Local company decries offshore N.L. contracting

Claims international companies trying to get out of local-first obligations

Published on May 10, 2014
Sea-Force Hyperbaric’s Jim Hynes stands beside his company’s hyperbaric reception facility, inside a warehouse building near the waterfront in St. John’s. Hynes says a lack of enforcement of Atlantic Accord regulations is hurting the new company enough for it to consider moving outside the province. — Photo by Ashley Fitzpatrick/The Telegram

The “For Sale” sign on his new hyperbaric reception facility is a “might as well” at this point for Jim Hynes, who says improper contracting is killing what could otherwise be a positive addition to the local offshore supply and service community.

Hynes is a director with Sea-Force Hyperbaric and leads the company’s day-to-day operations.

A recipient of more than $1 million in public funds since 2011, the company offers support services for divers.

Its facility, its main asset, is used for the slow decompression of divers who perform construction and maintenance jobs under the pressure of deep water, absorbing certain gases into their body tissues.

The gases must be released over the course of several days and certain pressures, or risk harm to the workers.

Sea-Force’s facility is prepped to take up to 18 divers at a moment’s notice and is located inside a large, blue box of a building at the NewDock yard off Water Street, near the waterfront in St. John’s.

However, Hynes said this week, that location may not be permanent.

The company needs to be successful in obtaining contracts with offshore operators in order to pay its bills.

Contracts to have the facility on standby have been impossible to win with one operator, he said, accusing Suncor Energy of not respecting the provisions of the Atlantic Accord and providing “full and fair opportunity” to Sea-Force as a local company.

Hynes has recently been notified his company lost out on a contract with Suncor for a month of work, set for later this year.

The contract instead went to Subsea7 which, he said, plan to bring in a hyperbaric support unit from another country for the job.

Subsea7 was also the company responsible for handling the tender process, he said, suggesting the company found a way to simply award the contract to itself.

Sea-Force lost the contract on “a commercial basis.” Subsea7, with its 75 employees based in St. John’s, reportedly offered the service at a much better price.

Hynes does not believe the proper service could be provided at a better price if the required equipment has to be brought in.

“They have to go where this system is to somewhere in the world now, take it all apart, lift it with a crane, put it on a truck, bring it to their vessel somewhere in the U.K., put it on the vessel, bring it across here, take it off their vessel, set up a place in Bay Bulls outside with a big crane, put all this together, commission and test it, have it there for 30 days, take it all apart and ship it back, which takes two to three weeks,” he said.

“And they can do that for 50 per cent less than what I can do it here?

“It’s impossible.”

He has gone to the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) and accused the company of intentionally lowballing the cost of service.

“We follow up on all complaints and are following up with the operator, Suncor,” a representative for the board has confirmed.

Defends process

Subsea7 is standing by the award.

“All available suppliers of hyperbaric reception facilities were given an opportunity to bid on a full and fair basis,” Stephen Henley, managing director for Subsea7 in Canada, said when reached about the complaints.

“Subsea7 took great strides to ensure a fair and equitable process. Firstly, a protocol for bid submissions and analysis was established between Subsea7 and Suncor. Secondly, within Subsea7, the bid analysis was completely isolated from the tendering process; as such, all bids were subject to the same rigorous confidentiality requirements. And thirdly, Subsea7 was required to submit its proposal to Suncor two days in advance of its competitors’ bids to ensure integrity of the process,” he said.

Suncor performed its own review of the proposals, including one from a third bidder, Unique Group.

“Suncor applied due diligence oversight to ensure the integrity of the Subsea7 bid process for (hyperbaric) services and is satisfied that it was not only a fair competitive bid process, but that the most competitive bid was selected,” stated Suncor spokesman John Downton.

“The regulator, CNLOPB, was advised of the process and outcome and it raised no objections,” he added.

He said Subsea7’s dive support vessels, with hyperbaric units, are “globally-based and are internationally mobile,” speaking to the challenge on cost.

Penalized for complaint

Yet Hynes said he believes his company is being penalized for making a complaint to the CNLOPB in 2013, on an issue also relating to fair contracting.

As of mid-September 2013, the board found the process used in contracting for hyperbaric facilities in that case was “not entirely consistent with the full and fair opportunity provisions of the legislation,” according to a letter sent from the board to Hynes.

Minister knows about dispute

Meanwhile, Minister of Natural Resources Derrick Dalley is aware of the contracting dispute.

“Officials from the Department of Natural Resources have been in contact with the CNLOPB and Suncor, and are continuing their review of the complaint made by Sea-Force Hyperbaric,” a spokeswoman for the province said via email.

“The requirement for full and fair opportunity for local companies is a significant commitment in the Atlantic Accord, and we expect all operators to meet this condition. More importantly, the safety of people engaged in our offshore petroleum industry is our highest priority.”

Hynes said Sea-Force continues to seek other offshore support contracts for now, but he is also looking at relocating the company’s hyperbaric facility. If not feasible, with little buy-in by the operators active offshore Newfoundland and Labrador, his novelty “For Sale” sign will become fact.