Murray Brewster, THE CANADIAN PRESS

Stumble Upon

del.icio.us

Digg

Facebook

Print

Email

Speak Up

WINNIPEG - The Conservative government granted Telus Corp. (TSX:T) more time to switch National Defence over to its telephone and Internet network even as bureaucrats considered terminating the multimillion-dollar contract, The Canadian Press has learned.

The decision was made just days before the federal election and despite communications failures at two Canadian military bases last summer.

Public Works and Defence Department officials debated in early August whether to scuttle the five-year, $213-million Global Defence Network Services contract with Burnaby, B.C.-based telecommunications giant, leaked memos show.

Telus has struggled to implement the Global Defence Network Services contract, which was awarded in June 2007.

It was expected to complete the changeover by June of this year, but it has been plagued with glitches and network conflicts.

The new deadline for having the majority of the Defence Department's network moved over from Bell Canada (TSX:BCE) is mid-December, but officials are unsure whether that can met.

The leaked documents paint a picture of frustrated federal bureaucrats, upset over Telus promising but repeatedly missing deadlines for moving forward one of the federal government's largest telecommunications contracts.

"It has now been confirmed that Telus has fallen significantly short not only of the contractual obligation, but also of its most recent commitment," said a memorandum to Public Works Minister Christian Paradis, stamped solicitor-client privilege.

The document prepared by staff on Aug. 4 warned: "DND is very concerned Telus will be unable to complete implementation (including acceptance) by October 23, 2008 or even by mid-December 2008, when the current Bell contract expires."

Officials at the Defence Department's information management division would not comment on the problems. A spokesman for Telus also declined interview requests.

The contract covers both the open and secure military networks, and the company is expected to provide managed telephone, wireless, data, video and IP (Internet Protocol) services.

Bell Canada still maintains a number of telecommunications points for National Defence, but time is running out on their contract.

Last week Public Works went to the Canadian Radio-television and Telecommunications Commission, looking to force Bell to continue to backstop the transition.

The leaked memorandum proposed only two scenarios for the federal government to consider: cancelling the contract or sticking with it and hoping for the best.

Terminating the deal with Telus and awarding the contract to the second-place bidder, Bell Canada, was examined in detail.

That submission was as much as 10 per cent more expensive, but the "Department of National Defence has indicated that it is prepared to pay the additional costs associated with the Bell contract," said the note prepared by Francois Guimont, the deputy minister of Public Works.

Justice Department lawyers were asked how solid the federal government's case would be in light of the fact Telus had invested as much as $50 million in the transition.

The second option was to give the telecommunication company more time to come up with a "realistic approach to achieving full implementation."

A memo dated a few days later suggests discussions between the corporation and the government became tense, with the company openly suggesting bureaucrats had already made up their mind to terminate.

Telus did come back and offered a 50 per cent discount on the first year of the contract and a deep cut in service credits, said an Aug. 10 email between officials at Public Works and the federal Treasury Board.

Under the terms of the contract, Telus was eligible for late delivery penalties totalling as much as $2.7 million a month.

It's unclear whether the communications giant, with 5.8 million wireless customers and 1.2 million Internet subscribers, has faced penalties.

At least two Canadian military bases faced communications failures this summer when National Defence began switching to Telus.

Defence officials described the outages as minor.

But documents leaked to The Canadian Press in late August suggested that the service interruption created a "conflict in the network which would have taken down the entire national and potentially the international data networks carrying all DND (Internet Protocol) applications, including Search and Rescue, Intelligence and (Human Resources) Data."

The service interruptions happened at CFS Aldergrove, B.C., and at CFB Winnipeg.

Maj.-Gen. Glynne Hines, a senior information technology officer at the Defence Department, said in an interview in September that the outages meant the bases had to rely on the old network for a period of time.