Adding a third shipyard to the federal government’s massive multi-billion dollar shipbuilding strategy will not affect work already allocated to the other two yards, according to the federal department overseeing the program.
On Thursday, Public Services and Procurement Canada's announcement that Quebec’s Chantier Davie has pre-qualified to act as the third strategic partner to the National Shipbuilding Strategy (NSS) alongside Irving Shipbuilding in Halifax and Seaspan in Vancouver.
Back in 2011 Irving was named the prime contractor for the combat-portion of the NSS, and has been tasked with building six Arctic and offshore patrol ships (AOPS) and 15 new warships for the navy at a cost of around $60 billion, as well as two additional AOPS for the Canadian Coast Guard, announced in May -- work which is expected to take them through to the end of the 2030s.
Seaspan was given responsibility for the less expensive non-combat portion of the NSS and is building a number of science vessels, support ships, and smaller multipurpose vessels.
In August, Ottawa announced that an additional six icebreakers would be constructed to replace the coast guard’s aging fleet of heavy and medium icebreakers, and that the vessels would be built at a third, yet-to-be named, shipyard that is to be selected through a competitive process under the NSS.
The size of the shipbuilding pie
While Thursday’s announcement doesn’t give Chantier Davie the contract for the six icebreakers, it means Davie is the only yard that demonstrated it meets initial requirements related to experience, capability and capacity needed to pre-qualify for the build. It’s also the first step in positioning Davie as an equal partner to Irving and Seapsan in the NSS.
Davie will now move to the next stage in the selection process that will include a third-party assessment of the shipyard’s infrastructure, submission of a formal proposal, and a process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure, similar to the process previously undertaken in 2011 to select Irving and Seaspan.
Following that, the government will begin negotiating an umbrella agreement, which it says is expected to be put in place in late 2020.
Chantier Davie, backed by federal and provincial politicians in Quebec, has long called on Ottawa to give them a larger piece of the shipbuilding pie, despite not qualifying as a prime contract back in 2010 and 2011 when the initial competition was held. But that didn't stop the government from giving them work: Davie has already successfully converted a commercial container ship — MV Asterix — into an interim auxiliary naval replenishment ship for the Royal Canadian Navy and in 2018 the yard won a $610-million contract to convert three icebreakers for the Canadian Coast Guard.
All this has ruffled feathers at Irving, a longstanding rival of Davie, and has prompted repeated calls for reassurance from Ottawa that NSS work already promised to Irving will not be redirected out of Atlantic Canada. The government has, repeatedly, offered that reassurance.
In late 2018 concerns about the reallocation of some Halifax-class maintenance work to Davie led to the Halifax Shipyard union launching a “Ships Stay Here” campaign to call on the federal government to provide the yard with more work to prevent layoffs between the two major NSS builds.
A spokesperson for Public Services and Procurement Canada confirmed Thursday that the recruitment of a third yard for the icebreakers will not affect already allocated work.
“Because the current work packages for Irving and Seaspan will see both shipyards working to capacity until the 2030s-2040s, they needed to engage a third shipyard to support timely construction of the six new program icebreakers,” the department said in an email.
Irving's concern likely low: analyst
David Perry, senior analyst with the Canadian Global Affairs Institute, said Irving is likely not too concerned about Thursday’s announcement as the two additional AOPS it is building for the coast guard will fill any gap in production schedule between builds. It’s not clear, however, if these six coast guard ships were expected to go to Seaspan.
Perry pointed out, though Seaspan was selected to be the go-to yard for non-combat vessels and likely expected to be given all associated NSS work for the recapitalization of the coast guard fleet, when the initial contracts were awarded in 2011 there was no commitment of funding for those icebreakers, so they were not included in the umbrella agreement.
“Although (Seaspan and Irving) become the identified source of supply although there were caveats that having being identified as the source of supply didn't actually contractually obligate the government to follow through on work,” he said.
Retired navy commander and defence analyst, Ken Hansen, said he believes there’s more than enough work to keep all three busy.
“You need a specialty builder for Arctic capable ships, real icebreakers,” he explained.
“It’s a very detailed and laborious process and it requires a lot more in the way of materials because they are very heavily and sturdily built ... it takes a real expertise and its it's something you need to have focused so you can be proficient and effective.”
Because of the need for a specialized yard for this kind of ship, Hansen said Ottawa’s plan makes sense, especially when one considers the dire need for new ships in the coast guard. The fact that it will land well with Quebec voters is a bonus.
While he believes all three yards should be kept busy enough for now, the real challenge will be keeping up the demand for work for all three yards.
“The trouble will come if we get an economic downturn, revenues decline, a change in government with a different perspective, there’s all kinds of things that can cause shockwaves,” he said.
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