Israeli arms firm taking Canada to court after military contract disqualification

OTTAWA — An Israeli defence contractor is taking the Canadian government to court after the company says it was taken out of the running for a multimillion-dollar military equipment contract without explanation.

Elbit Security Systems Ltd. says in an application filed in Federal Court last month that Public Services and Procurement Canada has refused to explain its “purported disqualification” from a contract for hand-held laser rangefinders for the Canadian Armed Forces.

Elbit says the government’s refusal to give its reasons until after the contract is awarded prevents the firm from having “a full and fair opportunity to compete.”

The company says it can’t “meaningfully participate” in the procurement process because the federal government is “improperly withholding” information about why it disqualified Elbit’s bid.

Elbit has been targeted by protesters in Canada, including at last year’s Scotiabank Giller Prize ceremony. Protesters with signs saying “Scotiabank Funds Genocide,” taking exception to the bank’s investments in Elbit, jumped on the stage at the ceremony in November.

The company’s Toronto-based legal team at the firm Fasken declined to comment on the application filed June 20 in Ottawa.

In a statement, Public Services and Procurement Canada said the federal government “uses open, fair and transparent procurement processes.”

Elbit claims the contract is potentially worth tens of millions of dollars and was supposed to have been awarded late last month, but Public Services and Procurement Canada’s statement said the procurement process “continues and a contract is expected to be awarded later this summer.”

It said it would not comment on Elbit’s case as the matter is before the court.

Elbit says in its judicial review application that the disqualification was “procedurally unfair, incorrect, and unreasonable.”

“It also undermines the integrity of the procurement and the obligations enshrined in Canada’s trade agreements to ensure fair and open access to government procurement opportunities through a transparent and efficient framework,” Elbit’s application says.

The company claims being dropped from the running put Elbit “at a significant competitive disadvantage … and resulted in economic loss.”

The company has been a long-standing supplier to the Department of National Defence, with past contracts for night-vision equipment worth millions.

The contract in question first came up in January, but the company says it was told in May that its bid didn’t meet “mandatory industrial and technological benefits” as required by a policy of Innovation, Science and Economic Development Canada.

The policy “contractually requires companies awarded defence procurement contracts to undertake business activity in Canada equal to the value of the contracts they have won,” Innovation, Science and Economic Development Canada’s website says.

Canada’s refusal to further explain why the company was disqualified has left it “with the grave concern that Canada may have applied undisclosed evaluation criteria, which is contrary to principles of fundamental justice, transparency, and equality in public procurement.”

It said the failure to disclose the reasons represents a “flagrant violation of the law by Canada in its conduct of the procurement. ”

The company wants the Federal Court to quash the disqualification decision and to stay the contract award pending the court case’s outcome. It also wants an order for the government to disclose its reason for disqualifying Elbit.

“The applicant has a right to expect that Canada will follow its processes and apply the laws regardless of the origin of a supplier,” Elbit’s application says.

— Darryl Greer in Vancouver

This report by The Canadian Press was first published July 10, 2024.

The Canadian Press