Los­ing bid­der mounts le­gal chal­lenge

Calgary Herald - - NP - Lee BerthI­aume

• The $60-bil­lion ef­fort to build new war­ships for Canada’s navy has hit an­other snag, this time in the form of a le­gal chal­lenge by one of three com­pa­nies in the com­pe­ti­tion to de­sign the ves­sels.

The fed­eral gov­ern­ment an­nounced last month that U.S. de­fence gi­ant Lock­heed Mar­tin beat out two ri­vals in the long and ex­tremely sen­si­tive com­pe­ti­tion to de­sign re­place­ments for the navy’s frigates and de­stroy­ers.

Lock­heed’s de­sign was based on a new class of frigates for the Bri­tish navy called the Type 26. The com­pany is ne­go­ti­at­ing a fi­nal con­tract with the gov­ern­ment and Hal­i­fax-based Irv­ing Ship­build­ing, which will build the ships.

But one of the other two bid­ders, Alion Science and Tech­nol­ogy of Vir­ginia, has asked the Fed­eral Court to quash the gov­ern­ment’s de­ci­sion, say­ing Lock­heed’s de­sign did not meet the navy’s stated re­quire­ments and should have been dis­qual­i­fied.

Two of those re­quire­ments re­lated to the ship’s speed, Alion said in court fil­ings, while the third re­lated to the num­ber of crew berths.

The rules of the com­pe­ti­tion re­quired the fed­eral pro­cure­ment de­part­ment and Irv­ing, which helped eval­u­ate the bids, “to re­ject Lock­heed’s bid be­cause of its non-com­pli­ance,” Alion added. In­stead, they se­lected it as the pre­ferred de­sign.

Alion added that its own pro­posed de­sign, which was based on a Dutch frigate, met all of the navy’s re­quire­ments. It also said that it has re­ceived no in­for­ma­tion about why Lock­heed’s bid was se­lected over its own, de­spite re­quests for an­swers.

Lock­heed Mar­tin, Irv­ing and Pub­lic Ser­vices and Pro­cure­ment Canada de­clined to com­ment be­cause the mat­ter is be­fore the courts. The third com­pany in­volved in the de­sign com­pe­ti­tion, Span­ish firm Na­van­tia, has re­mained largely silent on Lock­heed’s suc­cess­ful bid.

The gov­ern­ment is plan­ning to build 15 war­ships start­ing in the next three or four years, which will re­place Canada’s 12 ag­ing Hal­i­fax-class frigates and al­ready-re­tired Iro­quois-class de­stroy­ers. They’re to be the navy’s back­bone for most of the cen­tury.

The bid by Lock­heed, which also builds the F-35 stealth fighter and other mil­i­tary equip­ment, was con­tentious from the mo­ment the de­sign com­pe­ti­tion was launched in Oc­to­ber 2016.

The fed­eral gov­ern­ment had orig­i­nally said it wanted a “ma­ture de­sign” for its new war­ship fleet, which was widely in­ter­preted as mean­ing a ves­sel that has al­ready been built and used by an­other navy.

But the first Type 26 frigates are only now be­ing built by the Bri­tish gov­ern­ment and the de­sign has not yet been tested in full oper­a­tion.

There were also com­plaints from in­dus­try that the deck was stacked in the


Type 26’s favour be­cause of Irv­ing’s con­nec­tions with Bri­tish ship­builder BAE, which orig­i­nally de­signed the Type 26 and part­nered with Lock­heed to of­fer the ship to Canada.

Irv­ing, which worked with the fed­eral gov­ern­ment to pick the top de­sign, also part­nered with BAE in 2016 on an un­suc­cess­ful bid to main­tain the navy’s new Arc­tic pa­trol ves­sels and sup­ply ships.

That 35-year con­tract ended up go­ing to an­other com­pany.

Irv­ing and the fed­eral gov­ern­ment have re­peat­edly re­jected such com­plaints, say­ing they con­ducted nu­mer­ous con­sul­ta­tions with in­dus­try and used a va­ri­ety of fire­walls and safe­guards to en­sure the choice was fair.

But in­dus­try in­sid­ers had long warned that Lock­heed’s se­lec­tion as the top bid­der, com­bined with nu­mer­ous changes to the re­quire­ments and com­pe­ti­tion terms after it was launched — in­clud­ing a num­ber of dead­line ex­ten­sions — would spark law­suits.

Gov­ern­ment of­fi­cials ac­knowl­edged last month the threat of le­gal ac­tion, which has be­come a favourite tac­tic for com­pa­nies that lose de­fence con­tracts, but ex­pressed con­fi­dence that they would be able to de­fend against such an at­tack.


The Irv­ing Ship­build­ing fa­cil­ity in Hal­i­fax. The gov­ern­ment is plan­ning to build 15 war­ships, start­ing in the next few years, which will re­place Canada’s 12 ag­ing Hal­i­fax-class frigates and al­ready-re­tired Iro­quois-class de­stroy­ers.


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