Murray Brewster · CBC News
A SNC-Lavalin contract with the Department of National Defence (DND) worth half a billion dollars comes up for renewal next year — when the Montreal-based engineering giant is expected to be on trial over corruption charges.
The pending expiry of the $507 million contract to support the servicing of minor warships and auxiliary vessels, signed in 2011, sharpens the debate over what a guilty verdict would mean for the Quebec-based engineering giant and whether a conviction actually would mean subjecting the company to a 10-year ban on bidding for federal contracts.
The stakes are high for DND. In addition to holding an important defence contract, SNC-Lavalin has access to a range of secret military drawings, equipment and intellectual property. Although its agreements are periodically reopened to new bids, the embattled corporation has been a reliable contractor for National Defence.
A survey of active federal government contracts shows DND and Public Services and Procurement Canada (PSPC) were the two biggest users of SNC-Lavalin services and construction during the current fiscal year.
Across the whole of the federal government, SNC-Lavalin holds 53 'active' federal government contracts — 25 of them with DND — with a combined value of $670 million.
The firm signed roughly $68 million in new or renewed agreements with the federal government ($23.7 million with DND and PSPC alone) in the current budget year up to the end of December.
That figure excludes what could be a large number of smaller contracts worth less than $25,000 — contracts the federal government can award without competition.
An inventory of those agreements is extremely difficult to track down, but PSPC acknowledged it awarded $146,522 in minor work to SNC-Lavalin in the current fiscal year.
The RCMP laid corruption charges against SNC-Lavalin and some of its units in February 2015. All the charges relate to the company's operations in Libya. The charges allege that the company offered officials in that country $47 million in bribes and accuse SNC-Lavalin and two of its subsidiaries of defrauding various Libyan public agencies of approximately $129.8 million over 10 years, starting in 2001.
The company has been at the centre of a political firestorm since early February, when The Globe and Mail reported that former justice minister Jody Wilson-Raybould felt pressured by the Prime Minister's Office to grant the company a deferred prosecution agreement (DPA) — a legal tool which would have allowed the company to avoid a criminal trial by acknowledging fault and paying a fine, among other conditions.
In defending their interest in a DPA for SNC-Lavalin, Prime Minister Justin Trudeau and others in his government have pointed to the scale of the engineering firm's business, the possibility it could be banned from federal government work and the number of people it employs.
Scott Newark, a former Crown prosecutor who teaches at Simon Fraser University, said it's been clear from the outset that avoiding the federal contract ban has been SNC-Lavalin's main objective.
The question of what would happen to those federal contracts should the company be convicted is a subject of debate, however.
There are policy provisions that allow federal officials to cancel existing contracts and ban future bids from a company convicted of serious crimes, such as bribery.
PSPC would only say the federal government would "assess the situation" if "a supplier becomes ineligible during the life of a contract" due to a conviction.
The power to terminate or suspend a contract rests with federal bureaucrats, according to PSPC's Ineligibility and Suspension Policy.
A company convicted of serious crimes can avoid being fired by the feds by signing an undertaking stating "that it will conduct business with Canada in an ethical and responsible manner." But there's never a guarantee that such an undertaking will be offered to a convicted company.
Just three companies are currently banned from carrying on business with the federal government — all relatively small firms in Ontario, Quebec and Newfoundland.
A spokesman for DND said there's nothing stopping SNC-Lavalin from continuing to bid on federal contracts as they appear, even during its trial.
"These contracts were issued pursuant to Government of Canada contracting regulations, particularly as it concerns open, fair and transparent competitions," said Dan Le Bouthillier in an email. "Those regulations also stipulate that any company eligible to bid on Government of Canada contracts may continue to do so, so long as they meet the necessary requirements for the work."
In an analysis piece for the Macdonald-Laurier Institute, Newark said PSPC is working on a revision of its 'integrity regime' policy to give federal officials more discretion to waive bans of individual companies contracting with the federal government.
Public Services Minister Carla Qualtrough has said her department is looking at eliminating fixed bidding disqualification periods and replacing them with a wholly discretionary determination — which would include the option of imposing no contracting ban at all.
Even under the current system, Newark said, an order cancelling a company's federal contracts and banning it from future contracts following a conviction is far from a slam-dunk.
"I checked on the Criminal Code and the Corruption of Public Foreign Officials Act and, of course, it's not in those statutes. It's not a mandatory consequence." he said.
The integrity regime review has been underway in Qualtrough's department since 2017. Newark said he's amazed that nobody with the company or the federal government seems to have realized that a conviction for SNC-Lavalin could lead to something other than a 10-year contracting ban.
"Why didn't anybody say, 'Hey wait a minute. We know what about this. We're changing our policy,'" he said.
The head of procurement at DND attempted to reassure members of the all-party House of Commons defence committee during a hearing last month that SNC-Lavalin's "secret" work for the federal government does not pose an unacceptable risk.
