Military trucks mess could cost taxpayers millions
TAXPAYERS COULD BE SADDLED WITH PENALTIES AS HIGH AS $60M IN BUNGLED TRUCK CONTRACT CASE
Taxpayers are on the hook for potentially tens of millions of dollars after federal bureaucrats bungled the purchase of trucks for the Canadian Forces and now must make good on the lost profits for a U.S. firm.
But Public Services and Procurement Canada, which oversaw the flawed defence procurement, has declined to provide details on just how much the penalties will cost the public.
Defence industry representatives, however, say the penalty being paid to the U.S. company, Oshkosh, could be as high as $60 million as it has to account for lost profit on the $834-million contract as well as other expenses the firm incurred.
The case dates back to 2016 when the Canadian International Trade Tribunal (CITT) ruled that the process, which awarded the truck contact to Mack Defense of the U.S., was flawed. The CITT supported the concerns of Mack’s rival, Oshkosh, that there were significant issues with the evaluation of the vehicles. As a result, the tribunal called on Public Services and Procurement Canada to conduct a new evaluation of the trucks being purchased for the Canadian Forces.
But instead, the department continued with the process to buy the Mack trucks and went to federal court in 2017 to challenge the tribunal’s ruling. It recently abandoned that appeal.
It was revealed by the tribunal that Public Services and Procurement Canada had failed to keep many key records to support its claim that the Mack trucks met the requirements for the Canadian military.
“The CITT recommended that Oshkosh be compensated for its lost opportunity to profit,” the department noted in a response to Postmedia about the settlement it reached with the firm.
The department, however, declined to provide details, claiming that the payout is confidential. It did not explain why the penalties that taxpayers must shoulder should be considered secret.
“This matter is now closed,” according to the department’s statement.
The Conservative government announced in 2015 that Mack Defense had won the $834-million contract to provide the 1,500 standard military pattern trucks as well as in-service support for the vehicles.
“Truck deliveries are ongoing and expected to be completed during spring 2020,” Public Services and Procurement Canada noted. It stated that the Mack trucks meet the required standards.
Oshkosh said in a statement to Postmedia that it was pleased with the financial settlement that resulted from its challenge heard by the trade tribunal. “Oshkosh cannot comment further on the details of this confidential settlement,” noted Alexandra Hittle of Oshkosh Defense.
The program to purchase the trucks was originally announced in 2006 by the Conservatives but the acquisition was dogged by problems. The vehicles were supposed to be delivered in 2008 and the project was considered a priority because the vehicles they were to replace had become a safety hazard, with faulty brakes and excessive rust.
But in 2012 the Conservative government temporarily shut down the project after learning that the Department of National Defence increased the cost of the project by $300 million but hadn’t received permission from government to do that. The government had approved an original budget of $430 million but department and military officials began adding more capabilities to what they wanted in the vehicles, bumping up the estimated cost. DND officials continued on with the acquisition without going back to Treasury Board for approval for the extra money, angering the Conservative government.
DELIVERIES ARE ONGOING AND EXPECTED TO BE COMPLETED DURING SPRING 2020.
Delivery of the Mack trucks began last year and have continued to various bases throughout Canada. Earlier this month Defence Minister Harjit Sajjan highlighted the delivery of some of the trucks to a base in Quebec, noting that, “through our defence policy, Strong, Secure, Engaged, we are providing the women and men of our Canadian Armed Forces with the equipment they need to do their jobs.”
Sajjan did not mention that the trucks were ordered under the Conservative government.