Decision No. 27-W-2021

SUMMARY

[1] Under the Act, the Minister of Public Safety and Emergency Preparedness (Minister) may issue a coasting trade licence authorizing a foreign ship or a non-duty paid ship to conduct a commercial activity in Canadian waters for a maximum period of 12 months. One of the prerequisites for issuing a licence is a Canadian Transportation Agency (Agency) determination that there is no suitable Canadian ship or Canadian non-duty paid ship available to perform the activity described in the application.

[2] Alcatel applied to the Minister for a licence to use the “ILE D’AIX”, a cable ship registered in France, to undertake cable-laying operations in northern Quebec. The proposed activity would commence on or about July 15, 2021, and end on or about November 5, 2021.

[3] Horizon Maritime Services Ltd. (HMS) filed an objection to the application with the Agency and offered two Canadian-registered ships, the “HORIZON STAR” and the “HORIZON ENABLER”, both of which are available to perform the activity described in the application, with cable installation equipment and personnel to be supplied by IT International Telecom Canada Inc. (IT). Later in the pleadings, HMS and IT clarified that the offer is a joint offer. HMS/IT also informed the Agency that a potential third ship could be available for the cable-laying operations, namely, the “HORIZON ARCTIC”.

[4] For the reasons set out below, the Agency finds, pursuant to subsection 8(1) of the Act, that no suitable Canadian ship is available to perform the activity described in the application.

BACKGROUND

[5] On December 18, 2020, Alcatel filed, through its Canadian representative, an application for temporary admission to the coasting trade of Canada of the “ILE D’AIX”. The activity described in the application is to install the marine component of the Eastern Arctic Undersea Fiber Optic Network (EAUFON) cable system in northern Quebec. The Kativik Regional Government (KRG), a supramunicipal body with jurisdiction over the territory of Quebec north of the 55^th parallel, has hired Alcatel to install the cable system to provide local populations with high-speed broadband internet connectivity. The system will interconnect the communities of Chisasibi, Kuujjuarapik, Umiujaq, Inukjuak, and Puvirnituq, Quebec. The activity would start on or about July 15, 2021, and would end on or about November 5, 2021.

[6] The submarine cable system comprises 3,000 metric tons (MT) of cable, twelve repeaters, and four branching units. After cable installation, post-lay inspection work is planned using a remotely operated vehicle, followed by the delivery of the spare cable equipment. The period between the completion of the laying of the submarine cable and the date for provisional acceptance of the work as completed, November 30, 2021, is devoted to system testing.

[7] On December 21, 2020, the Agency gave notice of the application to the Canadian marine industry.

[8] On December 23, 2020, and December 30, 2020, HMS/IT requested an extension to file an objection to the application. The Agency, in the directive dated January 4, 2021, granted the extension request to allow HMS/IT until January 12, 2021, to file the objection.

[9] On January 12, 2021, HMS/IT offered two Canadian-registered ships, the “HORIZON STAR” and the “HORIZON ENABLER”, to perform the activity described in the application. HMS/IT informed the Agency on January 21, 2021, that they had a potential third ship available to perform the activity, the “HORIZON ARCTIC”. The three offered ships are sister ships with the same characteristics and are interchangeable as far as being suitable for the activity.

[10] On January 19, 2021, Alcatel requested an extension to file its answer to the objection. The Agency, in its directive dated January 19, 2021, granted the extension request to allow Alcatel until January 29, 2021, to file its answer, which it provided on that date.

[11] In response to an extension request by HSM/IT dated February 1, 2021, the Agency, by a directive issued the same day, granted HMS/IT until February 9, 2021, to file a reply. HSM/IT filed the reply on February 9, 2021.

[12] On February 11, 2021, Alcatel asked to file an additional response in order to address information that was presented in the reply of HMS/IT.

[13] In its directive dated February 15, 2021, the Agency provided Alcatel with the opportunity to provide an additional response limited to addressing the cable installation plan described in HMS/IT’s reply. On February 16, 2021, Alcatel provided its additional response. HMS/IT filed a rebuttal on February 18, 2021, which closed the pleadings.

ISSUE

[14] Is there a suitable Canadian ship available to perform the activities described in the application?

