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British Columbia Liberals call ex-Tory shipbuilding effort in B.C. a ‘mess,’ add funding

The Seaspan Marine shipbuilding yard is pictured in North Vancouver, B.C., on Jan. 12, 2012.

JONATHAN HAYWARD/THE CANADIAN PRESS

The federal Liberals say they inherited a "mess" when they took over a multibillion-dollar shipbuilding effort launched by the former Conservative government, a file the minister in charge says was plagued by flawed cost assessments and poor planning.

"The numbers that would have been part of the initial shipbuilding procurement strategy would have been from the previous government. So we inherited a bit of a mess," Judy Foote, Minister of Public Services and Procurement, told reporters at a related announcement on Monday.

"We're working to try and fix that mess and working with our partners to do that."

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Ms. Foote made the comments as she announced extra money for a Coast Guard science vessel and navy support ships during a news conference at the North Vancouver site of Seaspan Shipyards, which is working on the vessels.

Monday's announcement referred to vessels that are part of the former Tory government's $38-billion national shipbuilding procurement plan for a mix of combat and non-combat vessels. It's a 30-year initiative expected to create 15,000 jobs in Canada.

The program included a $108-million contract for the science vessel that was announced in 2008. A year later, costs increased by an additional $35-million. On Monday, Ms. Foote announced an extra $30-million for the project.

Asked about the cost overruns, the minister said the previous costing methodology was "unrealistic," so the government had to consider what additional inflation, equipment and labour costs would add to the project.

"We're not sure what accounted for the costs that were announced initially, but as you know, that was done previously. We've taken an open and much more transparent approach to this, so we're going to make sure we work more closely to determine final costs."

Ms. Foote also announced another $35-million for navy support ships.

Conservative MP Steven Blaney, opposition procurement critic, said in an e-mail that Ms. Foote and the Liberals should stop blaming the previous government and start governing.

"The [national shipbuilding procurement strategy] has been launched on a sound and robust process and we expect the Liberals to protect taxpayers by ensuring the delivery of ships on cost and in a timely manner," he wrote.

Brian Carter, president of Seaspan, told reporters that his company has done its best at managing costs, but it takes its lead from the government.

"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. Right now, we're performing right to that estimate and working very closely with the government of Canada to make sure they are getting best value."

Ms. Foote was also asked about a newly released internal report from her department that says the current system of federal government contract pricing and policies provides "perverse incentives" for industry doing business with Ottawa to routinely hike their costs.

After a year of looking at $7.3-billion in contracts, the auditors found $72-million in potential "overclaims and excess profits" in the contracts – 75 per cent of which were not military related, according to the report obtained by The Canadian Press.

When questioned about the report, which was commissioned by the previous Conservative government, Ms. Foote said Prime Minister Justin Trudeau has asked her to modernize procurement. "We're doing just that," she said.

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To that end, the minister cited the hiring of Steve Brunton, who also oversaw shipbuilding programs and naval acquisitions with Britain's Ministry of Defence, as an adviser to Canada's government on the shipbuilding effort.

Ms. Foote also chided Davie Shipbuilding of Quebec – Canada's largest shipyard – for an unsolicited bid to provide vessels to Ottawa. The initiative led the B.C. government to issue a statement last week describing the initiative as "unacceptable," given work allotted to B.C.'s Seaspan.

"Davie's unsolicited bid was just that – an unsolicited bid. And we've indicated to Davie that we're not open to receiving unsolicited bids," Ms. Foote said.

Alex Vicefield, group CEO for Inocea Ltd., which owns Davie, said no harm was intended in the proposal to refit foreign ships for interim Canadian use.

In an interview from France, Mr. Vicefield said Davie was "under no circumstance" interested in taking work away from other Canadian shipyards such as Seaspan, which have contracts under the framework agreement. "We were surprised by the response," he said.

With a report from The Canadian Press

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