For several tense minutes last week 11 prominent Manitobans, including Premier Howard Pawley, sat in an office in the Langevin Block on Parliament Hill waiting for Prime Minister Brian Mulroney. Every member of the delegation knew there would be tough talk when Mulroney appeared. They were incensed at Ottawa’s decision to award a billion-dollar jet-fighter maintenance contract to Canadair Ltd. of Montreal, rather than to Winnipeg’s Bristol Aerospace Ltd., which had submitted a less costly bid. But no one was prepared for the extraordinary confrontation that ensued.
Just after 3:40 p.m., Mulroney swept into the room accompanied by Deputy Prime Minister Don Mazankowski and Health Minister Jake Epp, a Manitoban. He took the offensive immediately. According to one participant, “Mulroney sat down and unloaded both barrels straight across the table at Pawley.
Mulroney was angry, he was hostile and he was bitter.
He was speaking really low. You had to lean into his face to hear him.” Pawley “reeled visibly” under the assault.
But then it was Mulroney’s turn to be shaken. Several members of the Manitoba delegation—which included John Dooie, president of the Winnipeg Chamber of Commerce, and Donald Henderson, president of the Manitoba Chamber of Commerce—reminded Mulroney of the West’s century-old complaint that Ottawa favors the indus-
tries of Central Canada at the expense
of the regions. And they noted that before his election, he had promised “a new deal” under a Conservative government.
Then Mulroney’s Western lieutenants entered the fray. At one point, Epp told Manitoba Industry Minister Victor Schroeder to “pay attention because the Prime Minister is distinguishing between what he said publicly and what he said privately”—and before the session ended, said one observer, “you had Epp attacking Schroeder, Mulroney attacking Pawley and Mazankowski going after the president of the Manitoba Chamber of Commerce. It was a hostile group.”
But Monday’s confrontation was only the beginning of a week-long storm over the
over awarding of the CF18 contract —and Ottawa’s alleged favoritism toward industries in Central Canada. Business leaders complained that Ottawa’s decision to choose Canadair—despite a government committee’s appraisal ^ that found the Bristol bid superior— 9 undermined confi1 dence in the govern| ment. Declared z Bristol president ä Anthony Bowden: “The competitive ' bidding system
the only thing we can hang our hat on. If we don’t have that, we don’t have anything.”
Above all, the controversy was another reminder of how regional jealousies can divide the country and pose major problems for the government. In Quebec, those people affected by the decision expressed jubilation. But in
Atlantic Canada and Manitoba there was angry discontent. In Halifax, Moses Coady, manager of government affairs for the IMP Group Ltd., which also bid unsuccessfully on the contract, complained that “the decision was not based on merit but on the government’s desire to enhance its position in Quebec. We just can’t compete politically with Central Canada.”
In Winnipeg, Frank Lawson, owner of Mother Truckers Electronics and a former president of the Manitoba Young Progressive Conservatives, said that he was “so God damned mad” that in front of his busy Portage Avenue store he erected a sign that read, “Mullooney, Take Your Politics, Take Your Contract, Take Your B.S. & Shove It.”
There were also protests from Western Tories who had supported the party faithfully since the days of John Diefenbaker. Keith Cosens, executive director of Manitoba’s Conservative party, for one, declared: “It doesn’t matter who’s in power in Ottawa—out here in the West, we’re nothing. It is that type of disillusionment you are hearing.” Some Manitoba Conservatives were so upset that they momentarily considered distancing the provincial party from its federal parent by creating separate memberships. And a weekend meeting of the Manitoba party was expected to pass a resolution condemning Ottawa for “abandoning the tender process.”
The Manitoba protesters gained ammunition after The Canadian Pressciting data obtained from freedom of information requests—reported that the department of regional industrial expansion had channelled $421 million to Quebec between September, 1984, and March of this year. That figure compared with $257 million for Ontario and $10 million for Newfoundland.
In Ottawa, however, the opposition parties failed to take up Manitoba’s case. Although New Democratic Party Leader Ed Broadbent asked Auditor General Kenneth Dye to launch a special investigation into how the contract was awarded—
Dye declined —neither the NDP nor the Liberals were willing to risk alienating vote-rich Quebec. Pawley’s fellow Western premiers were similarly reluctant to join Manitoba’s crusade. Saskatchewan’s Grant Devine, re-elected last month after Ottawa promised $1 billion in assistance to grain farmers, said that Mulroney’s government had already done enough for the West. And Premier Don Getty of Alberta, where the Canadair award will generate 13 subcontracted jobs, called the CF-18 decision “reasonable.” In fact, the only Western premier who responded favorably to Pawley’s Telexed requests for political support was British Columbia’s William Vander Zalm—a point that prompted Manitoba officials to question the value of the annual Western premiers’ conference.
Rebuffed by his neighbors, Pawley received some unexpected support from Newfoundland Premier Brian Peckford, who voiced his own frustrations with Ottawa. Peckford accused Petro-Canada, the federally owned oil company, of almost scuttling the sale of the mothballed Come-byChance oil refinery in order to protect Central Canadian interests. Built mostly with government money under the 3 sponsorship of for| mer Newfoundland 5 premier Joseph Smallwood, the plant never became profitable. When it closed in 1976 after just three years of operation, it was $700 million in debt.