LEGISLATIVE CONTEXT

[15] When an application is made for a coasting trade licence to authorize a foreign ship or a non-duty paid ship to conduct a commercial activity in Canadian waters, the Agency is responsible under the Act for determining whether there is a suitable Canadian ship available to provide the service or perform the activity described in the application. The Act recognizes the interests of Canadian ship operators by permitting foreign ships to be used in Canadian waters only when no suitable Canadian ship or Canadian non-duty paid ship is available to provide the service or perform the proposed activity.

[16] The Agency must determine whether, on a balance of probabilities, there is a suitable Canadian ship available to perform the activity.

[17] The Agency’s process for making this determination is set out in the Canadian Transportation Agency Guidelines Respecting Coasting Trade Licence Applications (Guidelines).

POSITIONS OF THE PARTIES

Alcatel

[18] Alcatel claims that the ship selected to complete the activity must be capable of:

• carrying the entire EAUFON system, which includes 3,000 MT or 1,600 kilometres (km) of cable, 12 repeaters and a spare, and 4 branching units and a spare;
• ensuring that the branching unit housing and remote sea ground are grounded at all times when the system is powered; and
• installing the EAUFON system without refuelling during the cable-laying operations so that the activity can be carried out within the ice-free period of the geographic location.

[19] Alcatel states that the activity involves the installation of expensive, sensitive and complex telecommunication equipment under difficult marine conditions. It adds that there are significant consequences to any delays in the execution of the cable-laying operations. In the event that Alcatel does not meet the contract delivery dates, KRG will be entitled to liquidated damages. Alcatel contends that the activity requires a specialized cable-laying ship with a qualified crew experienced in cable installation, not only cable repair, and that the project leaves no room for error. Alcatel provides a support letter from KRG, which indicates that the selection of the “ILE D’AIX” as the main ship for cable laying was a determining factor for the selection of Alcatel as the supplier of the project in order to minimize as much as possible the level of risk.

[20] Alcatel states that it contacted both HMS and IT in October 2019 with a request for quotation (RFQ) for the work. It states that HMS’ bid was not compliant with several of the main project requirements and that IT declined the opportunity to bid.

[21] Alcatel claims that the ships offered by HMS/IT are designed as support ships for the offshore oil and gas industry and therefore are not technically suitable for this project. Alcatel contends that the feasibility study it conducted on the “HORIZON STAR” concluded that the ship is restricted in its ability to undertake the activity due to its size and the amount of cable required to be loaded on the ship. Alcatel further submits that, while the proposed deck layout provided by HMS/IT would be functional for cable maintenance work for cable segments varying from one km to 20 km, a larger ship is required because bigger equipment (cable machinery, jointing containers, etc.) would be needed to accommodate the entire EAUFON system.

[22] Alcatel submits that, due to deck strength constraints and cable tank shape, the maximum cable amount that can be loaded onto the back deck of the “HORIZON STAR” is estimated to be about 30 percent of the total EAUFON cable system. Alcatel claims that a single, large cable tank solution is required, as opposed to the multiple-tank solutions proposed by HMS/IT. Alcatel also submits that it would not be feasible to include two large cable tanks of comparable size on the deck layout due to anticipated deck congestion.

[23] Alcatel contends that the final allowable deadweight for loading cable on the offered ships would be variable, depending on how much fuel is loaded for the specific duration of an operational leg of cable laying. Alcatel claims that HMS/IT do not provide stability calculations or deck strength calculations to support their deck load availability figures.

[24] Alcatel contends that a 20-foot container, as proposed by HMS/IT, is not suitable for a temperature-controlled storage solution for repeaters and branching units and that the proposed deck layout does not allow for the safe transfer of equipment. Alcatel claims that HMS/IT failed to provide details for the controlled handling of the repeaters from their stacks and for their lifting and movement from the container to the cable tanks for jointing with the cable.

[25] Alcatel contends that the proposed layout of the equipment to be loaded on the deck of the offered ships does not address storing the repeaters inline, in that HMS/IT did not provide evidence concerning their capacity to store the repeaters pre-jointed and assembled in the cable. It further states that the proposed storage for the repeaters is away from the cable tanks and not suitable for inline storage, which it claims significantly increases the risk of damage to sensitive optic equipment during lifting and relocation operations of equipment at sea, prior and during cable-laying operations.

[26] Alcatel submits that HMS/IT have not demonstrated how they could accomplish the activity within the technical specifications of the KRG tender for the project. It claims that these specifications must be met for the selected ship to safely, effectively, and efficiently complete the activity described in the application.

