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The Bluenose II has problems such as ‘excessive water leakage’ and stability issues.Andrew Vaughan/The Canadian Press

The latest in the saga of Nova Scotia's nautical icon, the Bluenose II, is an inspection report detailing problems with the rebuilding of the vessel, including "excessive water leakage," possible stability issues and "poorly" installed masts.

These deficiencies are in addition to the embarrassing dilemma that cropped up months ago and is being dealt with now – that a new steel rudder is so heavy it is nearly impossible to steer the wooden racing schooner.

Despite all these issues – and there were dozens more outlined in the inspection report – the provincial government took ownership from the builders of the vessel last month. Premier Stephen McNeil told reporters Thursday the province had no choice.

"We couldn't say no," he said in a scrum following a cabinet meeting. The builder, Lunenburg Shipyard Alliance, fulfilled its part of the contract with a few exceptions, he said.

The province held back $25,000 to cover the cost of those deficiencies, Mr. McNeil said. Other problems, however, are not the fault of the builder.

"Some of those deficiencies are not related to the builder at all," he said. "They are related to the design work."

The Premier has asked the Auditor-General to investigate the contract and other questions around the restoration, which is already more than two years behind schedule and nearly $5-million over budget. So far, it appears the project will cost the province about $20-million. The Premier noted Thursday that the fix for the rudder issue could cost about $500,000.

For the McNeil government, the rebuilding of the Bluenose II, a 1963 replica of the original Grand Banks fishing schooner, is a nightmare it inherited from the NDP government, which was defeated in last fall's election.

The inspection report was obtained by the Canadian Taxpayers Federation's Atlantic director, Kevin Lacey, who has tenaciously tracked the Bluenose II rebuild.

"The contract clearly says … it [the Bluenose II] has to pass its regulatory test … and it has to be deficiency-free, and it has done neither of those things," Mr. Lacey said. "So why has the province taken ownership today? …The explanations they have given so far are weak."

As for the stability issue, the Premier says that has been solved. "We actually believe it is [stable]," he said. "So we're very confident. We wouldn't have taken the vessel if we believed the vessel wouldn't be able to sail."

The mast problem – the report says the "foremast" and "mainmast" are "poorly stepped" – is one the Premier tried to dodge, saying "I don't have a sailboat."

Captain Lou Boudreau, however, knows sailboats. He builds ships in Mahone Bay on Nova Scotia's south shore. "If they are just a little crooked, okay, well that could be rectified," he said. "Each mast needs to sit in a shoe down in the keel, so if that's not properly secured at that point and you have all this tons of sails and booms and rigging and you're out at sea and it jumps out of its shoe … well, then what happens is the mast punches a hole through the bottom of the boat and it sinks."

The Premier, meanwhile, shared Mr. Lacey's concerns that the designer of the vessel, Lengkeek Vessel Engineering – and not an independent investigator – also conducted the inspection of the Bluenose II before the province took it over.

"Having Lengkeek do the inspection is like having a student grade their own exam," Mr. Lacey said. Lengkeek officials could not be reached for comment.

The Premier said, "That was not our choice." A number of issues with the rebuild, he added, "started long before we were in government."

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