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Company wins judicial review of submarine deal
Canadian Press article, 17 July 2007
Canadian Press article, 17 July 2007
OTTAWA -- The Federal Court has cleared the way for a judicial review of the Conservative government's decision to steer a $1.5-billion submarine maintenance contract towards a West Coast firm.
Irving-owned Halifax Shipyards challenged the decision earlier this year, but the Crown attempted to shut down the case. It is latest the controversy involving big-ticket military purchases.
"The judge has determined we were directly affected by the Crown's actions in the tender of the Victoria-class submarines and that we do have standing to bring forward an application for judicial review," Mary Keith, a spokeswoman for Irving Shipbuilding, said Tuesday.
"We believe a full judicial hearing is merited and we're very pleased that that ruling has come forward."
In September 2006, the federal government announced it would open to tender the Victoria Class In-Service Support Contract. Last January, it identified Canadian Submarine Management Group - CSMG - of British Columbia as the company "most compliant" with the contract aims and began negotiating a final contract.
But Halifax Shipyards and Fleetway Inc. - part of a rival consortium led by British defence giant BAE (Canada) Systems Inc. - challenged the decision by calling for a judicial review.
The four diesel electric submarines, which Canada purchased from the Royal Navy, were built by Britain by BAE Systems in the late 1980s and early 1990s.
The two Nova Scotia-based subcontractors stood to receive $750 million in subcontract work had their group been the winning bidder.
The federal government sought to have the request for a judicial review thrown out and in court documents filed last spring said: "The applicants have no standing to make this judicial review application. The Attorney General of Canada states that both Irving and Fleetway, as subcontractors, are not 'directly affected by the matter in respect of which relief is sought."'
Government lawyers claimed that "a judicial review can only be made by a party directly affected" by a decision.
In written decision rendered late Friday, a Federal Court judge disagreed with the Crown and dismissed its application to halt the review.
Keith says lawyers for Halifax Shipyard have yet to receive a copy of the judge's ruling and will have to see it before deciding on the next step in the fight.
"We've been concerned in the awarding of this contract that process was flawed and that there was conflict of interest and a failure to ensure a safe process," she said.
There are growing complaints in the defence sector that in fast-tracking recent military purchases, the federal government has unfairly excluded some companies.
Airbus Military recently took the unusual step of appealing directly to the House of Commons defence committee to consider its A-400 transport plane, even though National Defence had said it was only interested in negotiating with Lockheed-Martin for the purchase of the C-130J medium-lift aircraft.
There have also been charges of bias in the program to buy new fixed-wing search and rescue aircraft.
In launching its initial court challenge, Irving named CSMG and claimed one the firm's parent companies, Weir Canada Inc., developed the bid evaluation criteria.
This gave their rival "an advantage over other potential bidders," said court documents.
The application for review went on to say elements of the bid that would have put CSMG at a disadvantage were left out of the government's technical evaluation and instead made part of the negotiation process once a bidder had been selected.
The federal government was also accused of a bias and conflict of interest.
In its court records, Irving claimed CSMG's new facility - to be built because of the contract - was going to be constructed on Crown land and subject to a Crown lease.
"Accordingly, the Crown's financial interest in CSMG's construction of new facilities creates a further apprehension of bias."