[27] Alcatel highlights the following technical specifications in KRG’s tender:

• no modifications should be required to normal equipment or working practices provided on a conventional cable ship, either for cable-laying or maintenance operations;
• no modifications shall be necessary that would prevent the cable ship from working on existing submarine cables;
• ships used for deep water and shallow water installation shall be sound and capable of remaining safely at sea for a minimum period of 60 days; and
• the cable-laying operations shall be planned to minimize the number of joints made during installation by undertaking, where possible, a single, uninterrupted installation operation.

[28] Alcatel submits that HMS’ past association with IT to repair underwater cables does not qualify HMS to conduct the activity described in the application. It argues that HMS/IT have not provided the specifics of their collaboration and that IT’s role appears to be limited to providing equipment and not the personnel to operate this equipment. Alcatel contends that the only experience HMS has with submarine cable is related to cable repairs, which were conducted on four occasions in 2018 and 2019. It contends that IT’s project experience list relates to cable installation conducted by IT and not by HMS.

[29] Alcatel states that HMS/IT did not provide a schedule for the time and expenses required to modify an offshore supply ship into a cable ship and to remove the equipment at the end of the activity. Alcatel adds that HMS/IT have not provided details of how the cable equipment provided by IT will obtain the necessary compliance certificates, how HMS will meet the classification society’s requirements for approval of the ship configuration, or how it will obtain Transport Canada’s approval to carry the supplementary equipment.

[30] Alcatel submits that if it uses the ships offered by HMS/IT, then the cable-laying operations can only be accomplished with multiple loading phases and refuelling of the ships. Alcatel evaluated a hypothetical multi-trip installation scenario, splitting the system into four independent cables. The scenario assumed that the cable would be loaded from a dedicated freighter ship onto the “HORIZON STAR”, with the freighter remaining on standby in a suitable location. Using St. John’s, Newfoundland and Labrador, as the suitable standby location, Alcatel’s schedule of its multi-trip installation scenario indicates that the final splice of the submarine cable system would be completed on November 10, 2021, at the earliest.

[31] Alcatel contends that HMS/IT’s proposed rate of 100 km/day for loading the “HORIZON STAR” with cable is too optimistic, as it is restricted to single-line loading.

[32] Alcatel states that the cable will be installed on the surface of the seabed, given that the area is deemed low risk for cable damage. The cable will be deployed off the stern of the ship in shallow waters with variable seabed gradients. It states that the maximum speed during cable laying is 7 knots.

[33] Alcatel contends that the cable installation rate of 96 km/day proposed by HMS/IT is not realistic and risks damaging the cable and associated equipment. Alcatel claims that HMS/IT’s proposed installation rate is based on use of a lightweight protected cable (polyethylene covered), whereas the EAUFON cable is steel armoured and heavier. In order to manage the proper amount of slack in the cable and avoid suspensions of the cable during the installation, Alcatel claims that the cable-laying speed must be reduced to follow the profile of the seabed.

[34] Alcatel submits that, without proven equipment speed, a cable installation rate of 45 km/day is a more realistic assumption for the “HORIZON STAR”.

[35] Regarding HMS/IT’s proposal to use a freighter to carry segments of the cable to the Port of Churchill, Manitoba, and to use the freighter for cable reloads, Alcatel contends that HMS/IT have not elaborated a plan for outfitting the freighter with the required equipment. Alcatel claims that extended storage tanks for the cable, repeaters, and branching units with specialized storage and handling equipment are required, which it claims is complex, risky and costly.

[36] Alcatel also submits that HMS/IT have not elaborated a plan for chartering the freighter that would have to transit and remain on standby at the Port of Churchill, between July 19, 2021, and September 9, 2021. It claims that the plan proposed by HMS/IT would require Alcatel to charter such a ship.

HMS/IT

[37] HMS/IT submit that the “HORIZON STAR”, or one of its two sister ships, the “HORIZON ENABLER” and the “HORIZON ARCTIC”, is an available and suitable ship, capable of performing the activity described in the application. HMS/IT states that IT will provide the necessary cable-laying equipment and the necessary experience.

[38] HMS/IT contend that Alcatel’s requirement that the entire 3,000 MT of cable be carried in one load is arbitrary, and claim that this requirement is not found in any of the KRG tender documentation.

