Awaiting radar renewal signal
Frontec, Pan Arctic Inuit seeking 10-year extension

Doug Ashbury
Northern News Services

NNSL (Sep 07/98) - There was a break-in at the Ottawa offices of Pan Arctic Inuit Logistics Corporation.

Alone, that's not a big deal.

But the crime occurred days after the Globe and Mail's Washington office revealed Canada's federal government might sole-source its hefty North Warning System contract to Pan Arctic.

The contract could be worth around $400 million over 10 years.

Edmonton-based Frontec Corp. and Pan Arctic currently hold the contract to maintain the North Warning System, a network of 47 radar stations across Canada's Arctic. In 1987, the Frontec Pan Arctic joint venture competitively won a five-year contract to operate and maintain the North Warning System.

Frontec's parent companies are ATCO and Canadian Utilities.

Pan Arctic is equally owned by development corporations of the Inuit of Labrador, northern Quebec, Nunavut and the Inuvialuit. It is the only company which combines all of Canada's Inuit.

"A week after the (sole-sourcing) story broke, our office was broken into," Pan Arctic chairman Russell Newmark said.

Newmark said the only thing missing is a hammer, but files relating to the North Warning System appeared to be the target, he said.

Who did the deed, reported to police, remains a mystery.

Another twist -- the fact that Globe story came out of Washington.

Aerospace giant Lockheed Martin is based a stone's throw from Washington in Bethesda, Maryland.

A source close to the matter suggests Lockheed Martin may be aligning with Serco to make a run at the North Warning System contract, if it goes out for bid.

There is a fear that such a partnership may bid the contract to crush a potential competitor like the Frontec Pan Arctic joint venture.

Lockheed made $2 billion profit on $43.6 billion in sales last year.

Last year, Serco made $92.6 million on sales of $1.27 billion.

London-listed Serco offers facilities management and engineering services. The foundation for its current business was a facilities management support contract for the Ballistic Missiles Early Warning System at RAF Flyingdales in Yorkshire, England.

"We know Lockheed and Serco have been to see (Federal Defence Minister Art Eggleton )," Newmark said.

Eggleton may be facing political pressure to open up the contract for bids.

But, under the Nunavut land claim, any moves by the federal government directly effecting the people of Nunavut can only be made after meaningful consultation with Nunavut government.

Nunavut political leaders support continuance of the current Frontec Pan Arctic deal.

"We told (Eggleton) it's in Canada's best interest to renew the contract," Newmark said.

Newmark, who met with Eggleton during the minister's recent visit to the North, said Eggleton is apt to decide soon on whether or not the contract will be sole- sourced -- renewed with the Pan Arctic and Frontec -- or if it will go to tender.

"When we met with him Monday (Aug. 31), he said he had not made a decision (but to) expect a decision later this month," Newmark said.

"We are encouraged. He visited (North Warning System sites) and gave us a fair hearing. I think that's all we can ask for."

Eggleton could not be reached Thursday for comment.

Newmark said the joint venture has cut costs from about $70 million a year to about $35 million to $40 million.

These are savings to Canadian taxpayers, Newmark said.

On the social benefits, Newmark said the contract has generated 75 to 100 jobs for Inuit. Another 37 Inuit are in training programs.

A new contract could put these benefits in jeopardy, he said.