By Canadian Press

Trade tribunal investigating allegation of bias in search for third shipyard

Sep 6, 2019 | 11:10 AM

OTTAWA — A trade tribunal has agreed to investigate the federal government’s plan to add a third shipyard to its multibillion-dollar shipbuilding strategy following allegations the process is rigged in favour of a particular Quebec shipyard.

However, it’s unclear how far the Canadian International Trade Tribunal will be able to delve into the case after the federal Liberals recently restricted its ability to review big-ticket government purchases.

Heddle Marine Services, based in Hamilton, Ont., first asked the tribunal to launch an investigation last month, alleging some requirements needed to qualify for consideration as the third shipyard seemed aimed at disqualifying all contenders except Quebec’s Chantier Davie.

The federal government subsequently amended some of the requirements, including one related to the size of vessel eligible shipyards must be able to build, which Heddle had said would disqualify it from contention.

But despite the changes, Heddle told the tribunal it still wants the search for a third shipyard suspended pending the results of an investigation into whether the process was biased toward Davie.

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In a letter to Heddle, the tribunal said it “has decided to conduct an inquiry into the complaint.” However, it rejected Heddle’s request to suspend the shipyard search, saying it expects its investigation to finish before a contract is awarded.

Heddle president Shaun Padulo welcomed the tribunal’s decision, saying in an interview that his shipyard wants a fair chance at winning the right to become the third shipyard, which will be tasked with building six icebreakers for the coast guard.

Heddle has partnered with Dutch firm Damen Shipyards in its application to be the third yard, which was submitted last week.

Asked why he is pressing ahead with his complaint despite the changed requirements, Padulo said he wanted the tribunal to “give us an objective view” on the original criteria.

“At the same time,” he added, “even after the amendments, I’m still concerned about what we perceived as a bias toward Davie.”

The federal procurement department did not respond to requests for comment on Tuesday. It is required to respond to Heddle’s complaint within 25 days of having received it.

In a statement, Davie spokesman Frederik Boisvert said the Quebec shipyard is aware of Heddle’s complaint to the trade tribunal and is evaluating its options.

“Complaints to the Canadian International Trade Tribunal should be made solely based upon factual, relevant information and not simply as a forum to launch unsubstantiated and misleading attacks against other companies in the hope of generating some attention,” he said.

Yet even as the tribunal gears up for an investigation, there is the threat it could be shut down at any time.

That is because the Liberal government in June rewrote the regulations governing the tribunal, whose role is to ensure the government follows proper procurement rules, by making it easier to exempt purchases for national-security reasons.

The change, which came without warning or consultation with industry, followed previous concerns from the tribunal about an excessive use of national-security exemptions and requests the government invoke such exemptions only when necessary.

Yet rather than tighten the use of the exemption, government officials can now cite it without any explanation.

The tribunal in its letter to Heddle couldn’t say if the Liberals properly invoked the exemption in launching the search for a third shipyard, but the government can wait until just before a contract is awarded to make such a designation and scuttle any review.

While he acknowledged the exemption is a “real concern for us,” Padulo said: “It’s not like this is wartime and we need to build warships to defend our coastline.

“I think there’s a very real need for the coast guard, but for them to invoke national security would be just one more example of them using a mechanism to favour a certain shipyard or supplier. And I hope they don’t go that route.”

—Follow @leeberthiaume on Twitter

Lee Berthiaume, The Canadian Press