Federal government faces new challenge over $67 million contract to Irving firm

The Liberal government is facing a new challenge over a decision to award an Irving company the contract to provide emergency ship towing services on the West Coast as part of its plan to protect the country’s oceans.

The Canadian International Trade Tribunal has started a second inquiry into the government’s procurement process that awarded the $67-million contract to the Irving company Atlantic Towing. A rival bidder has questioned the ability of those ships to do the job.

But Public Services and Procurement Canada says it remains confident its process was rigourous and fair. “The contract with Atlantic Towing Limited remains in place,” confirmed Marc-André Charbonneau, a department spokesman.

At the heart of issue is the government’s decision in the summer of 2018 to award a three-year contract to Atlantic Towing for the lease of two emergency offshore towing vessels that would operate in the waters off the coast of British Columbia. The vessels were to be capable of towing large commercial ships in distress, such as tankers and container ships, before they got too close to shore.

Procurement Minister Carla Qualtrough touted the contract as a key element of the Liberals’ Oceans Protection Plan, noting that it would provide equipment needed to prevent marine pollution incidents.

But that original award sparked a complaint to the CITT from rival bidder Heiltsuk Horizon, which alleged the contract was awarded without the required proof that Atlantic Towing’s vessels met the mandated power requirements to tow ships in distress.

During the first CITT inquiry, Procurement Canada initially refused to release the handwritten notes of the official who evaluated the bids, prompting the trade watchdog to admonish the department and remind it that its co-operation was needed to reassure public confidence in the government’s procurement system.

In January 2019, the CITT concluded that, “trade agreements were breached when (Procurement Canada) unreasonably concluded that (Atlantic Towing’s) bid was compliant” with the minimum towing requirements. The government’s evaluation of the Atlantic Towing bid was based on an assumption about the towing capabilities of the company’s ships, the CITT noted. Making such an assumption was “not only a serious breach of trade agreements but a serious deficiency as well,” the trade tribunal concluded.

The CITT recommended Procurement Canada re-evaluate the “bollard pull” (towing power) of the vessels in all bids received. It also awarded Heiltsuk Horizon costs incurred in submitting the complaint.

Charbonneau said as a result the department re-examined the bids and used a new team of evaluators. The original decision to award Atlantic Towing the contract was supported, he said.

In June Heiltsuk Horizon, a partnership of majority partner Heiltsuk Nation of Bella Bella, B.C., and Horizon Maritime Services Limited, a Canadian marine services company, filed a new complaint with the CITT.

A oil tanker is guided by tug boats as it goes under the Lions Gate Bridge at the mouth of Vancouver Harbour on May 5, 2012. Jonathan Hayward / The Canadian Press

The company alleged that Procurement Canada didn’t do the re-evaluation fairly and claimed that Atlantic Towing ships can’t deliver the required towing power. “In their original determination, the Canadian International Trade Tribunal determination clearly identified that the process deviated from the standards of fairness established by Government of Canada’s procurement legislation, and concluded that it was unreasonable for (Procurement Canada) to find that the winning bid complied with critical mandatory requirements in question,” the company said in a June 18 statement. “It is unfathomable that the original winning bid could suddenly be deemed compliant after a forced re-evaluation.”

Charbonneau said Procurement Canada has responded to the CITT on the new complaint but can’t comment.

A decision on the complaint is expected in late September although aspecific date has not yet been determined, the CITT noted.