CAF Mack Truck Contact will Happen; Oshkosh to Receive Some form of Compensation

By: David Pugliese, Defence Watch

Public Services and Procurement Canada has yet to figure out how to proceed on the troubled purchase of Standard Military Pattern trucks for the Canadian Army.

In July the Conservative government announced that Mack Defense had won the $834 million contract to provide 1,500 trucks.



But the Canadian International Trade Tribunal recently upheld a complaint from Oshkosh that the procurement was flawed. In its ruling the CITT is calling on PSPC to re-evaluate Oshkosh’s truck design. The Ottawa Citizen has reported that if that re-evaluation shows the company’s truck should have won the contract, then the CITT recommends the government compensate Oshkosh “for the profits it would have received had it been properly awarded the contract.”

There are also a number of other ways to deal with the situation, according to the CITT. But they all involve Oshkosh walking away with some cash to compensate the company for their involvement in this problem procurement.

Whatever the amount, the Department of National Defence is still proceeding on the purchase. “The Canadian International Trade Tribunal will not recommend that the contract awarded to Mack Defense LLC be cancelled,” the CITT ruling noted.

DND spokeswoman Ashley Lemire told Defence Watch that, “The Canadian International Trade Tribunal ruling is not influencing timelines on the MSVS Standard Military Pattern contract with Mack Defense. With respect to progress, National Defence has completed the first portion of the test programme, which was performed in France. We will be pursuing testing in Canada over the summer and fall of this year. In February, the Crown and Mack Defense agreed to postpone vehicle deliveries to the fall of 2017 to better align requirements verification with production. Other deliverables, such as trailers and Armoured Protection Systems, are scheduled to start delivery in the summer of 2017.”

Taxpayers could be on hook for bill after trade ruling questions $834M army truck contract

By: Lee Berthiaume, National Post 

OTTAWA — In a ruling that could cost taxpayers hundreds of millions of dollars, a federal trade tribunal has raised questions about the government’s handling of a military procurement project to buy desperately needed trucks for the army.

The ruling by the Canadian International Trade Tribunal represents the latest blow to Canada’s troubled military procurement system, which the Liberal government has vowed to fix without offering any details.

The vehicles were intended to replace a large part of the army’s existing truck fleet, which had been purchased during the 1980s and ’90s. Photo: 

In July 2015, the Conservative government announced that Pennsylvania-based Mack Defense, the military arm of the famed big-rig maker, had won a contract valued at more than $834 million to provide the Canadian Army with 1,500 specialized trucks.

The vehicles were intended to replace a large part of the army’s existing truck fleet, which had been purchased during the 1980s and ’90s. Many of those older trucks have been parked or sent to the scrap heap because of their age and to save money on maintenance and repairs.

Related
Conservative, Liberal MPs trade blame in Commons for failed military equipment purchases
Liberals ‘absolutely’ committed to military but it needs a tighter focus, defence minister says
Dave Perry: Our broken military procurement system

But Wisconsin-based Oshkosh Defense, which submitted its own truck design to the competition, challenged the government’s decision to award the contract to Mack Defense. Oshkosh alleged the department responsible for managing government purchases, Public Procurement Canada, had been unfair during design testing.

Late last week, the trade tribunal released a ruling calling on Public Works to re-evaluate Oshkosh’s design. If the results show the company should have won, the ruling says, then the government should compensate Oshkosh “for the profits it would have received had it been properly awarded the contract.”

If for some reason re-testing cannot be done, the government and Oshkosh are urged to negotiate compensation for the company’s “lost opportunity.” If they are unable to reach an agreement within 40 days, they are to go back to the tribunal.

Fortunately for the army, which is expecting the first new trucks to be delivered next year, the tribunal did not call on the government to push the reset button. “The Canadian International Trade Tribunal will not recommend that the contract awarded to Mack Defense LLC be cancelled,” the ruling reads.

Public Procurement Canada did not immediately respond to requests for comment.

Nonetheless, the ruling means taxpayers more than likely will have to foot the bill for the government’s error. It also reiterates the morass with which the entire military procurement system has been embroiled for years.

A large number of projects are facing delays, which has left the military lacking such vital equipment as resupply ships, or struggling to keep ancient equipment such as search-and-rescue planes in the air. Other projects are facing budget shortfalls that could result in fewer aircraft, ships and other pieces of equipment.

In addition, at a time of reduced military spending across the West, defence companies are fighting tooth and nail for every dollar. That includes resorting to legal challenges to try to scuttle the entire process in cases where their products lose.

