By Canadian Press

Feds given green light to award warship contract after tribunal reverses course

Dec 11, 2018 | 11:32 AM

OTTAWA — The federal government can award a contract to design the country’s $60-billion fleet of new warships after a trade tribunal reversed an earlier order not to finish the deal.

The Canadian International Trade Tribunal ordered the government last month to postpone awarding the high-stakes design contract until it had a chance to determine whether the deal is kosher.

But the tribunal rescinded the order Monday after the federal procurement department warned against delaying the warship project, which will see 15 new vessels built to replace Canada’s frigates and destroyers.

In a letter to the tribunal, Andre Fillion, head of military and maritime purchases for Public Services and Procurement Canada, said the deal “is urgent” and “a delay in awarding contracts would be contrary to the public interest.”

The decision paves the way for the government to sign a deal with U.S. defence giant Lockheed Martin, whose warship design beat out two others following a long and controversial competition.

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Fellow competitor Alion Science and Technology of Virginia has alleged that Lockheed’s design, which is based on a new British frigate called the Type 26, did not meet the government’s requirements.

The tribunal’s initial order not to award a contract to Lockheed came after Alion asked it and the Federal Court to determine whether the Type 26 should have been eliminated from the design competition.

Alion unsuccessfully tried to convince the tribunal not to rescind its earlier order, noting in its own letter that Fillion offered “no reasons nor any justifications” to support his warnings about a delay.

Public Services and Procurement Canada did not immediately respond to questions.

The 15 new warships will start to be built at Halifax-based Irving Shipbuilding in the next three or four years and replace Canada’s aging Halifax-class frigates and retired Iroquois-class destroyers. They’re to be the navy’s backbone for most of the century.

The federal government and Irving launched negotiations with Lockheed in October after it was tapped as the preferred bidder in the long and extremely sensitive design competition, beating out Alion and Spanish firm Navantia.

But Alion alleges Lockheed’s design did not meet three of the navy’s stated requirements — two related to the ship’s speed and one related to the number of crew berths — and should have been eliminated from contention.

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 helped run the design competition, also worked with BAE in 2016 on an ultimately unsuccessful bid to maintain the Canadian navy’s new Arctic patrol vessels and supply ships.

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 completely 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  several deadline extensions — would spark lawsuits.

— Follow @leeberthiaume on Twitter

Lee Berthiaume, The Canadian Press