

Sole-sourced contracts can be ‘raw deal’, top officials said in navy ship case

Prime Minister Justin Trudeau’s government has chosen to sign several sole-source contracts to bolster the coast guard’s aging icebreaking fleet and the country’s fighter-jet force

New court documents show public servants discussing the risk to taxpayers as successive federal governments have turned to sole-source contracts to buy desperately needed equipment for the Canadian Forces and others.

The documents were filed on behalf of suspended Vice-Admiral Mark Norman, who is charged with breach of trust in connection with one such contract. They land amid frustrations with Canada’s military procurement system — including because of political mismanagement — that have led to the need for quick fixes.

Prime Minister Justin Trudeau’s government has chosen to sign several sole-source contracts to bolster the coast guard’s aging icebreaking fleet and the country’s fighter-jet force, buying time to find permanent replacements.

READ MORE: Out with the old: Trump to kill old NAFTA to push Congress to approve USMCA

Sole-sourcing does make sense in many cases, said defence analyst David Perry of the Canadian Global Affairs Institute, particularly where there is an emergency or it’s clear that only one company can meet the government’s needs.

“But if you’re sole-sourcing to fill a capability gap, that’s the result of mismanaging a procurement to the point where you are out of options and have no alternative,” Perry said. “That’s not really a good reason to be sole-sourcing.”

The Tories under Stephen Harper once intended to buy a fleet of F-35 fighter jets on an untendered contract, but aborted that plan in 2012 once the full price became known.

Then the Trudeau government planned to spend about $6 billion on 18 sole-sourced “interim” Super Hornets from Boeing because it said Canada needed more fighter jets to support its aging CF-18s until replacements could be purchased through a competition.

The Super Hornets deal eventually fell apart because of a trade dispute with Boeing. So the government is buying 25 second-hand Australian fighter jets, also without a competition. Canada isn’t expected to get new fighter jets until at least 2025.

The Liberals also recently bought three second-hand icebreakers from Quebec-based Davie Shipbuilding for the coast guard, whose existing fleet is on average 35 years old — with no immediate plan to replace it on the horizon.

Suspended as the military’s second-in-command in January 2017, Norman was charged in March 2018 with one count of breach of trust for allegedly leaking cabinet secrets to Davie over a different contract. He has denied any wrongdoing and vowed to fight the charge.

The case against Norman centres on a sole-sourced deal negotiated between Davie and the previous Conservative government in 2015, in which the Quebec shipyard proposed converting a civilian cargo ship into a temporary support vessel for the navy.

The $700-million contract with Davie was not finalized before that year’s federal election. Although the newly elected Liberals at first wanted to delay it for a closer review, they signed off on the deal a short time later.

Before Liberal ministers agreed to buy the converted ship, bureaucrats from the Privy Council Office, the government’s top department, wrote a secret briefing note in November 2015 that discussed the problems with not holding a competition.

“The risk inherent with a sole-source contract is that much of the leverage in the contract negotiation resides with the company,” the bureaucrats wrote, even as they noted that the Conservatives had exempted the deal from the usual oversight for such projects.

Despite these concerns, the officials recommended the government approve the deal. Partly because they had assessed that “risk mitigation measures” were in place, but mostly because the navy urgently needed a support ship for faraway operations.

The court documents, none of which have been filed as exhibits or tested in court, include RCMP interviews with civil servants that suggest politicians’ desire for votes in Quebec also played a role in the decisions about the ship. But the navy’s need for the vessel was real.

The navy at the time had just retired its 50-year-old support ships and while replacements are being built in Vancouver through the government’s national shipbuilding plan, numerous delays and problems mean they won’t be ready until the 2020s.

The navy had originally expected to get new support ships in 2012.

The briefing note said a competition could have been held to find another, perhaps cheaper, solution, but ”a competitive process would take longer to deliver a solution — likely 10-14 months for a contract award, and then more time for the service to be ready.”

RCMP interviews with several senior civil servants raise similar concerns about awarding a contract to Davie without a competition while also alluding to the sense of urgency in getting new support ships.

The Defence Department’s head of procurement, Patrick Finn, told the Mounties that other companies were clamouring to compete to supply a temporary support ship in late 2014, and that “the information existed to say that this could be done competitively.”

But Finn noted that Davie had already found a ship that it could convert for the navy, which “at that point had no replenishment ships.”

Melissa Burke, an analyst with the Privy Council Office who attended various cabinet meetings about Davie’s proposal in 2015, told the RCMP that federal procurement officials were unhappy because “they felt the taxpayers were getting a raw deal.”

Lee Berthiaume, The Canadian Press


Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A second wave of COVID-19 is probable, if history tells us anything

B.C.’s top doctor says that what health officials have learned this round will guide response in future

Snow expected to hit West Kootenay passes overnight on Thursday

Up to 15 cm of snow could fall on Highway 3 between Paulson summit to Kootenay Pass by Friday morning

Former Grand Forks fire chief suing city for wrongful dismissal

Dale Heriot was fired in July 2019 after his department was investigated for safety, bullying issues

Regional District of Kootenay Boundary seeks online feedback on transit, housing

Surveys on the RDKB’s website are asking for input to help plan for the future

School District 51 staff iron out plan for return to classrooms

Teachers are looking for a comprehensive health and safety plan to be in place before June 1

LIVE: Procession to honour Snowbirds Capt. Jennifer Casey comes to Halifax

Snowbirds service member died in a crash in Kamloops one week ago

RCMP facing ‘systemic sustainability challenges’ due to provincial policing role

Provinces, territories and municipalities pay anywhere from 70 to 90 per cent of the cost of the RCMP’s services

One man dead after standoff with Chilliwack RCMP

The Independent Investigations Office of B.C. is investigating the RCMP’s role in the death

B.C. employers worry about safety, cash flow, second wave in COVID-19 restart

A survey found 75 per cent of businesses worry about attracting customers

Ex-BC Greens leader Andrew Weaver says province came close to early election

Disagreement centred on the LNG Canada project in northern B.C.

Canada’s NHL teams offer options to season-ticket holders

Canadian teams are offering refunds, but also are pushing a number of incentives to let them keep the money

B.C. premier says lessons to learn from past racism during response to pandemic

B.C. formally apologized in the legislature chamber in 2008 for its role in the Komagata Maru tragedy

Snowbirds to remain at Kamloops Airport indefinitely after fatal crash

small contingent of the Snowbirds team is staying in Kamloops, acting as stewards of the jets

Oak Bay man stumbles upon eagle hunting seal, grabs camera just in time

The eagle did ‘a perfect butterfly stroke to shore’ with its prey, photographer says

Most Read