[39] HMS/IT state that their weight calculations are not incorrect, contrary to what Alcatel suggests. They state that their stability calculations confirm that there is latitude within items, such as ballast water and freshwater, to compensate for a further deck-load increase of 50 to 100 MT. They submit that stability calculations are proprietary, of no concern to Alcatel and not ordinarily disclosed during the coasting trade licence application process. They also claim that they addressed the deck strength issues and basic elements of those calculations in their cable installation plan.

[40] HMS/IT refer to Decision No. 153-W-2014 and Decision No. 392-W-2002, in which the Agency indicated that ship stability is a marine safety issue within the purview of Transport Canada.

[41] HMS/IT confirm that the repeaters will be accommodated as required by Alcatel and that they will be stored inline, pre-jointed and assembled in the cable. They also indicate that the repeaters will be stored in a temperature-controlled container positioned close to the cable tanks. HMS/IT argue that Alcatel has not explained why a 20-foot container is not suitable for this task, and remark that they have previously deployed this exact configuration successfully.

[42] HMS/IT contend that Alcatel has not demonstrated why some of the requirements in the technical specifications, such as the requirements for a five-year track record of relevant experience, 60-day fuel capacity, and restrictions on modifications to the ship, among others, are necessary to perform the activity described in the application. They claim that Alcatel’s arguments that the ships offered by HMS/IT do not comply with the technical specifications in the KRG tender are at odds with the intent of the Act. HMS/IT submit that the Agency must determine whether the offered ships are suitable to perform the activity, and not whether they are in strict compliance with all technical specifications of the tender.

[43] HMS/IT submit that strict compliance with the technical specifications of the KRG tender is not necessary to safely, effectively and efficiently complete the activity. It contends that ships built to specifications for offshore supply ships have been successfully utilized to lay submarine cables, including by IT itself.

[44] HMS/IT contend that experience cannot be used to determine whether a ship is suitable. HMS and IT have been in business for a collective 31 years and have significant experience working together, as well as in their own right. HMS/IT argue that Alcatel will have its own personnel onboard the selected ship, which will effectively be a platform for performing the activity under the direction and control of Alcatel at all material times, pursuant to charter party terms. HMS/IT submit that Alcatel will remain the directing mind of the cable-laying operations and, therefore, its concerns about HMS’ experience are moot.

[45] HMS/IT confirm that IT will supply all necessary engineering and installation expertise, equipment and personnel to safely deploy and install the cable. HMS/IT maintain that they have successfully collaborated in the past and that, in each of those cases, HMS provided the ship and crew and IT provided all cable-laying equipment and personnel. HMS/IT contend that companies can and frequently do work together to pool and rely on one another’s expertise. They claim there is nothing in the Act prohibiting partnerships, joint ventures, or other forms of collaboration.

[46] HMS/IT reject Alcatel’s allegation that their offer lacks details on scheduling, cost and suitability and argue that these issues could have been well addressed had Alcatel engaged with HMS/IT. They argue that Alcatel should not be permitted to simultaneously avoid engaging with HMS/IT and argue that insufficient information has been provided.

[47] HMS/IT state that the time to mobilize one of the offered ships is between five and seven days and that the ship can be easily adapted to accommodate IT’s equipment. HMS/IT confirm that their offered ships are currently in class.

[48] With respect to the required certificates, HMS/IT submit that the technical specifications of the KRG tender only require certificates to be provided before mobilization, and not as a precondition to the contract award.

[49] HMS/IT refute Alcatel’s assumptions that the proposal to lay the cable in segments, which involves the use of a freighter for cable reloads, would be costly because the freighter would have to be outfitted for extended storage with tanks for the cable and specialized handling and storage for the repeaters and branching units. HMS/IT contend that Alcatel always intended that a freighter could be utilized, referring specifically to Alcatel’s RFQ dated October 4, 2019, which states that “[t]he main assumption is that [Alcatel] will be responsible for the transportation of the cable from Calais [France] to a port to your convenience. However please quote as an option the extra cost for you to directly freight the cable from Calais to either your port of convenience or your vessel.”

[50] HMS/IT submit that their offered ships are not restricted to single-line cable loading as suggested by Alcatel and that loading cable is a straightforward process that does not require any specialized equipment or expertise. HMS/IT detail their plan to use a 14-metre and a 10-metre cable tank, arguing that they can utilize two lines for loading.

