Evidence of meeting #22 for Transport, Infrastructure and Communities in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was purolator.
A recording is available from Parliament.
10:10 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
It seems fairly reasonable to me.
Do you have anything else to add in relation to why you picked a Canadian supplier instead of a foreign one?
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
As I said, even with all the trucking companies we do business with, we will open up bids to anybody. We've actually had American carriers try to bid on these, so we don't exclude American carriers from doing it.
Air carriers, obviously, have much more difficulty with the registration of aircraft in this country, but they can register aircraft to operate in this country.
We've opened it up. I know that in our RFP we had two carriers that were foreign carriers.
10:10 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Do you give any preferential treatment in your bid process or your RFI process or your request for proposal process to Canadian companies? Do you give any preferential treatment to Canadian companies?
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
We put it out in the marketplace, and based on service, cost, financial stability--the top three criteria--we select for it.
10:10 a.m.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
In this case, a Canadian company won, which, it just so happens, is also controlled by the vendor, in this case Canada Post. It's a good-news story all around for Canada.
Is that what you're saying?
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
I think it's a good-news story for Canada, yes, sir.
10:10 a.m.
Conservative
10:10 a.m.
Conservative
The Chair Conservative Merv Tweed
Thank you.
We're going to do one more, final round. Everybody will get one more opportunity.
Ms. Crombie.
10:10 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Mr. Henderson and Mr. Bacon, just from listening to your testimony, I am left with the impression that you weren't up front with Canada Post Corporation during the RFP/RFI process.
We've already established that you got a contract without an RFP; you got it with an RFI. We've also established that you didn't have the capacity at the time to fulfill the agreement. I'm not sure Cargojet had less capacity than you did at the time. But what you had was something different: you had the ear of the board. There was this interlocking directorship that you described, and of course that just smells of coziness and preferential treatment.
I wonder if you might want to address that for us.
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
Certainly.
In terms of preferential treatment, Purolator's transparency is such that even though we are a private organization, we issue an annual report. That goes out to 2,000 of Purolator's shareholders. It's issued to both Kelowna Flightcraft and Canada Post. That has in it our consolidated financial statements. Our financial statements are consolidated with Canada Post.
In terms of being up front and transparent with Canada Post, we actually have four board meetings annually where we do share with them every single item, whether that's financial, service, health and safety, or productivity.
So we're very transparent and very up front about our business operations.
10:10 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Was Canada Post aware that you were going to pass off part of the contract to Kelowna Flightcraft at the time?
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
Yes, because it's been Purolator's business model for both trucking and air that we utilize outsource providers to complete our transportation requirements.
10:10 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
I have another concern. You've gone to a sole-source supplier. I'd like to review the terms of the contract with Kelowna Flightcraft.
What was the bidding process, precisely, for Kelowna Flightcraft to receive this portion of the business from you?
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
Purolator issued a public RFP in 2007.
10:10 a.m.
Liberal
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
Nine companies responded.
We go through a bidding process. Each bidder actually comes in to make their individual proposals. Then we go through a scrutiny at that time. We review, as we're progressing, with our board, since the matter of airlift for Purolator is significant in how Purolator conducts its business.
10:10 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Did Kelowna Flightcraft have the capacity at the time?
10:10 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
Kelowna Flightcraft had the capacity at the time, yes.
10:10 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Why did they need to go out and purchase two additional DC-10s, and when was the purchase made? Let's look at the timing here. When was the RFP extended, and when was the purchase of the planes? What are those dates, Mr. Henderson?
10:15 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
The purchase of the planes was made in 2008, in the spring of 2008. But if--
10:15 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
So what would have been the reason for Kelowna Flightcraft to go out and purchase those two DC-10s?
10:15 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
Sorry, if I can just speak to your further question on capacity, acquiring aircraft hauls is probably a very small part of capacity. In order to operate aircraft, there have to be hangar facilities for the repair and maintenance; you have to have the crews, the ongoing testing of the crews. Purolator people, employees, actually provide the loading and unloading of those aircraft and have the ground support equipment. Acquiring the aircraft is probably the easiest and simplest component of that whole formula.
When you ask if there is capacity, they did have the capacity to operate that.
10:15 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
And how many wide-body jets did they have at the time before they made the purchase of the two additional DC-10s?
10:15 a.m.
President and Chief Executive Officer, Purolator Courier Ltd.
They didn't have wide-body aircraft. But as I pointed out, in January 2008, Purolator, well apart from this contract by well over 18 months, had requested Kelowna to start evaluating aircraft such as DC-10s, MD-11s, 767s, to transition into wide-body aircraft from the narrow-body fleet.
10:15 a.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Mr. Henderson, you have to understand that the perception here is that there was some sort of inside deal done because of the nature of your ownership structure and the interlocking boards. They clearly did not, at the time, have the capacity to fill the contract. They went out to buy a couple of planes and yet they were awarded the contract.
It just doesn't pass the smell test, Mr. Henderson.