VICTORIA, British Columbia, Canada — Oshkosh Defense is challenging the Canadian government's decision to award Mack Trucks a major vehicle contract for the Canadian Forces, the second similar such action on the country's procurement scene in the last several months.
Oshkosh is asking a Canadian government trade tribunal to overturn the CAN $834 million (US $583 million) contract and order the restart of the program to supply the Canadian military with 1,500 trucks.
Oshkosh’s action comes just months after Raytheon filed a similar challenge, requesting the same tribunal overturn a contract for Canadian Army communications equipment that was awarded to Rheinmetall Canada. That contract could be worth as much as (CAN) $250 million.
Both firms allege the procurement process was flawed and unfair.
Analysts and industry sources say such challenges are rare on the Canadian defense scene, with the latest actions reflecting problems in the country's procurement system as well as a market where competition is fierce for fewer major equipment programs.
"You tend not to see this often in Canadian defense procurement but markets are getting tight and companies are reacting to that," said Martin Shadwick, who teaches strategic studies at York University in Toronto. "At the same time there are ongoing concerns from industry about Canada's procurement system and whether it is functioning properly."
An industry source said some companies appear to be getting frustrated with Canada's procurement system, and its rules that sometimes seem to be arbitrary. More such challenges could come forward, the source added.
The recently elected Liberal Party government has vowed to improve Canada’s cumbersome and often criticized procurement system. Both the Liberal government and the previous Conservative Party government have criticized the system and have called for changes to the system.
Judy Foote, minister of public services and procurement, issued a statement in response to Oshkosh's complaint, noting that she is committed to ensuring government procurement is fair, efficient and effective.
"At the same time, I am determined to making it easier to do business with the government of Canada by modernizing procurement practices so that they are simpler and less burdensome," she added.
Both Oshkosh and Raytheon filed their complaints with the Canadian International Trade Tribunal, a federal government organization that reviews and rules on procurement issues. In both cases, the firms are asking the tribunal to order the procurement programs restarted.
The tribunal is not commenting on either issue but is expected to rule on Raytheon's complaint sometime in February. Oshkosh's complaint would be heard later this year.
The two contracts were awarded in July 2015 by the previous Conservative Party government.
Mack Defense, LLC, of Allentown, Pennsylvania, was selected to provide 1,500 standard military pattern trucks and related equipment for the Canadian Forces.
Rheinmetall was awarded the contract for the Integrated Soldier System Project or ISSP. The contract will provide troops with equipment that would not only allow them to track each other as they move throughout the battlefield, but feed communications and targeting information into their helmets or data devices they will carry.
Raytheon alleges that soldiers involved in testing ISSP, along with officials from Public Services and Procurement Canada, did not follow proper procedures in their evaluation of systems submitted.
It noted in its complaint that the soldiers who performed the evaluation "lacked the necessary expertise" and that they based their evaluation on undisclosed criteria.
"Aspects of the evaluation process raise a reasonable apprehension of bias," the Raytheon complaint alleged.
"We expect to receive a result from this protest process in February," Terry Manion, vice president of Raytheon Canada, stated in an email. "We look forward to a positive outcome that produces a fair, reliable and objective result."
Wilson Jones, president and chief executive officer of Oshkosh Corp., Oshkosh, Wisconsin, said in a statement that the company believes it provided the overall best value for the Canadian military truck contract.
"Following a thorough review during the past five months, Oshkosh has concluded that there are significant questions regarding the conduct of the (truck project) testing and evaluation," he said.
Pierre-Alain Bujold, a spokesman for Public Services and Procurement Canada, said the department cannot comment on either the Oshkosh or Raytheon claims because those are being reviewed by the tribunal.
In the meantime, Department of National Defence officials said both procurements are proceeding. Rheinmetall is expected to finish the first phase sometime this year of the ISSP.
Department of National Defence spokesman Evan Koronewski said the testing of the first Mack truck will soon begin and continue for much of this year.
"The next major steps are first delivery, currently forecasted for the spring of 2017, and final delivery in the fall of 2018."