The president of B.C. Ferries is defending his staff against allegations of defamation, saying they had an obligation to act on concerns about the performance of two of its contractors.

Two companies -- Polar Design Sales Ltd. and Marine Design Associates Ltd. -- have filed a lawsuit.

The suit is focusing on an e-mail sent by a B.C. Ferries vice-president that said the two companies should not be used for any further work and any existing contracts should be ended at the first opportunity.

The e-mail complains of `several incidents of poor performance' by the companies, which are said to have cost B.C. Ferries `several hundred thousand dollars'.

The companies maintain there is no truth to the complaints, but B.C. Ferries president David Hahn testified today the e-mail was prompted by concerns about quality and cost overruns, and he stands by the decision to send it.

None of the allegations have been proven in court.