Successful shipbuilding process may be future template: Expert Halifax, Vancouver are the big winners in a three-decade, $33-billion, 15,000-job procurement strategy. But don't conflate this announcement with whether the ships will actually see the light of day, says one expert. By Carl Meyer Published Oct 20, 2011 1:00 AM

View story Email Comments To the Editor

Embassy Photo: Carl Meyer

Tom Ring, assistant deputy minister at Public Works and Government Services Canada, explains on Oct. 19 how the government will now negotiate an umbrella agreement with the selected shipyards.

The federal bureaucracy was so pleased with the results of its shipbuilding evaluation process that it is considering using it as a template for the future, says one naval expert.

Ken Hansen, a former naval defence fellow and current resident research fellow at Dalhousie University, was speaking about Canada’s largest shipbuilding procurement in history—the Harper government’s three-decade, $33-billion, 15,000-job procurement strategy—which saw a decision for large vessels handed down Oct. 19.

Irving Shipbuilding Inc. in Halifax won the largest prize, $25 billion to build 21 large combat ships like new frigates and destroyers, while Seaspan Marine Corp. in Vancouver got $8-billion to construct seven large non-combat ships like a new icebreaker.

Given the politically sensitive nature of doling out billions to two parts of the country in one lump sum while passing over a third, the government opted for a complex evaluation process.

When revealing the bid, senior officials took pains to point out that the process was non-political, shutting out politicians and lobbyists, and relied on “open and transparent consultations” as well as “independent third parties” like a someone called a "fairness monitor."

This worked so well that the government may replicate it elsewhere, said Mr. Hansen after consulting with a senior bureaucrat involved in the shipbuilding evaluation.

“There’s going to be a lessons-learned activity after the fact, and they’re going to capture all this new knowledge and put it together into some kind of an accessible document,” he said.

That move would be much needed in the federal procurement system, he said, since "it gets people to think strategically—longer-term than the standard four-year cycle for politics."

Government officials said the committee would likely make public the overall evaluation process, which used a ratings system to grade shipyards out of 100.

But some of the nuts and bolts—like the evaluation of a shipyard’s financial situation, including its sources of funding—could stay behind closed doors if it contained sensitive commercial information.

Mr. Hansen said he hoped the government made a lessons-learned document public so that Canadians could get a feel for the structure.

Process lauded by stakeholders, opposition alike

After the results were announced, the process was lauded by several groups including the Canadian Association of Defence and Security Industries, which called it “fair and balanced” and the Canadian Manufacturers and Exporters, which said it was “fair and transparent.”

The Conservatives themselves took the role of supporter, with Public Works Minister Rona Ambrose giving a separate announcement thanking the procurement committee and the shipyards for their participation.

NDP MP Peter Stoffer, whose riding borders Halifax and who has followed the shipbuilding saga for 14 years, said he could see no other way than to give the government credit over the independence and fairness of the program.

He did, however, argue that he had not yet seen the funding outline for the program, and he called on the government for the final costing details.

But the back-slapping over Vancouver and Halifax wasn't unanimous; the odd one out was Davie Shipyards in Quebec, whose fate was tied to a group that put together an 11th-hour bid after winning court approval to buy the company.

In fact, it was Mr. Stoffer’s colleague, NDP leader Nycole Turmel, who became the day’s biggest critic, blasting the Conservatives for leaving Davie “vulnerable” by “picking winners and losers.”

Liberal Leader Bob Rae also said the government "has a responsibility" to develop a plan to help the region in which Davie is based.

Davie hasn’t been completely hung out to dry, however. There is still a $2-billion work package for over 100 smaller vessels that it can bid for, as well as the $500-million annual maintenance and repair work that is open to all the shipyards.

There’s also the possibility that the larger shipyards won’t be able to handle all that’s coming their way, said Philippe Lagassé, assistant professor at the University of Ottawa who focuses on defence issues. An agreement might be worked out so smaller items could land in Davie’s lap.

“I wouldn’t be surprised if that’s kind of a conciliatory prize that’s handed out,” he said.

However, he cautioned against the news of the shipyards being selected being conflated with the issue of whether the ships would actually see the light of day.

The frigates and destroyers won’t see service for another decade, he noted, and the Joint Support Ship project has seen several snags over the last few years.

“I’m not sure we can be so confident that this is all just going to fall into place now,” he said.

The government's next step is to create what's known as an "umbrella agreement" with each of the selected shipyards. After that, contracts for the construction of individual ships will be negotiated. The government expects the first ships to be built to be Arctic patrol vessels for the Navy and science vessels for the Coast Guard.

cmeyer@embassymag.ca