Public Service Alliance of Canada BC

source: The Vancouver Sun

OTTAWA — Such fast-food outlets as Tim Hortons, Pizza Pizza and Subway are quietly popping up on military bases across the country in sole-source deals that “hand them a captive market,” says the Union of National Defence Employees.

It wants to challenge the legality of replacing base restaurants, canteens and cafeterias operated by the Canadian Forces Exchange System — known as CANEX — with food outlets and franchises without seeking bids from other suppliers.

“What bothers us is these private sector companies are selling on Crown property to provide services to a captive market, the military troops and their families, without being publicly tendered. It raises the question of how many small businesses would love to put in a bid for such a captive market,” said UNDE President John MacLennan who intends to ask Auditor-General Sheila Fraser investigate.

“We’re challenging these contracts. How can one arm of a department be exempt from contracting rules, the Federal Accountability Act, and fair competition? At the end of the day, they all answer to the Chief of Defence Staff who is a public servant.”

But CANEX, which runs all retail and food services on bases, wings and units, is exempt from the contracting rules that govern National Defence and all other federal departments.

CANEX is part of the Canadian Forces Personnel Support Agency, which oversees all ‘non-public property’ and is not part of the department. This arms-length agency has 5,000 employees whose mandate is to take care of the “morale and welfare” of military personnel and their families. It answers to a board of directors and comes under the authority of the Chief of Defence Staff General Rick Hillier.

CANEX can use federal property for its stores and restaurants and it keeps its revenues to pump into community programs on bases, from babysitting and child care to recreational and sports programs. But MacLennan worries hand-picking franchises and operators will affect the “quality of life” on bases if these fast-food chains are eating into the share of revenues that go back to the bases for community programs. He said many CANEX employees were spouses and children of military personnel and they now have to work for franchises where they make less money than when they worked for CANEX-operated restaurants.

But Gerry Mahon, the president of CANEX, said CANEX’s food operations are generating record revenues for bases. He wouldn’t reveal those numbers, but said CANEX directly contributed $5 million to base programs last year. At the same time, the number of food outlets have increased and the quality of service improved.

CANEX operates 41 retail outlets, from grocery to convenience stores, in addition to the 250 concession agreements it has with retailers, from fast-food outlets to tailors and hairdressers.

He said CANEX does evaluations of what the base needs and wants and selects services and retailers that would be found in similar sized “progressive” communities. Tim Hortons is popular among the military and opened its first outlet on a base more than 13 years ago. He argued CANEX wouldn’t be able to get the services it wants if these concession contracts were thrown open to competition.

“We aren’t talking about taxpayers’ money. This is money generated by the people (on bases) and we’re returning that money to deliver day-to-day morale and welfare programs for them across Canada.”

He said CANEX is developing a national food services program so the fare, service and quality are consistent whether personnel are stationed in Halifax or Esquimalt.