Mark Collins – RCN Ship Procurement, or, the Curse of Irving: Canadian Surface Combatant Section

Further to these posts,

The Great Canadian Shipbuilding Never Never Land: Wild-Ass Guesses=FUBAR

RCN Ship Procurement, or, the Curse of Irving

we now learn that a semi-secret cabinet committee on defence procurement appears to be looking into the sweet arrangements with Irving, Halifax, the shipyard chosen over four years ago to build the Navy’s new high-end warships:

Irving Shipbuilding’s $26-billion warship procurement deal under review, senior source says
[that number no longer valid–see “FUBAR” link above]

The multi-billion dollar sole source deal to build a new fleet of warships for the Royal Canadian Navy is being reviewed by a newly-formed Cabinet committee set up to take a closer look at controversial defence procurement contracts.

Irving Shipbuilding in Halifax was awarded the build contract [in fact no build contract has yet been awarded–that is planned for 2020, see here for “Major Milestones…Implementation Contract” and see also the end of this post] as part of Canada’s largest-ever defence procurement project, the $26-billion Canadian Surface Combatant program.

Irving was also named as the prime contractor on the design phase. That role allows Irving a say in designating sub-contractors for the project, and awards Irving a cut of their payment — which could be even more lucrative than building the ship hulls, since up to 70 per cent of the cost of the vessels derives from the complex combat systems that will be installed on them.

That role as prime contractor is now “under active discussion,” said a senior industry source.

Irving’s appointment as prime contractor was greeted with shock in the industry. Since the contract was awarded without being put out to tender, accusations followed that the taxpayer might have received a better deal had competing bids been received.

The Conservatives justified handing Irving the work without a tender on the basis that it would save money having one contractor instead of two (one for the build, one for design), each charging a percentage fee on every dollar spent.

Government and industry sources say Irving put out calls last fall for information and data from pre-qualified defence companies interested in bidding on the design and combat systems integration phase of the project.

However, that process stopped “dead in its tracks” after the new Liberal government indicated its plans for a new ad hoc Cabinet committee, chaired by environment minister Catherine McKenna, to review key projects…

Sources said the choice of Irving’s Halifax yard as the construction site for the combat vessels is not in question. Justin Trudeau promised as much during the election. “We will be able to guarantee the delivery of current procurements for the navy, we will keep those promises for the Halifax shipyards,” he said in September.

As Postmedia reported last month [story here], Public Services and Procurement Canada has confirmed that no contract has been signed between the government and Irving, even though Irving has been designated prime contractor for the “definition and implementation” phase. “While three preliminary services contracts have been awarded to (Irving) for work relating to the CSC project the definition contract for CSC has not yet been awarded.”..

The Conservatives had originally planned to build 15 warships but federal officials acknowledged last year inflation and currency pressures could see that number reduced [see “Maybe Not the Planned 15 High-End RCN Warships–and Nobody Knows Costs, Part 2“]…

What a morass.  Very relevant:

RCN: Detailed Examination of National Shipbuilding Procurement Strategy

“A letter to the New [Canadian] Minister of National Defence on the Defence Policy Review”

What Is the RCN For? Reprise

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds


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