Legal Action Launched in Alberta Over Carillion Road Maintenance Contracts
August 1, 2018
Five Alberta companies file court application over Alberta Transportation deal with Emcon
The five companies that currently maintain Alberta's provincial highways (the Alberta Highway Maintenance Contractors or "the HMCs") have joined forces to take legal action against a costly and potentially illegal deal, approved by the Alberta Minister of Transportation, in the matter of the Carillion Canada bankruptcy proceedings.
Our five companies (Alberta Highway Services Ltd., Carmacks Maintenance Services Ltd., LaPrairie Works Inc., Ledcor Highways Ltd. and Volker Stevin Highways Ltd.) are competitors, but we share a common concern in this case. We have retained legal counsel (Burnet, Duckworth & Palmer LLP) and filed an application with the Alberta Court of Queen's Bench. The court application requests judicial review of the Government of Alberta's role in the agreement that was announced by the Alberta Minister of Transportation on July 26, 2018. The agreement in question assigns highway maintenance contracts covering 40 per cent of Alberta highways to Emcon Services, a B.C. company. Emcon was reportedly granted better terms than those of the previous owner of the contracts, Carillion Canada.
We have no objection to Emcon or any other company entering Alberta under a fair, competitive and transparent process. We ask only that experienced, proven Alberta maintenance companies be given an equal opportunity to compete for business in Alberta.
We are therefore asking the Court to review whether the Alberta Minister of Transportation, Brian Mason, violated his government's legal requirements by granting contractual concessions and extensions in favour of one company, effectively sole-sourcing contracts worth over half a billion dollars of public money over several years.
As Carillion is under creditor protection, its assets were sold as part of a court supervised process in Ontario. Carillion's Alberta and Ontario road maintenance contracts were marketed as a single package of assets. Our group's smaller members were thereby shut out because they operate today only in Alberta. Our larger members were blocked by the Minister's own rules around reducing the number of maintenance contracts that any one firm can hold in Alberta. We did recommend a made-in-Alberta solution to the Minister many weeks ago; it is disappointing that he did not stand up for that solution.
Even more questionable than eliminating Alberta-based competition, however, is the fact that the Minister of Transportation apparently approved more favourable contract terms for Emcon than previously existed. In other words, this is not just an asset sale as the Minister has claimed. This is a large, sole-sourced piece of business with Alberta Transportation, funded by Alberta taxpayers.
The Minister stated in a release that Alberta Transportation will reveal more details about the terms of the new contracts after the Emcon deal is finalized. We call on the Minister to disclose those details now, so that Albertans can assess whether this deal is in the public interest.
Specifically, we call on the Minister to disclose whether any of the following three concessions are granted in the deal: an extension to the term of the contracts; a higher price for the work; or freedom from the environmental liability formerly held by Carillion Canada. The first of those three concessions is unfair to the HMCs. We stand ready and able to take over the Carillion contracts today, and extensions will delay the next public tender process in which we could compete. The second and third concessions are unfair to Albertans, because they raise the cost of highway maintenance and shift risk and liability from a private company to taxpayers.
The Minister has also suggested that the Emcon deal is about preserving jobs. We agree with the need to ensure Carillion's Alberta employees, who are AUPE union members, do not face layoffs. As we have told the Minister consistently, our companies are prepared to hire those workers. Our five companies collectively employ nearly 1,000 Albertans in our road maintenance businesses.
We regret that this action on our part has become necessary. The HMCs have enjoyed an excellent relationship with the professional staff of Alberta Transportation dating back many years. Alberta Transportation has demanded value for Albertans, and in return has consulted constructively and openly with our industry to solve problems. Contracts and changes of direction have always been communicated and made available to all players in the industry equally. We struggle to understand why the competitive playing field has suddenly been tilted so sharply toward one non-Alberta company.
Alberta Highway Maintenance Contractors