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Three shipyards set to share $7 billion in navy maintenance contracts


OTTAWA – The federal government says it plans to divvy up $7 billion in maintenance and repair contracts for Royal Canadian Navy frigates to three shipyards, a political compromise that was met with mixed reaction.

Public Services and Procurement Canada announced the advance contract award notices on Thursday for Halifax’s Irving Shipbuilding Inc., Seaspan Victoria Shipyards in Victoria, B.C., and Davie Shipbuilding in Levis, Que.

The contracts are to maintain Canada’s 12 Halifax-class frigates until the end of their operational life, estimated at another 20 years.

Ottawa said in a statement that after consultations, it was decided the three Canadian shipyards were needed to complete the work on the warships.

It was not immediately clear how the money would be divided among the three shipyards. A government spokesman said the value of each contract would be variable as the number of “docking periods” per shipyard may vary.

David Baker-Mosher, president of the Unifor Marine Workers Federation Local 1 union at Halifax’s Irving shipyard, called the government’s plans an “utter disappointment.”

“Workers feel their future is being jeopardized,” he said, noting that the decision could mean layoffs.

“It’s disappointing that our government cannot understand how these ships are worked on and how much skill is needed.”

At issue is a gap between the end of the Arctic and Offshore Patrol Ships program and the start of the Canadian Surface Combatant program.

Irving has indicated in the past that repair work on the Halifax-class frigates would help mitigate that gap and sustain jobs.

An Irving spokesman declined an interview on Thursday’s announcement, but said the company would provide comment following an announcement by Defence Minister Harjit Sajjan at the Halifax Shipyard Friday morning.

In B.C., Tim Page with Seaspan said the company was pleased with the government’s intent to contract the Victoria shipyard.

“We have been repairing and refitting those vessels now for some time on budget and on time and that elicits great pride in our workforce in Victoria,” said Page, Seaspan’s vice-president of government relations.

However, he pointed out that “it’s not the end of the road” as there is a 15-day “cure period.” The deal gives other interested suppliers 15 days to come forward if they wish to bid on the contract and submit a statement of capabilities that meets the requirements laid out in the contract notice.

In Quebec, the announcement was greeted with relief by Davie Shipbuilding, which has laid off hundreds of employees over the past year as work dried up.

“There is finally stability,” company spokesman Frederik Boisvert said.

Ottawa has faced strong pressure from the Quebec government to send more work Davie’s way.

The company had 1,500 employees during work to convert a civilian ship into a new interim resupply vessel for the navy, but the workforce has fallen to 250 since that ship was delivered in 2017. Davie has been seeking a contract to produce a second resupply vessel.

Ken Hansen, an independent defence analyst and former navy commander, said dividing the work between three shipyards through untendered contracts is about politics.

“Any work that is awarded to Davie is done for the sake of politics,” he said. “It tells you that the power of the Quebec caucus in the Liberal party is really strong.”

Hansen said international best practice is to do repair and maintenance work in the ships’ home port.

“If the ships have to travel a distance and get their work done elsewhere, it’s both ineffective and uneconomical,” he said.

The Royal Canadian Navy’s Atlantic fleet is based at CFB Halifax while the Pacific fleet is based at CFB Esquimalt near Victoria, B.C.

Hansen added that the decision hearkens back to a historic approach to shipbuilding in Canada

“The various regions all had a slice of the shipbuilding pie and what ended up happening … was this boom and bust cycle,” he said, noting that it led to repeated gaps in work and layoffs.

Michael Byers, a University of British Columbia professor and expert on Canadian defence policy, agreed that the decision was likely influenced by politics but called it a “defensible policy choice.”

“It’s likely a decision made for a political reasons, but it’s not a decision that threatens the viability of the shipyards in Halifax or B.C.,” he said.

“It’s a defensible decision even if the motivation was probably political.”

Byers added that Irving can also bid on work on the commercial market and shouldn’t expect government to fill every gap.

“From a political point of view, it is interesting that the government has found a way to potentially satisfy everyone,” he said. “From a vote winning perspective, that’s an optimal outcome for the federal government.”

Conservative Leader Andrew Scheer, in Quebec City to meet with Premier Francois Legault, accused the federal government of “neglecting the Davie Shipyards.”

He said the resupply vessel was delivered “on time, on budget, and now they’re delaying the second ship unnecessarily, which is costing jobs here.”

Nova Scotia Premier Stephen McNeil said his government has spoken with Ottawa about maintaining work at the Halifax Shipyard.

“We’ve made the case to the national government that we believe the level of work should be maintained at the shipyard so they can hold on to the high quality talent that they currently have,” he told reporters.

Ottawa says the work on the frigates is necessary while the navy awaits the delivery of replacement Canadian Surface Combatant ships.

 

News from Canadian Press Enterprises Inc. © 2018

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1 Comment » for Three shipyards set to share $7 billion in navy maintenance contracts
  1. Randy says:

    Politicians should have their ability to pick winners and losers removed. Politicians lack the knowledge and expertise to evaluate these large projects. Politics should be completely removed from all equations. Government should be required to provide a budget for these projects followed by stop measures for cost over runs. At this point there should be no involvement from government outside of securing the funding. Projects should be rewarded on capability, performance to deliver on time and on budget. Outside of providing a budget and securing the funding, no politician should have any other input. For example what professional expertise or knowledge does a drop out drama teacher have with respect to building ships. What expertise does an MP for defense have particularly a combat officer with relation to the navy? Outside of communicating the navy’s needs no politician has any expertise when it comes to building ships. Leave it to the experts people we already pay handsomely to award contracts. For it to remain impartial bids could be blind bidders with the company name not known until the award is made. Remove the lobbying. A tender should be communicated, followed with bids being reviewed based on them meeting criteria only. Mess up your bid no do overs to maximize your ability to meet requirement based on political elegance. Political influence on major projects is costing Canadians money thru over runs, delays and political pandering. Remove the political equation and build base on performance and budget.

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