Question Period Note: Emergency Towing Vessels

On August 9, 2018, Public Services and Procurement Canada (PSPC), on behalf of the Canadian Coast Guard (CCG), awarded a contract to Atlantic Towing Limited for the chartering services of two emergency towing vessels as part of the Oceans Protection Plan (OPP).

• The Government is committed to investing in the Canadian Coast Guard to ensure it can provide the vital services needed by Canadians while also growing our economy and creating jobs
  • Following an open, fair and competitive process, Atlantic Towing Limited of Saint John, New Brunswick, was awarded a contract for interim emergency towing services for an initial contract period of 3 years, worth $67 million, for the services of two fully-crewed Emergency Towing Vessels
  • The services from these vessels will provide an interim heavy-towing capacity while a long term strategy is developed

If pressed on Heiltsuk Horizon legal challenge

• As the subject is under judicial review, Public Services and Procurement Canada cannot comment further on this issue

If pressed on the existing contract

• The contract with Atlantic Towing remains in place given the importance of the services provided by the Emergency Towing Vessels in the context of Canada’s Oceans Protection Plan

If pressed on the why Canada is not recompeting the existing requirement and contract

• Public Services and Procurement Canada cannot comment further as the question is related to a matter that is currently before the Federal Court of Appeal

Oceans Protection Plan (OPP)

CCG requires a variety of procurements to meet its OPP obligations including: new rescue stations; enhanced towing capacity; communications equipment; research services; oil spill response equipment; disposal of derelict vessels; first response services for marine emergencies in Indigenous and coastal regions; etc.

Emergency Towing Vessels (ETV)

A 2018 contract with Atlantic Towing was challenged at Canada’s International Trade Tribunal (CITT) . There has been substantial legal activity as detailed below and the matter is not yet resolved. The initial contract with Atlantic Towing remains in place given the importance of the services provided by the emergency towing vessels in the context of Canada’s OPP. One of the two vessels has already been used in an emergency situation.

Detailed background

On February 5, 2018, PSPC issued a Request for Proposals (RFP) for the chartering services of two ETVs under the OPP to meet an immediate need for increased emergency response capacity on the West Coast.

Industry and stakeholders were consulted extensively on this process and the requirements for this contract, and all parties were given several opportunities to provide input. These vessels provide an initial limited capability until the broader strategy under the OPP to bolster Canada’s marine safety system is completed. This strategy, informed by an in-depth towing needs analysis, will include equipping the CCG large ship fleet with emergency towing capacity, and an expanded approach to regional response planning.

The Heiltsuk Nation sent a letter to the Prime Minister on June 13, 2018 voicing concerns regarding the perceived outcome of the RFP for ETVs. Heiltsuk Nation had created a joint venture with Halifax-based Horizon Maritime Services Ltd to submit a bid proposal for this requirement.

On August 9, 2018, Atlantic Towing Ltd. (ATL), Saint John, N.B., was awarded a three-year contract worth $67,013,720 (taxes included) for the chartering services of two ETVs to provide an initial emergency towing capability while the study for the long term towing capability requirement for the Canadian waters is being finalized. The contract includes options for extensions. The ETVs are able to support a number of related OPP initiatives including the Indigenous Community Response Training project, the Environmental Response Student and Indigenous Recruitment Program and the Coast Guard Auxiliary Indigenous Branch.

The first ETV vessel entered into service in November 2018 and the second ETV entered into service in December 2018.

On November 3, 2021, Canada exercised its first of four (4) one-year option for two fully crewed ETVs stationed off the coast of British Columbia. The extension is valued at $20 million

Challenges

On August 20, 2018, a complaint was made to Canada’s International Trade Tribunal (CITT) by Horizon Maritime Services Ltd. which alleges PSPC did not fully assess all the requirements it set out for the vessels.

Decisions:

Complaint 1 was found valid in-part and CITT recommended re-evaluation of Mandatory Requirement (MR)-12 for all bids received.

Complaints 2 and 3, with respect to the re-evaluation results, were found valid in-part. The CITT found that the re-evaluators misinterpreted MR-12. The CITT recommended a further re-evaluation, while expressly permitting supplementary information from bidders regarding their compliance with MR-12. The CITT dismissed the allegations of bias in all the Complaints.

Judicial Review Applications: Horizon sought judicial review of the Remedy in Complaint 1 and all parties sought judicial review of the CITT’s decision in Complaints 2 and 3. The hearing of the consolidated judicial review Applications occurred on December 2-3, 2020. Decision was delivered February 10, 2021. As a result, Complaints 2 & 3 were sent back to the CITT to be determined in accordance with the Federal Court of Appeal (FCA) reasons. On Friday, September 24, 2021 the CITT determined that PWGSC’s evaluation of MR 12 was reasonable and that MR 12 did not contain a latent ambiguity. As a result, Heiltsuk Horizon’s second and third complaints (PR-2019-020R and No. PR-2019-025R) were deemed not valid.

Complaint 4 was not accepted for inquiry by the CITT on the grounds that the issues were the same in Complaints 2 and 3.

In Complaint 5, Horizon alleged that Canada’s approval of substitution of certain employees of ATL as Masters for their vessels (“Replacement Masters”) was improper because the Replacement Masters did not have the same qualifications as the employees proposed in its bid. The CITT determined on May 3, 2021 that the complaint was not valid.

Judicial Review Application: On May 28, 2021 Horizon filed a judicial review with respect to the determination and reasons issued by the CITT on May 3, 2021. The FCA has directed that all affidavits and documentary exhibits be submitted to the Court by October 27, 2021 for its consideration.

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