Canadian Manufacturing

Liberals add $65M to shipbuilding budget, say Tories lowballed estimate

Feds commit additional funds to get work started on science vessel, joint supply ships

March 15, 2016  by Geordon Omand, The Canadian Press

PHOTO:  Gordon Henderson, Heath Moffatt & Jordan Junck/Seaspan

The Liberal government announced the new funding at Seaspan Shipyards in Vancouver. PHOTO: Gordon Henderson, Heath Moffatt & Jordan Junck/Seaspan

VANCOUVER—The federal Liberals have announced another multimillion-dollar top-up for a key project under the national shipbuilding strategy after the minister in charge said the former Conservative government lowballed the original budget.

“We inherited a bit of a mess,” said Public Services and Procurement Minister Judy Foote shortly after committing an additional $30 million to build an offshore oceanographic science vessel.

The project is over budget and behind deadline.

“We’re working to try to fix that mess.”


Foote made the announcement in front of hundreds of hard hat-toting workers gathered inside a Seaspan Shipyards hangar in North Vancouver on Monday.

The minister also promised $35 million for Seaspan to start work on three joint supply ships. Those vessels will deliver fuel, ammunition, spare parts, food and water to Canadian and allied vessels, allowing them to remain at sea for long periods.

The previous government relied on an “unrealistic” costing methodology that failed to take into account various price increases including inflation, Foote told reporters after the event.

This is the second cash infusion for the science vessel since the Conservatives’ initial $108-million budget in 2008 was boosted by $35 million a year later. Monday’s announcement puts the project’s overall cost at more than $170 million, or 60 per cent over budget.

Conservative procurement critic Steven Blaney said the Liberals inherited a rigorous process that was recognized by the auditor general as being fair and competitive.

The new government is responsible to ensure those ships are delivered on time and at cost, he said.

“The Liberals cannot blame others for meeting the responsibility to ensure the best interests of the navy, of the coast guard and of the taxpayers. That’s what we expect them to do,” Blaney said.

“They are in charge. Now they have to step up to the plate.”

During her announcement, Foote left the door open to the possibility of further cost overruns and downplayed the suggestion that Seaspan is to blame for the spiralling price tag.

“It’s not about fault. We have not had a shipbuilding industry in this country in 20 years, so getting it right is really important,” she said, adding that more funds would be made available if necessary.

Seaspan president Brian Carter said the initial 2008 budget predated his company’s involvement in the national shipbuilding strategy, which became official four years later.

“When we came into this situation it was our first look at the projects and we made an honest assessment of what we thought it would take to build these ships,” he said.

“And right now we’re working right to that estimate.”

Carter said he was unable to provide an overall dollar figure for the science vessel, explaining that final estimates are typically made after the construction contract is signed and immediately before building begins.

The offshore oceanographic science vessel is the fourth of 17 ships tentative slated for construction at the North Vancouver shipyard. Work has already started on the first of three fisheries vessels, which also have budget woes.

Internal briefing notes dated Nov. 16 show the budget for those ships spiked by 181 per cent between 2009 and 2015 to $687 million.

The documents attributed this increase to the federal government’s inexperience overseeing “multiple, complex ship projects,” as well as a steep learning curve for Seaspan, which needed to find skilled staff and learn to use its new facilities.

This announcement comes days after Foote rejected an unsolicited bid from Quebec-based Davie Shipyard to take over many of the contracts already awarded to Seaspan.

A draft statement obtained by The Canadian Press last week acknowledged Davie had proposed to build or repurpose a fleet of Canadian Coast Guard icebreakers and support ships years ahead of the current schedule and at a fraction the cost of Seaspan.

The statement said the federal government did not respond to unsolicited proposals.