The Ottawa Citizen
June 17, 2008
By David Pugliese
A Defence Department project intended to be a straightforward and relatively quick purchase of commercial trucks for the army has gone off the rails after only one firm bid on the multimillion-dollar program and the government determined its proposal didn’t meet requirements.
The contract to buy 800 commercial trucks, slightly modified for military use, was originally announced in June 2006 and labelled by then-defence minister Gordon O’Connor as one of the Harper government’s top priorities.
Military officials expected the purchase to run smoothly since the vehicles would be based on a commercial design with only minor modifications needed. But vehicle firms shunned the program and only one company, International Truck of the U.S., put in a bid. That company’s bid, however, has now been deemed “non-compliant,” and it’s unclear how the Defence Department will proceed.
The truck project is the latest large-scale military procurement to run into difficulties, with firms either deciding the hassle they face in dealing with the Canadian Forces is not worth the effort, or others being disqualified or deciding not to bid because of what they say are unreasonable requirements set out by the military and Public Works.
In the last month, two companies withdrew from a $100-million project to lease aerial drones for the Afghanistan mission. Officials with both firms have said the financial risk to industry on the project was just too great to entice them to compete. The government then decided that the remaining two firms in the competition didn’t meet the requirements, so the bidding has been extended.
Around the same time, General Dynamics of Canada withdrew from the $1.1-billion project to upgrade the navy’s frigates after the firm determined the program was not commercially viable. That left only one company in the running, but Public Works and the Defence Department have extended the bidding process as they try to figure out what to do next.
Earlier this year, the $2.9-billion project to build a fleet of supply and transport ships for the navy ran aground after the industry consortiums involved informed the Defence Department that not enough money had been set aside to build the vessels. The military is now asking the government for more funding.
In addition, Defence Department and Public Works procurement officials are still trying to straighten out a $5-billion project to purchase maritime helicopters after U.S. aerospace giant Sikorsky informed them they had fallen behind schedule on delivery.
Industry officials say part of the problem is that the Canadian Forces often wants suppliers to make numerous changes to their products or deal with requirements that can’t be met without major design changes.
Since the Canadian Forces orders relatively small quantities of gear, it usually isn’t financially worthwhile for firms to make such changes. Even those companies that once would have made concessions no longer need the business, because many are working flat-out to supply the U.S. war effort in Afghanistan and Iraq.
Industry officials say four or five firms should have bid on the Defence Department truck project, but the fact that only one came forward should be seen as a signal to the government that there are problems with the procurement process.
The Defence Department did not respond to a request for comment.
Public Works spokeswoman Lucie Brosseau said a contract for the trucks is expected to be awarded in January 2009. Delivery of the first vehicles is scheduled for the summer of 2009, said Ms. Brosseau.
Roy Wiley, corporate spokesman for International Truck, declined to discuss why the firm’s bid was deemed to be non-compliant, and said what happens next will be up to the Canadian government.
“We have to wait until we get some direction from the government,” said Mr. Wiley. “Are they going after bids again? If they go after bids, I’m sure we’ll be a bidder.”
Acquiring new trucks is critical for the Canadian Forces since the existing fleet, purchased in 1982, is falling apart.
The truck replacement was to have been done in two phases. The 800 commercial vehicles were the first phase while follow-on phases included the purchase of 1,500 standard military pattern trucks with 300 trailers and 150 armour protection kits. Those vehicles would be for use on international operations such as Afghanistan. It’s expected several firms will compete when the bidding for that part of the project begins.
The total project is estimated to cost $1.1 billion, but military officials have refused to say how much the commercial truck portion is worth.
Army chief Lt.-Gen. Andrew Leslie has said the vehicle replacement should have been done five years ago.
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