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Jeffrey Simpson (Brigitte Bouvier For The Globe and Mail)

Jeffrey Simpson

(Brigitte Bouvier For The Globe and Mail)

Jeffrey Simpson

At last, a cure for government procurement Add to ...

Shipbuilding in Canada used to be 50 per cent engineering, 50 per cent politics.

Rummage around the letters of Sir John A. Macdonald, Canada’s first prime minister. There, you will see pleas from his MPs, small-town mayors with little shipyards, friends of the party and other worthies, all imploring the government to favour this or that yard.

There has seldom been enough work for all the yards in Canada. Since the federal government was always instrumental in ordering ships for military and civilian purposes, the scramble to win contracts through political pressure was relentless. (Canadian yards could not compete for private contracts with more effective, and sometimes heavily subsidized, yards in other countries.)

This political lobbying reflected the regional nature of Canada. Whenever defence procurement contracts arrived at the federal cabinet, Liberal or Conservative ministers would spend way more time arguing about their regional distribution than whether what was being built was right in military or strategic terms.

Recent decades have offered two spectacular examples of political interference in major defence contracts.

In the 1970s, Pierre Trudeau’s government decided to build new navy frigates. The usual bidding process ensued, and Saint John’s shipyard won the contract for the first batch – at which point, Quebec ministers intruded themselves and demanded that half of the new ships be built in Lévis, at Davie Shipyards, a facility in and out of bankruptcy kept alive by its political backers’ ability to win contracts.

Then, in the 1980s, there was the infamous CF-18 maintenance contract. A bidding process was established, criteria were drawn up and civil servants set to work examining bids. They reported that the winner should be Bristol Aerospace of Winnipeg. But Brian Mulroney’s government, anxious to curry favour in Quebec, overruled the civil servants and awarded the contract to Canadair of Montreal.

Whatever marginal gratitude the Conservatives earned in Quebec was overwhelmed by the firestorm in Manitoba and throughout Western Canada. The spark lit by the Bristol decision was among those that led to the political fire called the Reform Party, whose modern iteration governs Canada today.

Against this background, the Harper government’s awarding of contracts for massive ship-building in the decades ahead breaks with tradition in exemplary fashion.

The government remained true to its word. It made the overarching political decision to restock the navy and Coast Guard. It defined the ships it wanted, and the money it would pay. It asked a group of civil servants to assess the shipyards interested in bidding. It hired an international firm to cross-check their work. It published the results, and lived by them, whatever the political consequences.

Whether the government framed the question this way is not known, but it could be that Stephen Harper’s ministers knew they could not trust themselves. (For example, in the 1990s, after the Cold War ended, the U.S. Congress understood that military installations would be closing. So it asked a blue-ribbon panel to recommend which ones, and bound itself to vote up or down on the whole list to prevent politicians from horse-trading and interfering. It worked.)

Or maybe the government, remembering the response to the CF-18 decision, drew an appropriate lesson from that affair.

In any case, the outcome – Halifax and Vancouver’s yards won out over Davie in Quebec – is rather un-Canadian, in the sense that two large centres of shipbuilding excellence will now emerge, rather than having a series of medium-sized, average centres. In a country where relative equality of distribution usually trumps the quest for excellence, this contract was quite remarkable.

With the exception of shipbuilding critic Peter Stoffer, who is from Nova Scotia, the New Democrats argued for the old model of relative equality to protect the Quebec shipyard. The NDP would have made the same argument if the yard left out had been somewhere else, for that is how the NDP tends to see the world: state-driven equality at the expense of economic rationality.

So the shipbuilding contract broke with a long Canadian tradition, produced a rational, fact-based decision, bullet-proofed the government from any charge of political interference, and gives Canada a chance to build a more streamlined and efficient industry.

Hats off to the Harper government.

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