CANADA

Repairs for an image

January 5 1987
CANADA

Repairs for an image

January 5 1987

Repairs for an image

CANADA

Six days before Christmas, Supply and Services Minister Monique Vézina presented a welcome gift to the 5,200 employees of Canadair Ltd.: the first stage of a contract for maintaining CF-18 jet fighters, which will be worth an estimated $1.2 billion over the next 20 years. But during a signing ceremony at Canadair’s Montreal plant, Vézina added, “Never perhaps in the history of our country has the award of a government contract . . . created so much joy on the one hand and so much disappointment on the other.” In reaching its decision, the government ignored the advice of its own review committee, which said that a consortium led by Bristol Aerospace Ltd. of Winnipeg could do a better job for less money. The decision to choose Canadair despite that advice outraged many business and political leaders—particularly in the West. But last week the Winnipeg Free Press reported that Bristol will be awarded a $350-million contract for maintaining CF-5 fighters as a “fence-mending” gesture to compensate it—and Manitoba—for losing the CF-18 job.

However, the controversy appears to have raised concerns among many businessmen over the way in which Ottawa awards contracts. Federal officials acknowledge that since the CF-18 decision they have been approached by bidders seeking reassurances that their tenders will not be undermined by political interference. “They’re looking for assurances that it’s not going to happen to them,” said Col. Barry Code, manager of a project to supply the Canadian Forces with heavy trucks. Even some government officials expressed concern about the CF-5 report—which federal spokesmen would not confirm. Canadair built the CF-5 during the 1960s, and it has maintained them ever since. One official said it would be more practical to give Canadair the contract. But, he added, “common sense doesn’t seem to prevail around here anymore.”

The CF-18 decision has angered some foreign companies as well. Prime Minister Brian Mulroney defended it by saying that the government preferred Canadair because it is Canadianowned; Bristol is owned by a British firm. That led Jack Ripley, chairman of Allied-Signal Canada Inc., a subsidiary of a giant U.S. aerospace conglomerate, to write to Mulroney, saying that such an attitude “could discourage further investment by foreign shareholders of Canadian companies.”

In at least one case, the dispute hardened already-held suspicions about the government’s bidding procedures. William Thomas, chairman of Amertek Inc. of Woodstock, Ont., said that he withdrew his company from bidding on the Armed Forces’ truck project last fall because he claimed that Ottawa already favored another bidder—Bombardier Inc. of Montreal. Thomas said that the CF-18 contract reinforced his suspicions that Ottawa generally favors Bombardier, which bought Canadair from the federal government in August.

Thomas said that he became concerned about Bombardier’s influence last spring after the company persuaded Ottawa to reopen the truck competition to let it submit a bid. Indeed, Maclean's has learned that

Thomas Niles, the U.S. ambassador to Canada, pressed cabinet ministers for the reopening in order to assist Bombardier’s prospective U.S. partner in the truck project —Oshkosh Truck Corp. of Oshkosh, Wis.

In Canada, several major military contracts will be up for tender in the next few years, including one for a $2billion helicopter fleet. But because of

the CF-18 controversy, future contracts will likely be closely scrutinized. One influential Quebec Conservative said that the province’s pursuit of the CF-18 award could limit its eligibility for future contracts. “We got the CF-18, but now Mulroney can’t give anything to Quebec without provoking a storm,” he said. “It was a shortsighted approach.” For her part, Vézina has tried to reassure potential future bidders that the government does not interfere politically in the process. After Thomas pulled Amertek from the truck competition, Vézina urged him to reconsider. In November he re-entered the bidding. “She assured me that there would be no political involvement,” said Thomas. But he added, “I tell people that and they laugh at me.”

— MARC CLARK in Ottawa with BRUCE WALLACE in Montreal

MARC CLARK