[51] HMS/IT contend that their proposed cable-laying rate of 96 km/day is in line with their experience and that it is fully attainable. They claim that their rate is not based on use of a lightweight cable as stated by Alcatel, but that it is based on their experience laying armoured cable in similar conditions and depths.

[52] HMS/IT submit that Alcatel’s suggested cable-laying rate of 45 km/day represents a ship’s speed of under 1 knot and wrongly assumes that they are only capable of laying 45 km/day, thereby discounting many years’ experience.

[53] The HMS/IT cable installation plan proposes to load an offered ship with an initial segment of cable from a freighter at St. John’s, followed by two subsequent reloads of the ship at Port of Churchill, from the same freighter waiting on standby there. HMS/IT provided confirmation from the Port of Churchill that the port can accept and service the ships with fuel, and has four deep-sea berths for loading. HMS/IT contend that transferring cable from shore to ship is not unusual and can easily be accomplished with regular stevedores who would operate under the direction of IT’s experienced team.

[54] HMS/IT state that their proposed installation plan to deploy the cable in three segments would complete the work within the timeline proposed by Alcatel, while also allowing for a 25 percent contingency, which they consider to be “generous”. HMS/IT further submit that laying submarine cable in segments is not an unusual practice, and they provided descriptions of previous segmented cable installations undertaken by IT, using a reloading ship.

ANALYSIS AND FINDINGS

[55] The onus is on the applicant to provide information in sufficient detail to permit the Canadian industry to assess and respond to the coasting trade application. An offering party is responsible for establishing that its ships are suitable and available to perform the activity. The applicant bears the burden of proof, on a balance of probabilities, to demonstrate that the offered ships are not suitable and available. Should the applicant fail to provide sufficient evidence to support its position, the Agency will determine that a suitable Canadian ship is available.

Availability

[56] Alcatel made no submissions in relation to the availability of the offered ships. The Agency therefore finds that the availability of a Canadian ship for the required period is not contested by Alcatel and is therefore not an issue.

Suitability

[57] While the offering party has the responsibility to establish that its ship is suitable to perform the activity, the ultimate burden of proof rests, on a balance of probabilities, with the applicant to demonstrate that the offered Canadian ship is not suitable.

[58] The Act does not define the term “suitable”, nor does it require that an offered Canadian-registered ship be identical to the foreign ship proposed in an application. The Agency assesses the suitability of the Canadian-registered ship in relation to the requirements of the proposed activities and whether the Canadian-registered ship is capable of performing these activities.

[59] The Agency considers the following suitability factors, if they have been raised and substantiated during the pleadings: technical and operational suitability—which refers to the technical characteristics of the ship and equipment—and the commercial and economic implications of using the foreign ship versus the offered Canadian ship.

DECK SPACE, CONFIGURATION AND TECHNICAL SPECIFICATIONS OF THE OFFERED SHIPS

[60] Paragraph 60 of the Guidelines states that an offered ship need not be identical to the foreign ship proposed in an application and that the suitability of the Canadian-registered ship is not assessed in relation to the technical specifications of the foreign ship. In this regard, the offered ships are not cable ships, unlike the foreign ship for which Alcatel seeks a licence, but this does not mean that they are not suitable for the activity in question. HMS/IT have demonstrated that the offered ships could be configured with the requisite cable installation equipment necessary to do the work, including two cable tanks, cable engines, cable chute, splicing area, power-feeding equipment, and repeater storage.

[61] Alcatel references technical specifications within the KRG tender documents that it argues must be adhered to with respect to the activity described in the application. The onus is on the applicant to prove to the Agency that any technical requirement is necessary for the work.

[62] Alcatel’s application states that the ship must be capable of:

a) carrying the entire EAUFON system, including all system cable, repeaters, branching units and spares. The related technical specifications require that the cable-laying operations should be planned to minimize the number of joints made during the installation by undertaking, where possible, a single, uninterrupted installation operation; and

b) installing the system without refuelling during the cable-laying operations so that the activity can be carried out within the ice-free period of the geographic location. The related technical specifications state that the ship must be capable of remaining safely at sea for a minimum period of 60 days.

[63] Alcatel argues that the ability to remain on station to install the cable avoids delays caused by moving in and out of the installation area and that it maximizes the chances of completing the cable installation by the end of September 2021. The ships offered by HMS/IT do not meet these specifications because they are unable to carry all the cable at once and require reloads and refuelling. The Agency notes that HMS/IT indicated in the schedule of their cable installation plan that they could complete the work 11 days after Alcatel’s completion date (October 8, 2021, instead of September 27, 2021).