The Liberal government has promised to fix the system, but has have offered few details on how that will happen. Defence Minister Harjit Sajjan has referred only to the government’s ongoing defence policy review, which isn’t expected to produce any results until next year.

Defence chief Gen. Jonathan Vance similarly dodged questions Tuesday about fixing the system, saying only that the government wants to be “innovative, both in process and in terms of where we put our efforts in the future.” He suggested that “bodes well for the country and for the armed forces.”

In the federal budget in March, the government announced it was pushing off $3.7 billion in planned equipment purchases for the foreseeable future. The government said such a “re-profiling” was necessary to ensure money was available when needed, but others such as retired general Rick Hillier said it was a budget cut.

Oshkosh wins challenge on CAF Mack Truck Contract

By: David Pugliese

U.S. defence firm Oshkosh is alleging that the Canadian government unfairly awarded a $834 million contract that would see Mack Trucks deliver vehicles, such as the one in the photo, to the Canadian Forces. Photo courtesy Mack Trucks 

Oshkosh Defense Canada, Inc., an Oshkosh Corporation company, announced today that the Canadian International Trade Tribunal ruled in the firm’s favour regarding its legal challenge to the Medium Support Vehicle System’s Standard Military Pattern (SMP) contract award decision.

The CITT ruling recommends that Public Services and Procurement Canada re-evaluate Oshkosh’s bid and conduct a re-evaluation of vehicles for the project. Failing that the government could provide monetary compensation to Oshkosh.

The first of the new trucks, coming from Mack, have successfully undergone testing and are expected to be soon delivered to the Canadian Forces.

“We are pleased with CITT’s ruling, which validates our concerns and defends the fair and transparent procurement process that the Canadian Government strives to implement,” Wilson Jones, president and chief executive officer of Oshkosh Corporation, said in a statement. “Following years of work and investment, the Oshkosh team firmly believes we offered the most capable vehicle for the Department of National Defence, and overall best value for Canada. While we are disappointed in the significant errors found in the conduct of the MSVS evaluation process, we look forward to a fair and timely implementation of the Tribunal’s recommendations.”

As part of its determination, CITT recommended the following actions to the government:

Conduct a re-evaluation of the bid submitted by Oshkosh, including a physical re-evaluation of the vehicle test protocols, and/or payment of compensation to Oshkosh.
Compensate Oshkosh for its reasonable costs incurred in preparing and proceeding with the CITT complaint.

The contract, valued at $834 million, was awarded in July to Mack.

Following a four month review, the CITT in part validated Oshkosh’s claims related to procurement processes, technical compliance and testing protocols shortfalls during the MSVS SMP evaluation, the firm noted.

The Department of National Defence referred questions to Public Services and Procurement Canada. That department has yet to respond.

US Firm Alleges CAF Truck Contract Unfair

Published by: David Pugliese, 

A major U.S. defence contractor is alleging a contract worth more than $800 million for new trucks for the Canadian Forces was unfairly awarded.

Oshkosh Defense announced Thursday that it had filed a complaint about the contract with the Canadian International Trade Tribunal. The complaint will now be reviewed by the federal tribunal but no details were available on how long that would take.

The complaint alleges that Public Works and Government Services Canada, now Public Services and Procurement Canada, did not conduct a fair and transparent process to select the new trucks.

In July, then Defence Minister Jason Kenney announced that Mack Defense, LLC, of Allentown, Pennsylvania, had been awarded two contracts to provide standard military pattern trucks and related equipment for the Canadian Forces.

Assembly will take place in a Sainte-Claire, Quebec, plant operated by Prevost, one of the firms partnered with Mack.

The overall contract for the project, known by its military acronym as MSVS SMP, is worth $834 million.

“Following a thorough review during the past five months, Oshkosh has concluded that there are significant questions regarding the conduct of the MSVS SMP testing and evaluation,” Wilson Jones, president and chief executive officer of Oshkosh Corporation, said in a statement.

Public Services and Procurement Canada is limited in what it can say at this point about Oshkosh’s allegations. PSPC “is committed to an open, fair and transparent competition process, department spokesman Pierre-Alain Bujold told The Ottawa Citizen's Defence Watch. “As there is a review underway, it would be inappropriate for PSPC to comment.”

The program to purchase the trucks was originally announced in 2006 by the Conservative government but the acquisition had been dogged by problems.

The first delivery of the trucks and equipment is planned for summer 2017, and deliveries are expected to be completed by fall 2018, according to the federal government’s news release issued at the time. With the ability to carry 9.5 tonnes, the Standard Military Pattern trucks are the backbone of the Canadian Forces truck fleet, the government noted.