BUSINESS

SNC-Lavalin Loses Federal Contract Worth Up To $22.8B

11/08/2014 10:31 EST | Updated 01/08/2015 05:59 EST
CP
The federal government is not renewing a major public works contract with Quebec engineering giant SNC-Lavalin.

The news comes on the heels of the company's announcement that 4,000 employees worldwide will be laid off in the months to come — 1,000 of them in Canada. SNC-Lavalin said its job cuts are due to a restructuring effort that will save the company about $200 million.

SNC-Lavalin has been in charge of maintenance for a few thousand federally owned buildings across the country for about a decade. However, that will no longer be the case as of April 2015.

Public Works and Government Services Canada is awarding the hefty eight-year contract to SNC-Lavalin’s competitor, Brookfield Johnson Controls Canada.

The eight-year contract is worth as much as $9.6 billion, with an option to renew for six more years, bringing the total potential value of the contract to $22.8 billion. The contractor will be responsible for maintaining around 3,800 buildings, facilities and pieces of land.

In a statement, the department responsible for awarding the contract said private contractors will subcontract about 50 per cent of the total value of the deal.

"As a result, hundreds of small and medium enterprises across the country will have access to the work through thousands of competitive subcontracting opportunities," the statement read.

Public Works and Government Services Canada said it followed a fair, open and transparent bidding process for the contract.

"It was posted on the Government Electronic Tendering Service after almost three years of industry engagement," the department said.