[64] Alcatel also referred to a technical specification that states that “[i]n particular, no modifications should be required to normal equipment or working practices provided on a conventional cable ship, either for cable-laying or maintenance operations. No modifications shall be necessary that would prevent the cable ship from working on existing submarine cables.” As the ships offered by HMS/IT are not purpose-built cable ships, they would have to be modified in order to undertake the activity and, therefore, do not meet this technical specification.

[65] The requirements for essential equipment and operating practices are often legitimate prerequisites for an activity that needs to be completed to specifications and within certain time constraints. However, such requirements must not be arbitrary and must be essential to the activity described in the application. As recognized by the Agency in Decision No. 500-W-2002, the Act should not be interpreted in a way that allows applicants to impose artificial conditions on the activities described in their applications. As indicated in Decision No. 79-W-2020, the Agency’s mandate under the Act is to determine whether the offered Canadian-registered ship is suitable to perform the activity described in the application, and not whether it is the “best available” or the “most suited” ship for the activity.

[66] The offered ships do not meet certain elements of the KRG tender’s technical specifications. However, HMS/IT demonstrated that it would be possible to complete the activity described in the application by splitting the cable lay into three operational legs, with bunkering and cable reloads in Port of Churchill. While the proposed plan is operationally and logistically different than if using a larger, purpose-built cable ship, such as the “ILE D’AIX”, the need to modify a ship, by way of adding or removing equipment and reconfiguring deck layouts, does not preclude it from ultimately being technically or operationally suitable for an activity. The Agency finds that Alcatel has not demonstrated that a ship’s ability to remain at sea for 60 days and the need for a ship to require no modifications prior to completing the activity described in the application are necessary elements.

HMS/IT COLLABORATION AND SUBMARINE CABLE INSTALLATION EXPERIENCE

[67] The Agency notes that HMS and IT were consistent in the pleadings regarding their intent to work together. IT provided written confirmation that it would collaborate with HMS and provide its equipment and expertise.

[68] In Decision No. 381-W-2016, the Agency noted that a lack of previous experience with a particular activity cannot be interpreted as a ship being unsuitable for the required activity. The issue at hand is the suitability of the ship, not whether the ship has engaged in the activity before. In any event, the Agency accepts that HMS’ own experience in cable installation is irrelevant given that HMS and IT are making a joint offer and that IT has the necessary expertise. In addition, Alcatel will remain the directing mind of the cable-laying operations, and the offered ships would ultimately just act as a platform for IT and Alcatel to perform their roles. Alcatel did not dispute IT’s experience in cable installation; rather it took issue with HMS presenting IT’s experience as relevant to the offer. However, it is reasonable for HMS to reference IT’s experience in cable installation, as the offer is a joint one.

[69] The Agency finds that Alcatel’s arguments regarding HMS’ limited experience, and concerns regarding the availability of IT’s equipment and personnel are unfounded. The question is the suitability of the offered ship, and not whether it has experience performing the activity at issue. In any event, HMS/IT have established that IT has relevant experience and that Alcatel would be in a position to oversee the activity. Alcatel has not established that lack of experience renders the offered ships unsuitable.

HMS/IT CABLE INSTALLATION PLAN – CABLE-LOADING AND CABLE-LAYING RATES

[70] HMS/IT indicate that the two-cable tank setup that they propose on the offered ships will allow two-line cable loading and not single-line cable loading as initially suggested by Alcatel. Therefore, HMS/IT claim that a cable-loading rate of 100 km/day can be achieved at St. John’s for the initial load, followed by the Port of Churchill’s cable-reloading rate of 75 km/day. The Agency notes that Alcatel had estimated the cable-loading rates for the offered ships would be limited to a maximum of 90 km/day. While Alcatel contends that the stevedores at the Port of Churchill are unlikely to be qualified for cable loading, HMS/IT submits that transferring cable from shore to ship is not unusual and can easily be accomplished with regular stevedores who would operate under the direction of IT’s team.

