Shipbuilding competition will get political yet

With $35 billion on the hook, Harper can't avoid regional headaches

By Alex Binkley
True North Perspective

The awarding of any large procurement contract is a pasture riddled with cow paddies for any government.

So the Harper government is trying to walk around the field in selecting the winners in its $35 billion shipbuilding sweepstakes by placing the final decision in the hands of a committee of senior government officials.

It almost worked, until the last minute rescue of the Davie Yards near Quebec City ensured the final decision expected late this year will have all the political headaches Harper et al want to sidestep.

A few months ago, Public Works Minister Rona Ambrose warned the then four prospective bidders not to spend money on lobbyists to promote their proposals for the National Ship Procurement Strategy. Officials would study the facts and make the choice. They would refuse to even meet or talk to the lobbyists.

So the premiers of Nova Scotia and British Columbia went to bat for their hometown favourites — the Irving Shipyard in Halifax and the Seaspan Marine facility in North Vancouver. Those yards are considered the leading contenders.

So what about the other two hopefuls? Davie had been in bankruptcy protection for more than a year and unable to complete a contract for three offshore exploration vessels because of a lack of financing, and Seaway Marine and Industrial near St. Catharines?

Seaway couldn’t build the larger vessels Ottawa is planning to replace Navy and Coast Guard ships because of the size restraints of the St. Lawrence Seaway locks.

Quebec Premier Jean Charest tried to help Davie with a $60 million contract for two new ferries. The yard tried to negotiate a take over deal by an Italian shipbuilder but that deal fell through in June and Davie appeared out of the race.

The feds probably breathed a sigh of relief because they could award the contracts to Irving and Seaspan and find a way to send enough work on smaller vessels to Seaway to keep it happy.

Then, with a July 21 deadline looming to submit final proposals to Ottawa, Seaway, a subsidiary of the Upper Lakes Group of Toronto, joined forces with Montreal engineering giant SNC-Lavalin and Korean shipbuilder Daewoo to buy Davie.

The new owners got it out of bankruptcy protection in time to meet the deadline. A week later, Ottawa said the Davie Canada bid qualified for further consideration.

Now, the Harper government faces the classic Canadian regional battle. The East supports Irving, the centre, Davie, and the West Seapsan.

The industrial spin-off benefits from supplying all the components of modern ships are huge. The federal proposal is for one shipyard to build combat vessels and the other to build non-combat vessels for the Navy and Coast Guard.

Based on its experience, Irving is expected to get the contract for new Navy frigates and armed Arctic patrol vessels while Seaspan would get the smaller deal to build Navy supply ships and replacement vessels for the Coast Guard.

There could be four or more premiers stirring up the political waters on the issue.

Ottawa says there will be no future comment on the issue, but that will give the provinces more latitude to speak out. And the opposition parties will be able to join the fray after Parliament resumes Sept. 19.

No one really believes the government’s assertion that it will let a bunch of bureaucrats make the final selection on a big ticket item that could cause so much political grief. Especially the government that doesn’t trust bureaucrats to speak in public.

Most observers expect the final decisions rest with Ambrose, Defence Minister Peter MacKay, Julian Fantino, the associate minister of defence, and Industry Minister Christian Paradis. After all, the government will have to live with the political fallout of the decision.

Will the Harper government risk its strong support in British Columbia by not selecting Seaspan? Freezing out Davie Canada won’t make Paradis’ goal of rebuilding of rebuilding the Conservatives in Quebec any easier.

How would MacKay and the other Atlantic ministers explain away Irving’s world-class facility being shutout by the Canadian government?

The political games are afoot.

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