Les Leyne: Don’t swing at shipyard’s wild pitches

VKA-Leyne02832.jpgIt might be smart business and smart politics for Chantier Davie Shipyard in Quebec to pitch the federal government on building some ships.

But it would make no sense for anyone in Ottawa to do anything other than say: “Thanks, but no thanks.”

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Entertaining any bids from the company would involve undoing firm commitments given by the federal government five years ago as part of a grand strategy to put federal ship procurement on a rational basis over the long haul.

Coming up with a sensible plan is one thing. Sticking to it is another. Any divergence from what was signed and sealed in 2011 — by taking the Quebec outfit’s bid seriously, for instance — is going to be bad news for B.C. And it’s already happened once.

Seaspan was awarded the rights by the previous Conservative government to build about $8 billion worth of non-combat vessels over a generation in a process that got worldwide recognition for being transparent and non-partisan. Essentially, the government banished the politicians — and the lobbyists — from the process completely and handed it over to senior staff. They judged competing bids in a blind process and decided impartially to give the navy work to Irving Shipbuilding on the East Coast and the non-combat work to Seaspan. Davie was in the running, but lost.

Five years on, Davie has submitted a long-shot bid, revealed by Canadian Press, to provide icebreakers and multi-purpose ships. In other words, to horn in on work that it already bid on, and lost. The company said they can be delivered to the federal government for 60 per cent of Seaspan’s costs.

Seaspan CEO Jonathan Whitworth said the bid violates the exact reason the national ship procurement strategy was designed in the first place. It was to create a rational long-range plan with some certainty.

“It’s disingenuous for them to say they can do anything better,” said Whitworth. “They’re trying to mess with the system.”

Although Davie CEO Alex Vicefield said the bid was well received, Whitworth said it’s considered “dead on arrival.” The federal government Friday confirmed the bid has been dismissed.

Davie made a similar pitch last year and won a major job that could have been done at Seaspan’s Esquimalt yard. After two ships had to be retired suddenly, the Conservatives changed their own national strategy in the run-up to the last election to create room for Davie to bid on supplying a temporary naval-supply vessel. Whitworth said that work could have been done in Esquimalt for a fraction of the price and in much less time. The new Liberal government held that contract up for a time, but in December awarded the rush replacement job, worth up to $587 million, to Davie. There is still some benefit to Victoria, as a local supplier has a contract with Davie.

But Whitworth said it was a “gift” to Davie and it circumvented the procurement policy.

Nevertheless, if an end-run around the vaunted procurement strategy worked once, even through a change of government, it can work again.

Whitworth said the Davie yard has a troubled business history. It’s been in receivership three times and hasn’t delivered a vessel in years, he said.

Meanwhile, it has taken four years of preparation to get Seaspan to the point of delivering the first of the jobs it was handed.

Whitworth said the company spent $170 million of its own money gearing up for all the work ahead. Construction is underway in North Vancouver on a 69-metre fisheries research ship — the Sir John Franklin — to hit the water later this year and be moved to Esquimalt for completion by the end of 2017. Cost is capped at $514 million.

The B.C. government backed Seaspan’s bid by way of a tax-credit program related to apprenticeships. Whitworth said 28 are now at work and dozens more are expected to be hired.

That’s if the federal government sticks to the original plan and doesn’t take another swing at another wild pitch.


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