[71] Alcatel also questioned the cable-laying rates proposed by HMS/IT. Although its application states that the maximum speed during surface lay is seven knots, Alcatel claims that HMS/IT’s proposed cable-laying rate of 96 km/day, or 2.2 knots, is unrealistic. It submits that, without proven equipment speed, a cable-laying rate of 45 km/day is a more realistic assumption for the offered ships. In order to manage the proper amount of slack in the cable and avoid suspensions of the cable during the installation, Alcatel claims that the cable-laying rate must be reduced to follow the variable gradient profile of the seabed.

[72] The Agency finds that Alcatel has not substantiated its concerns regarding the offered ships’ proposed cable-loading rates and the personnel who would be responsible for the cable loading. Additionally, the Agency finds that Alcatel has not substantiated its argument regarding the proposed cable-laying rates, as it has not provided any accepted industry standard as evidence that the cable-laying rate in HMS/IT’s plan is unrealistic.

RELOADING THE OFFERED SHIPS WITH CABLE FROM A DEDICATED FREIGHTER, AND REFUELLING AT THE PORT OF CHURCHILL

[73] It is undisputed by the parties that the offered ships do not have the load capacity to carry the supply of cable and related equipment, unlike the cable ship “ILE D’AIX”, which would be able to carry the entire EAUFON cable system and lay it continuously from start to finish. This raises the issue of the suitability of the offered ships to perform the activity if they are unable to carry the equipment being installed.

[74] HMS/IT’s cable installation plan proposes deviations from the logistics originally detailed in Alcatel’s application, because none of their ships have the capacity to carry the entire EAUFON system at once. According to their cable installation plan, a dedicated freighter would load the EAUFON system at Calais, then sail to St. John’s, where it would meet the offered ship to load the first cable segment. The freighter would then travel on to the Port of Churchill, where it would stay to provide two subsequent cable reloads to the offered ship, first in August and again in September. HMS/IT provided examples of their experience laying submarine cable systems in several segments with the cable segments supplied by a freighter.

[75] HMS/IT’s proposal adds additional travel across Hudson Bay to the Port of Churchill and back twice during the cable-laying operations. These reloading trips would require a total of 17 days according to the proposed installation schedule, giving rise to valid concerns regarding the possibility of incidents and delay to the whole activity. The Agency recognizes that completing the work during the ice-free period for the geographic location is critical to the success of the project and that the ability of a cable ship to remain on station for the entire installation duration maximizes the chances of completing the activity during this period. However, the Agency notes that Alcatel did not provide any evidence indicating that the proposed completion date is not within the ice-free period for the geographic location, nor any evidence of the accepted industry standard regarding the dates that constitute the ice-free period for the geographic location.

[76] HMS/IT’s cable installation plan requires the use of a dedicated cable reloading freighter to complete the activity described in the application, both to carry the cable from France to Canada and to remain on standby at the Port of Churchill to reload the cable segments. Alcatel’s RFQ, dated October 4, 2019, did indicate that it would consider the possibility of using a freighter to carry out some of the operations. However, HMS/IT did not provide information about the cost or logistics of chartering a freighter, including the cost of keeping the freighter on standby for a protracted period, or how the freighter would be outfitted to store all of the required cable, repeaters, and branching units. Nor did HMS/IT provide any information regarding how they could undertake the work without the support of a freighter.

[77] The offered ships do not have the capacity to carry the entire EAUFON cable system. The Agency accepts that this capability is not a strict technical requirement, because there is nothing that would indicate that the cable must absolutely be installed in one single operation. However, the limited carrying capacity of the offered ships raises the critical question of how they could be suitable for the activity if they are incapable of carrying the cable being laid. HMS/IT propose to address this issue through the use of a freighter that would remain in the Port of Churchill and from which the offered ships would load the cable system in segments. However, HMS/IT have not provided any evidence or submission to explain how they would charter this freighter, how it would be equipped to store the cable, and whether the freighter would be available to remain in the Port of Churchill during the activity. HMS/IT were invited by Alcatel during pleadings to address the freighter component of their offer, but they did not. This lack of information on the required freighter means that HMS/IT have not demonstrated that their offered ships would be able to complete the activity described in the coasting trade application without having the loading capacity to carry the entire EAUFON cable system.

[78] In light of the foregoing, the Agency finds that the offered ships are unsuitable to perform the activity described in the application.

CONCLUSION

[79] The Agency, pursuant to subsection 8(1) of the Act, finds that there is no suitable Canadian ship available to perform the activity described in the application.

[80] The Agency is providing this Decision to the Minister.