"We hold the intellectual property, the drawings and everything," Pat Finn testified on Feb. 28. "Irrespective of the circumstances in which the contract is terminated, we hold the material."
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CAE defense head Dan Gelston tells Defense News why the $1.05 billion deal positions the company to go after future fighter and bomber programs.
September 5, 2018 | Local, Land
September 4, 2018 – Ottawa – National Defence / Canadian Armed Forces From September 10 to 21, 2018, Canadian defence scientists and Canadian Armed Forces personnel will be conducting a series of technology research experiments in the city of Montreal alongside participants from partner nations including Australia, New Zealand, the United Kingdom and the United States. Activities will include testing and assessing new technologies in various urban environments and landscapes. The Contested Urban Environment 2018 experiment (CUE 18) will take place around the Côte-des-Neiges Armoury, around Belvedere Kondiaronk on Mont Royal, along rue de la Montagne, and at Silo 5 in the Old Port area. Most of the activity will happen during the day, however, there will be also be periods of testing at night. All military personnel participating in the CUE 18 experiment will be unarmed. This activity is being conducted in support of advancing research around how to best conduct military operations in urban environments. Measures are being taken to ensure minimum inconvenience to those in the area, however the public is advised that certain areas may be inaccessible during CUE 18 experiment. Questions concerning local issues including traffic disturbances, road closures etc. should be directed to the City of Montreal. Questions from the public regarding the experiment can be directed to Department of National Defence's science and technology organization, Defence Research Development Canada at CUE18_EUC18@forces.gc.ca. Questions from media can be directed to the Department of National Defence's Media Relations Office at mlo-blm@forces.gc.ca.
June 17, 2019 | Local, Naval
From: National Defence News release June 17, 2019 – Ottawa – National Defence/Canadian Armed Forces Commodore Josée Kurtz of the Canadian Armed Forces (CAF) officially assumed command of Standing NATO Maritime Group Two (SNMG2) during a change of command ceremony held in Souda Bay on the Greek island of Crete on Saturday, June 15. Commodore Josée Kurtz assumed command from Commodore Boudewijn Boots of the Royal Netherlands Navy. This deployment is part of Operation REASSURANCE, and Canada's contribution to NATO regional maritime security operations and assurance measures in the Mediterranean region and the Black Sea. Canada continues to answer the call to serve and contribute to international peace and security. As a founding member of NATO, Canada has demonstrated leadership and will continue to do so under our defence policy, Strong, Secure, Engaged. Quotes “The appointment of Commodore Josée Kurtz to lead this NATO Maritime Group is a demonstration of the Canadian Armed Forces' professionalism, leadership and strong commitment to NATO and our Allies. Our members are a visible symbol of Canada's commitment to international security and cooperation in the region and around the world.” —Lieutenant-General Mike Rouleau, Commander, Canadian Joint Operations Command “It is an honour and privilege to take command of Standing NATO Maritime Group Two. Over the next six months, I look forward to working with the highly trained and professional sailors from NATO member nations as we take on the challenges of this mission and work together to strengthen global and regional stability.” —Commodore Josée Kurtz, Commander Standing NATO Maritime Group Two Quick facts Her Majesty's Canadian Ship (HMCS) Toronto is deployed with the Maritime Task Force as part of OP REASSURANCE and is now the flagship of Standing NATO Maritime Group Two (SNMG2). SNMG2 is one of four multinational, high readiness maritime forces composed of vessels from allied countries. These vessels are permanently available to NATO to perform tasks ranging from participation in exercises to operational missions. These groups provide NATO with a continuous maritime capability and help to establish Alliance presence, demonstrate solidarity, conduct routine diplomatic visits and enhance interoperability among Allied naval forces. They also serve as a consistently ready maritime force to support the NATO Very High Readiness Joint Task Force. With Commodore Kurtz's appointment, Canada is currently leading three NATO efforts globally. Since June 2017, the CAF have led a robust multinational rotational NATO Battle Group in Latvia as one of four Framework Nations formed as part of the Alliance's enhanced Forward Presence in the Baltic countries and Poland. Since November 2018, Canada has also led NATO Mission Iraq (NMI), which aims to create the conditions for more effective and sustainable Iraqi security institutions and structures. Commodore Josée Kurtz is an exceptional leader and outstanding role model and her appointment demonstrates Canada's leadership and strong commitment to the Alliance. This commitment to multinational naval leadership follows Canada's recent command of Combined Task Force 150 from December 2018 to April 2019. The Royal Canadian Navy (RCN) is making significant contributions to security and stability around the globe, and is an agile, fighting force that can be rapidly deployed and flexibly employed. A capable, steadfast partner, our sailors, and ships have a solid reputation and are always ready to help, lead and fight. https://www.canada.ca/en/department-national-defence/news/2019/06/canada-assumes-command-of-standing-nato-maritime-group-two.html