AG Ramlogan gets a letter from Bombardier saying CAL didn't act fairly

Senator the Honourable Anand Ramlogan,
Attorney General,
Ministry of the Attorney General,
Cabildo Chambers,
Cor. St-Vincent & Sackville Sts Port of Spain,
Trinidad & Tobago,
December 21, 2010.

Dear Minister Ramlogan:

I understand from recent press reports that you are conducting enquiries concerning Caribbean Airlines' recent decision to purchase 9 ATR72 aircraft, both with regard to the process by which the decision was made and the merits of the decision itself.

I am Bombardier Commercial Aircraft (BCA)'s Director of Sales responsible for sales activities of BCA's commercial aircraft products to Caribbean Airlines and led a sales campaign for Q400s for Caribbean Airlines.

I'd like to bring to your attention what I believe were shortcomings of the process by which Caribbean Airlines selected the ATR72s. What follows is a chronology of events which will explain why BCA feels we were not given an equal footing with ATR.

BCA has been marketing the Q400 to CAL for some time, my first Q400 presentation to CAL was in March, 2007. Up until November, 2009 the pace of our discussions with CAL was very slow with CAL showing little interest in replacing or augmenting the 5 Bombardier Q300s it currently operates.

Meetings were infrequent and virtually all the meetings were at our own initiative—save for a meeting in February, 2008 which we participated in which was organised at the request of then PM Manning to discuss the proposed acquisition of a Global business aircraft by CAL for the Mannings' use.

Then CEO of CAL Philip Saunders advised me he had been requested by CAL's then Chairman, Mr Arthur Loc Jack (sic) to ask me to arrange for my Bombardier Business Aircraft counterpart to present an offer to CAL and Manning for a Global and the meeting took place at the PM's official residence. I understand there were further meetings concerning the purchase and sale of a Global but I wasn't involved.

In November, 2008 we issued proposals to CAL for 5 Q400s and 8 CSeries aircraft to give them an indication of what an offer from Bombardier generally looks like, ie, indicative pricing and the sort of ancillary services that typically goes with the sale of new aircraft. Very preliminary. We never received a response to our proposals.

In January, 2010 I paid CAL another visit to discuss their fleet plans and we made a presentation to Chairman Loc Jack (sic), Capt Brunton and several members of CAL's management. Capt Brunton had recently been appointed the airline's CEO and he had advised me in November, 2009 that they intended to make a decision to replace their Bombardier Q300s with new turboprop aircraft in the next 12 months.

At this time we learned that Chairman Loc Jack (sic) had engaged a consultant, Frederic Mognetti, to assist in CAL's evaluation of aircraft that might replace their Q300s, particularly the ATR72 and the Q400. We were also advised that ATR would be presenting within a day or so of our presenting.

We were not asked to make CAL a commercial offer for the sale of Q400s and we did not do so; the presentation was product oriented (range, payload, cargo capacity, fuel burn, maintenance schedule and costs), not a commercial offer.

Shortly after our visit, I was advised by Capt Brunton that CAL was leaning toward the ATR72 because ATR was offering to put a training facility and a maintenance repair facility for ATR72s in Trinidad to serve the region and also because the ATR72 was being offered "at a very low price" and CAL believed the ATR72 was more economical to operate.

We had not had any serious discussion with CAL about the price of a Q400. We hadn't yet defined the aircraft, ie, the configuration and specification of the aircraft—for example, what avionics suite they wanted in the cockpit—so a pricing discussion was somewhat premature.

In July, 2010, we submitted a detailed presentation to CAL, including a comprehensive network schedule, showing the Q400 to be more economical than the ATR72 notwithstanding a somewhat higher estimated purchase price of the Q400, provided the Q400 is used, in part, to replace and/or augment jet service on certain routes.

We emphasised that CAL ought to adopt a common practice employed at other airlines—to right size the equipment flown on a given route according to time of day, day in the week and the season in order to reflect the demand for service at those times of day/day of the week/season and that the Q400 could make a major contribution in this regard because of its jet like speed, a major distinction from the ATR72 (which are in fact slower than the Q300s CAL currently operate).

Despite our submission, CAL appears to have remained focused almost exclusively on the cost of operating the Trinidad-Tobago air bridge service and did not give due consideration to where the aircraft could/would be put into service in future.

In early August, 2010, I was advised by Capt Brunton that CAL had negotiated a definitive agreement with ATR and he intended to submit it to the Minister who has oversight of CAL for approval to proceed with an order for 9 ATR72s.

We were taken aback, to say the least. No RFP had been issued and no criteria had been established and communicated to Bombardier as to how competing bids would be evaluated. Indeed, we had not even been asked/invited to make a written bid! Also, there had been no "side by side" negotiation of two or more competing contracts to see who was offering the best overall terms and conditions, which is industry practice.

CAL had still not spent any time or effort in settling what optional features they would they required if they were to have proceeded with the Q400, reflecting the fact they appeared to have already made up their minds to proceed with the ATR72.

Also, I [was] advised by members of CAL's middle management that the evaluation process wasn't being made at the management level, with the input of middle and senior management, it was all coming from the top down with very little, if any transparency.

In August, we made a "best and final" offer to CAL, offering our aircraft at a very aggressive price ($19.7 million USD including a placeholder for optional features on account of the configuration and specification not having been settled) and agreeing to support CAL to qualify as a Bombardier Recommended Service Facility for the Q1000/200/300/400 product line.

We voiced our concerns about not having been treated fairly in CAL's evaluation process.

We also arranged to meet Minister Warner and aired our concerns regarding the selection process employed at CAL. Unfortunately, we never heard back from CAL. Based on the forgoing, we respectfully submit as follows:

1) the procurement process was flawed: - no RFP was issued; - no objective criteria were established and communicated to Bombardier regarding how competing offers would be evaluated; - no timelines were established; - preferential treatment/focus was given to ATR; and - by not running concurrent negotiations with ATR and Bombardier, CAL likely did not achieve the most favorable terms and conditions possible.

2) the evaluation process was flawed: - CAL hadn't given due consideration to where the aircraft would be operated; and - CAL was evaluating its jets and turboprops as separate fleets rather than as one integrated fleet.

Minister Ramlogan, I hope this information is helpful to you in your review. If you have any questions or comments, please do not hesitate to contact me.

Yours truly,
Ross Gray,
Director of Sales, the Americas Bombardier Commercial Aircraft
(Reproduced from the Trinidad Express)