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Five months before election time, the federal government’s national shipbuilding procurement strategy is threatening to come apart at the seams, despite the fact that senior members of cabinet are aware of a potential solution and of a mind to push it forward over the objections of bureaucrats at the Department of National Defence who are, as is their custom, ragging the puck.
The biggest portion of the $30-billion-plus naval build, on the east coast, is moving ahead, albeit slowly, with Irving Shipbuilding Inc. in January awarded the task of building six DeWolf-class Arctic offshore patrol ships, and named prime contractor on the Canadian surface combatants, the fleet of 15 vessels to replace the Royal Canadian Navy’s Halifax-class frigates and Iroquois-class destroyers.
The Western tranche, the $8-billion in work allotted to Seaspan Shipyards to build the non-combat vessels — including four smaller coast guard boats, one large polar icebreaker and two very large support ships — is where problems have emerged.
Seaspan’s yard in North Vancouver has in the past produced mainly barges and ferries. As a result, the yard required a big upgrade, which the company has done, at a cost, it says, of $170 million. That work was completed last November. Yet no contract with the federal government has been finalized, nor has construction of the coast guard vessels begun.
Under the terms of its non-binding agreement with Ottawa, signed in February 2012, Seaspan was required to reach a “target state” — that is, readiness to begin work — by mid-January of this year. That deadline passed with no target state achieved. According to industry sources, the company has been granted an extension until June.
According to some industry estimates, given the four smaller coast guard vessels are in line to be built first, it could be the mid 2020s before the Navy again has a supply vessel, or oiler, without which it is greatly limited in its ability to project power. Both HMCS Protecteur, which caught fire in early 2014 and had to be towed to Hawaii, and HMCS Preserver, were retired last year.
This is where another shipbuilder, Davie, re-enters the story.
When the shipbuilding procurement strategy was announced in 2011, Davie was under protection from creditors. Today, under its new European owners, Zafiro Marine, Davie is again a bustling shipyard, with about 1,300 employees. For the past year, the company has been quietly advancing what it terms a “gap filler,” a cost-effective means of providing the Navy with some supply capability to fill the void until the West Coast ships are ready. Davie says it can refurbish a commercial tanker and make it available within 16 months for lease at between $35 million and $65 million a year, depending on the length of the term, plus an additional $12 million a year for crew, all-in.
And here’s where it gets delicate: There are jobs at stake in Levis, Que., should the gap-filler project not go ahead. Davie issued 200 temporary layoff notices Friday.
The government could simply green-light Davie’s plan, while stressing this is a stop-gap only. Ottawa would then be in a better position to dicker with Seaspan, should there be further delays out West. For the taxpayer and the Navy, this would appear to be a slam-dunk.
The resistance apparently comes from senior bureaucrats at DND, architects of the support ships, who consider any incursion by another shipyard to be a threat to their favoured project. Elected leaders, are once again in thrall to unelected silo-builders at DND, a dynamic not unlike the one in 2012 when the F-35 program collapsed under the weight of delays and ballooning costs. The more things change . .