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

OTTAWA — 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.

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.”

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

Just Posted

Alberta children whose only symptom of COVID-19 is a runny nose or a sore throat will no longer require mandatory isolation, starting Monday.
477 new COVID-19 cases confirmed in Alberta on Thursday

Changes being made to the COVID-19 symptom list for school-age children

Chasetin Morin
Photo from RCMP
Three men accused of assaulting Blackfalds RCMP officer going to trial

RCMP officer shot and wounded one of alleged attackers in December 2019

The Cenovus Energy Inc. logo seen at the company's headquarters in Calgary, Alta., Wednesday, Nov. 15, 2017.THE CANADIAN PRESS/Jeff McIntosh
One-time costs of Husky takeover expected to be about $500 million, says Cenovus CEO

One-time costs of Husky takeover expected to be about $500 million, says Cenovus CEO

This drum circle was one of a multitude of activities held at The Hub on Ross in downtown Red Deer. The facility was permanently closed by the provincial government his week. (Advocate file photo.)
Many Red Deerians react with anger, dismay at closure of The Hub on Ross

Many disabled people can’t afford other recerational options, says guardian

Award-winning Calgary developer Brad Remington stands with Red Deer Mayor Tara Veer at the site of three multi-family condo complexes that are planned for Capstone, west of Carnival Cinemas. (Photo by LANA MICHELIn/Advocate staff).
$36M condo project on its way to Capstone development

Calgary developer plans to create 180 housing units to open in 2022

Alice Kolisnyk, deputy director of the Red Deer Food Bank, says the agency expects an increase in demand as the COVID-19 pandemic continues. Every new subscription to the Red Deer Advocate includes a $50 donation to the food bank. (Photo by BYRON HACKETT/Advocate Staff)
Support the food bank with a subscription to the Red Deer Advocate

The community’s most vulnerable members are always in need of a hand,… Continue reading

Workers at Olymel's Red Deer pork processing plant are among those eligible for a $2-an-hour bonus because of the pandemic.
Red Deer Advocate file photo
Two Olymel workers test positive for COVID-19 in Red Deer

Two workers at Olymel’s pork processing facility in Red Deer have tested… Continue reading

This 2020 electron microscope image made available by the National Institute of Allergy and Infectious Diseases shows a Novel Coronavirus SARS-CoV-2 particle isolated from a patient, in a laboratory in Fort Detrick, Md. Health officials north of Toronto say 46 cases of COVID-19 have now been linked to a large wedding.THE CANADIAN PRESS AP-NIAID/NIH via AP
46 cases of COVID-19 linked to wedding events in Vaughan, Ont., health officials say

46 cases of COVID-19 linked to wedding events in Vaughan, Ont., health officials say

A man walks to the lineup for COVID-19 Assessments at Toronto Western Hospital in Toronto on Tuesday October 27, 2020. THE CANADIAN PRESS/Frank Gunn
Alarm bells ring over COVID-19 and long-term care; Ontario sees slowing virus growth

Alarm bells ring over COVID-19 and long-term care; Ontario sees slowing virus growth

French policemen stand next to Notre Dame church after a knife attack, in Nice, France, Thursday, Oct. 29, 2020. French anti-terrorism prosecutors are investigating a knife attack at a church in the Mediterranean city of Nice that killed two people and injured several others. (AP Photo/Alexis Gilli)
Tunisian carrying Qur’an fatally stabs 3 in French church

Tunisian carrying Qur’an fatally stabs 3 in French church

Director Deepa Mehta is pictured in a Toronto hotel room as she promotes "Beeba Boys" during the 2015 Toronto International Film Festival on Monday, Sept. 14, 2014. Toronto-based director Deepa Mehta's upcoming drama "Funny Boy" is Canada's selection in the 2021 Oscars race for best international feature film. THE CANADIAN PRESS/Chris Young
Deepa Mehta’s ‘Funny Boy’ chosen as Canada’s contender for international film Oscar

Deepa Mehta’s ‘Funny Boy’ chosen as Canada’s contender for international film Oscar

The skeleton of a dog buried in a crouched or sitting position is shown in this undated handout photo. This dog's grave, believed to be 7,000 years old, was one of several dug up by archeologists in Siberia and became part of a genetic study on the history of humans and dogs. Co-author Robert Losey from the University of Alberta in Edmonton says the study provides new insight into how far back the relationship between dogs and humans goes. THE CANADIAN PRESS/HO - University of Alberta, Dr. Robert Losey
‘They came with dogs:’ Genomes show canines, humans share long history

‘They came with dogs:’ Genomes show canines, humans share long history

This microscope image made available by the National Cancer Institute Center for Cancer Research in 2015 shows human colon cancer cells with the nuclei stained red. Sales of medications to treat cancer have nearly tripled in Canada over the past decade, reaching $3.9 billion last year, a report by a federal agency says. THE CANADIAN PRESS/HO, AP, NCI Center for Cancer Research
Cost for cancer-fighting drugs triples in Canada but still no national drug plan

Cost for cancer-fighting drugs triples in Canada but still no national drug plan

Most Read