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Canadian North challenges food mail contract

Inuit-owned airline says $175 million contract process “rigged”

JIM BELL

The Canadian North airline alleges that Indian and Northern Affairs and Canada Post may have “rigged” last year’s $175-million, five-year food mail contract award to the Makivik Corp.’s First Air – and they’re seeking to have the decision overturned through a complaint lodged with the Canadian International Trade Tribunal, or “CITT.”

”It was rigged in favour of our competitor,” Christie Sinclair, director of business development for Norterra, Canadian North’s parent company, told the Qikiqtani Inuit Association in Iqaluit last week.

The tribunal, which reports to Parliament, normally deals with complaints about international trade. But the CITT also may hear complaints about federal government procurement decisions.

In their complaint, Canadian North alleges that Canada Post, acting on behalf of Indian and Northern Affairs Canada, may have subjected Canadian North’s food mail proposal to discriminatory treatment.

As part of that complaint, they say that Canada Post and INAC did not state the criteria they used to evaluate competing food mail proposals from First Air and Canadian North, and that they may have treated First Air’s proposal differently than theirs.

They also suggest that INAC may be using Canada Post to dodge federal government procurement rules that would normally apply to the contract. That’s because Canada Post is exempt from many procurement rules that apply to federal departments like INAC, which actually runs the food mail program.

Canadian North wants the tribunal to either cancel the contract and put it out again for competition, or order the federal government to pay for Canadian North’s lost profits.

Worth between $175 million and $200 million over five years, the food mail deal for Nunavut, northern Quebec and the Northwest Territories is one of the biggest contracts the federal government awards in northern Canada.

When it came up for renewal in May of 2005, Norterra, on behalf of Canadian North, submitted an aggressive bid for it, offering to ship food along all the routes specified in Canada Post’s request for proposals.

“Canadian North also has reason to believe that it submitted the lowest price proposal,” their complaint reads.

To prepare their proposal, Canadian North had to demonstrate they were ready to go as of Dec. 1, 2005, using their warehouses in Val d’Or, Edmonton, Cambridge Bay, Iqaluit and Yellowknife, all equipped with coolers and freezers needed to store food. They also shipped building materials into Kuujjuaq that summer for use in the rapid construction of a new cargo warehouse there.

But in November of that year, Norterra officials were stunned when INAC told them that once again, the entire contract would be awarded to First Air, Canadian North’s main competitor in the eastern Arctic. First Air has held the food mail contract for 15 years.

In their latest proposal, Canadian North suggested, as an option, that the contract could be split between the two airlines, with some routes going to Canadian North and some routes going to First Air.

“INAC was very specific about enabling things so that the contract could be split,” a Norterra spokesperson said this week.

The spokesperson said the splitting of such contracts is a normal way of “keeping the companies honest” and ensuring that the government, and consumers, get their money’s worth.

Canadian North is a subsidiary of Norterra Inc., owned 50-50 by two Inuit birthright corporations: Nunasi Corp. of Nunavut and the Inuvialuit Development Corp. of the western Northwest Territories.

The food mail program, which is aimed at supplying northern communities with nutritious perishable food at low postal rates, is run by INAC and paid for by money that comes out of INAC’s budget.

INAC uses a third party, Canada Post, to acquire the air transportation needed to ship the food. Under that arrangement, food purchased at certain designated entry points qualifies for a low postal rate. The designated entry point for Baffin and Nunavik is Val d’Or, Quebec.

But Canada Post doesn’t actually handle or store any of the food “mail.” All that work is done by the airlines.

In her presentation to the QIA meeting in Iqaluit last week, Christie Sinclair suggested the loss of the food mail contract hampers Canadian North’s ability to offer competing airline services to Nunavut communities.

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