For the second time a local firm has lost a US defense contract in Greenland — despite a lower bid

By Kevin McGwin, The Arctic Journal - May 30, 2017

In 2014, Greenlandic firms held three contracts with the US Air Force to provide transport and maintenance services for Thule Air Base, a military facility in the north-western corner of the country.

That number is now down to one after Royal Arctic Line earlier this month lost a two-year contract to provide sea-lift services for the base, despite submitting an offer that, according to company officials, was half as expensive as the winning bid.

The loss of the sea-lift contract follows the selection in 2014 of an American-controlled firm to replace Greenland Contractors, a company that is part owned by the Self-Rule Authority, to provide maintenance services on the base.

While the fallout from that tendering process has driven a wedge between Nuuk and Copenhagen, Royal Arctic Line downplayed the effect of losing the sea-lift contract, in large part due to its relatively small, $8.5 million, value. (The base-service contract, by comparison, is valued at over $400 million over an eight-year period.)

Nevertheless, company officials and legislators expressed surprise that Schuyler Line, a U.S.-based firm, had been selected, despite the significantly higher bid.

The selection of Schuyler also came despite Royal Arctic Line performing “exceptionally” in the eyes of the U.S. officials, Lars Borris Pedersen, a Royal Arctic Line executive, said after attending a meeting at the US embassy in Copenhagen.

Schuyler Line, which completed a resupply mission to the base in 2016, code-named Polar Goose, was ultimately selected because it is an American firm, Pedersen was told.

Speaking with Sermitsiaq, a Greenlandic weekly owned by The Arctic Journal’s parent company, Pedersen said Royal Arctic Line would likely have been selected had it been an American-owned firm.

In Copenhagen, members of the national assembly questioned whether the tendering process violated competition laws, as well as whether the preference for American firms had played a similar role in the assignment of the maintenance contract.

Next up for a decision will be a contract to provide civilian air transport to the base. Air Greenland, the country’s flag carrier, has won the three most recent five-year tenders. Before that, SAS, a Scandinavian airline, held the contract.

The value of the deal is not public, but winning a fourth tender in 2018, according to Hans Peter Hansen, an Air Greenland executive, would be important for the airline.

The rules for the next tender have yet to be drawn up, but there is little evidence they will put Greenland’s interests first.