But negotiations were proceeding smoothly to sell the refinery. For the $1 sale price, Newfoundland Energy Corp., a Bermuda-based company, agreed to supply the facility with crude oil from offshore and sell most of its production in the northeastern United States. Suddenly, said Peckford, Petro-Canada put “a whole bunch of new conditions” on the table. “They were the kind of conditions we’re used to in Newfoundland and Manitoba and other have-not provinces — conditions which would protect Central Canada.” With the deal rapidly slipping away, Peckford flew to Montreal for an emergency meeting with Energy Minister Marcel Masse, urging him to press Petro-Canada to ease its demands. Within days the deal was closed.
But there was an important qualification. Petro-Canada insisted that the new owner agree not to sell oil from the refinery in Canada outside Newfoundland. Newfoundland Energy Minister William Marshall told Maclean’s
last week that such a restriction on the refinery’s access to the Canadian market is a violation of federal laws that promote competition. Said Marshall: “This is not an acceptable premise for us. We are not talking about trade with a foreign country—we’re talking about interprovincial trade.” He suggested that the restriction could be challenged under new federal competition legislation, although Newfoundland has no such plans at present.
Ottawa may also face court action over the CF-18 contract. Both IMP and Bristol warned last week that they might sue the government if it does not reimburse them for the money they spent preparing their bids. Bristol’s Bowden said his company spent close to $5 million, while Coady said IMP spent about $1 million.
Bristol further claimed that Ottawa’s choice of Canadair would cost Canadian taxpayers an extra $30 million. Canadair, Bristol officials said, would be forced to purchase much of the technology for servicing the CF-18 from Bristol’s allies in the bidding consortium. The U.S. parents of those companies produce some parts of the CF-18, and would not have charged their subsidiaries for access to that technology.
But Canadair’s partners in its bid also possess extensive knowledge of the CF-18. Most notably, CAE Electronics Ltd. of Montreal has built three sophisticated CF-18 flight simulators for use in training Canadian air force pilots. In fact, the same government committee that rejected IMP’S bid concluded that the Bristol and Canadair groups possessed roughly equivalent knowledge of the jet, and that there would be no saving in technology costs associated with either bid.
But the committee’s painstaking appraisal left no doubt that Bristol’s proposal was technically superior. Such evaluations are often decided by a slim margin; the committee awarded Bristol 926 points out of a possible 1,000, compared to 843 points for Canadair. And Bristol’s $100.5-million bid for the initial 42-month phase of the contract was $3.5 million lower than Canadair’s.
Still, there were other considerations—not all of them political. As the winner, Canadair will acquire a broad range of valuable technical information from the CF-18’s manufacturer, McDonnell Douglas Corp. of St. Louis, Mo. Treasury Board President Robert de Cotret argued that Canadair, as a designer and builder of aircraft, would make better use of that technology than Bristol, which only repairs aircraft. Energy Minister Marcel Masse also defended the choice of Canadair. In an interview in La Presse, Masse said that the contract—worth $1.4 billion over 20 years—would help shore up Montreal’s eroding industrial base and confirm the city’s status as a high-technology centre.
When the decision was announced last month, the military swiftly disguised its preference for Bristol. Said one officer: “We’ll salute smartly and get on with it.” Some Tory MPs, however, were more vocal. “I don’t buy the transfer of technology argument at all,” said Brian White, who represents the Dauphin-Swan River riding in northwestern Manitoba. “It’s a purely political decision that they’re trying to justify on technical grounds.”
Some Manitobans charged that Mulroney does not understand the depth of the province’s concern. “Either this guy has a temper that no one can control or he got some real bad advice,” said one observer of the Prime Minister’s behavior during the Pawley meeting. “Someone led him to believe that the problem in Manitoba was a result of a hysterical, partisan Howard Pawley. That was a real tactical error because John Dooie, president of Winnipeg’s Chamber of Commerce, was every bit as strong as Howard on the question of trust and credibility.”
After his attack on the premier, the Prime Minister explained his responsibility for the national interest. “He went into a shopping list,” one participant recalled. He said that the Prime Minister added that “ ‘you got this, Quebec got this, you got this, Quebec got this, therefore everything is okay.’ It was apparent that he did not understand what people were really pissed off about. To tell Manitobans about the money that went into the Alberta oil industry and into bailing out Alberta banks—those aren’t big home runs in Manitoba.” Said Manitoba MP Lee Clark, a historian from Brandon University: “They underestimated Bristol’s importance as a symbol of progress. There’s a fear that we are still seen as hewers of wood and drawers of water. It’s important that Bristol get a reasonable contract soon.”
Indeed, Epp returned to Ottawa from Winnipeg last week with a list of upcoming contracts that Bristol and its partners may want to bid on. They include an $800-million air defence system for Canadian troops in Europe, a northern warning radar system and a $2-billion fleet of naval helicopters. But Clark contends that there is more at stake than government contracts. Said the MP: “A lot of people who don’t know the history of the West don’t appreciate how politically volatile it is. What we do in the next 12 months will be crucial.”
-MARC CLARK with PAUL GESSELL in Ottawa, DOUG SMITH in Winnipeg and CATHY WHITE in St. John’s
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