DM's son works at defence firm behind winning warship bid; DND silent on what guidelines are in place to avoid conflict of interest

Public Services and Procurement Canada was responsible for all aspects of bid evaluation on the Canadian Surface Combatant project.

Jody Thomas is Canada's deputy minister of National Defence.

A deputy minister who warned defence industry executives about raising concerns over a controversial $77-billion warship project has a son who works for the company that submitted the winning bid.

Andrew Coates, the son of Jody Thomas, deputy minister at national defence, has been working since March 2019 in industrial development for Lockheed Martin, the company that was selected on Feb. 8, 2019, for its proposal for the Canadian Surface Combatant fleet. The Kanata-based firm also has a significant role on the Arctic and Offshore Patrol Ship project being handled by the defence department.

National defence declined to outline what guidelines, if any, have been put in place by the department to deal with Thomas’s interactions on the Canadian Surface Combatant project, the Arctic and Offshore Patrol Ships or other defence projects Lockheed Martin is involved with. The office of Conflict of Interest and Ethics Commissioner Mario Dion also declined to provide that information.

Thomas has had dealings on both shipbuilding projects, according to Department of National Defence documents obtained by this newspaper.

Lockheed Martin also has work on the Joint Support Ship project that will build two supply vessels for the Royal Canadian Navy. In addition, the firm’s F-35 aircraft is a top contender for the $19-billion fighter jet program also being handled by DND.

Last fall, Thomas admonished industry executives who had been complaining to politicians and media outlets that the Canadian Surface Combatant project had fallen far short on its promises of creating domestic employment. Another company is in the middle of a lawsuit over the Canadian Surface Combatant (CSC), alleging the procurement was bungled. Other industry executives have been warning politicians the rising price tag for CSC will jeopardize funding for other equally important military equipment projects.

Thomas told executives on Oct. 5 they were hindering the project, and she characterized their efforts as being those of sore losers. “I think there’s still too much noise from unsuccessful bidders that makes my job and Bill’s job very difficult,” she said, referring to Bill Matthews, deputy minister at Public Services and Procurement Canada.

In addition, Thomas was involved in a high-level meeting in March 2019 with then Irving president Kevin McCoy, who briefed her on the company’s plans to sue this newspaper. Irving made its threat of legal action after DND officials tipped the firm off that this newspaper had asked the department questions about problems with welds on the Arctic and Offshore Patrol Ships. DND eventually confirmed there were problems and the article was published despite the threat of a lawsuit.

File photo of an Arctic Offshore Patrol Ship
File photo of an Arctic Offshore Patrol Ship Photo by CPL TONY CHAND, FIS TRINITY /PROVIDED

DND spokesman Dan Le Bouthillier said that all necessary disclosures regarding Thomas’ private affairs were completed, submitted and accepted by the Office of the Conflict of Interest and Ethics Commissioner. “Mr. Mario Dion, the Conflict of Interest and Ethics Commissioner, has also personally confirmed that DM Thomas followed all necessary procedures and that there is no conflict,” Le Bouthillier said.

The DND referred this newspaper to Dion’s office for further details, but the Office of the Conflict of Interest and Ethics Commissioner responded that it couldn’t provide any details. “It would be for Ms. Thomas to discuss whatever advice we gave to her, if any at all,” the office noted in an email.

Before joining Lockheed Martin, Andrew Coates was an industrial benefits co-ordinator for Ultra Electronics Maritime Systems, the firm selected by Lockheed to provide key equipment on the Canadian Surface Combatant. From April 2016 to September 2017, Coates was a value proposition analyst for BAE Systems, whose frigate design was selected by the Canadian government for the surface combatant. Before that, he worked as a customer service representative at Enterprise-Rent -A-Car and a contracts administrative assistant at Esterline Electronics, according to his LinkedIn profile.

Coates did not respond to a request for comment sent through Lockheed Martin Canada.

Lockheed Martin noted in an email, “It is our company practice not to share individual employee information due to privacy — however, in all instances, Lockheed Martin and its employees adhere to a robust ethics and conflict of interest policy.”

The Canadian Surface Combatant project is the most expensive single outlay of public funds in Canadian history. The project, originally estimated to cost taxpayers $14 billion, has skyrocketed in price and has faced delays. Earlier this year, the Parliamentary Budget Officer estimated the budget for the 15 ships at $77 billion. DND acknowledged the PBO figure, but noted it believed the project cost would be between $56 billion and $60 billion.

DND spokesman Le Bouthillier said Thomas’s admonishment to defence firm executives to stop raising concerns about the surface combatant program was not a conflict of interest. It was all about helping out taxpayers and the Canadian military, he said. “Calling-out members of industry when beneficial to Canada’s military and the taxpayer is not a conflict of interest.

“To be clear, any suggestion of the existence of a conflict of interest — or any other impropriety — is completely unfounded,” he added.

Le Bouthillier noted that Public Services and Procurement Canada was responsible for all aspects of bid evaluation on CSC.

The DND did not explain why it couldn’t provide details about what steps, if any, it had taken in regard to interactions by Thomas on projects involving Lockheed Martin.

Conservative MP Kelly McCauley said that, considering the large amount of tax dollars involved in defence procurement projects, it was surprising that neither Thomas nor national defence were forthcoming on what guidelines might have been put in place.

“This requires a very strong and immediate proactive disclosure,” said McCauley, who serves on the House of Commons government operations committee. “You would think they would want the public to know what steps they’ve taken, if any. But this looks like typical DND attempts to block transparency.”

The Liberal government has taken significant steps over the years to limit the amount of information available to taxpayers and the news media on the surface combatant project as well as the Arctic and Offshore Patrol Ships, documents obtained by this newspaper show.

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