By Dan Middlemiss, 21 June 2022
As noted in earlier posts to this Forum, several recent media reports have indicated that Irving Shipbuilding is seeking at least $300 million in funding from the federal government to upgrade its facilities at the Halifax Shipyard to accommodate the Canadian Surface Combatant (CSC).1
While details of the funding request are sparse, Irving Shipbuilding President, Kevin Mooney, shed some light in a recent interview with Canadian Defence Review. When asked what changes Irving was anticipating in moving from the construction of the Arctic and Offshore Patrol Ships to building the future CSC, Mr. Mooney replied:
“In terms of transitioning from the AOPS to the Canadian Surface Combatant, there are a series of changes that are needed. The largest and most visible one, to folks that would be looking at this from the outside, would be how are we going to launch the CSC. Right now, for AOPS we have a barge that we rent, but that barge is not big enough for the CSC. So, we have a proposal to modify our facility and we’re working on that with Canada. In all likelihood we’ll go with the ship lift capability, which is actually overall a good value proposition for Canada because it will also be available for repair because our graving dock, where we currently do maintenance on the Halifax-class frigates, does not have the capacity for a CSC ship. So, we're excited to upgrade the shipyard in that area for CSC.”2
However, one reporter suggests that this request for funds constitutes a potential ‘boondoggle’ insofar as it contravenes the terms of the original Umbrella Agreement between Irving and the federal government. This agreement, according to an authoritative source, stipulated that any upgrades required by the builders be financed with their own funds.3
According to Mr. Tom Ring, a former Assistant Deputy Minister of the Acquisitions Branch at Public Works and Government Services Canada and in part responsible for implementing the selection process of the then National Procurement Shipbuilding Strategy, a key provision of the ‘strategic partnership’ agreements signed with the two major shipbuilders in February 2012 was:
“The shipyard capability to build large federal ships in Canada in a timely and affordable manner would be built at no cost to Canada. Clearly, the investments being made by the shipyards to upgrade their facilities will be funded through profits earned over the course of the program as one would expect in any private sector undertaking. BUT, the open book accounting included as part of the UA and referenced below ensures that the actual capital costs and associated financing charges needed to modernize the shipyards cannot be charged to Canada, at any time. Only the ongoing operating costs of the shipyard are an eligible expense (this is the normal practice).”4 (Emphasis added.)
While the federal government has not commented on the reported request for funding from Irving, Canadians should be concerned if Irving is indeed seeking to alter the basic terms of its original agreement under the National Shipbuilding Strategy (NSS). Irving is earning solid profits which are more than enough to finance the upgrade of its facilities. The NSS was not intended to be a government welfare program for wealthy shipbuilders. In addition, there needs to be greater openness and transparency regarding any proposed changes to the basic partnership deal.
Notes
1. David Pugliese, “Liberals mull giving Irving an extra $300 million to build warships,” Ottawa Citizen, 13 June 2022, https://ottawacitizen.com/news/national/defence-watch/liberals-mull-giving-irving-an-extra-300-million-to-build-warships; Aaron Beswick, “Bigger warships will require big investment in Halifax Shipyard,” Saltwire.com, 9 June 2022, https://www.saltwire.com/halifax/news/bigger-warships-will-require-big-investment-in-halifax-shipyard-100742268/
2. Interview with Mr. Kevin Mooney, Canadian Defence Review, Vol. 28, Issue 1 (2022), p. 51.
3. Pam Frampton, “Watch out, Canada’s warship program – there’s a boondoggle dead ahead,” Saltwire.com, 16 June 2022, https://www.saltwire.com/atlantic-canada/opinion/pam-frampton-watch-out-canadas-warship-program-theres-a-boondoggle-dead-ahead-100744450/
4. Tom Ring, “The National Shipbuilding Procurement Strategy: How did we get to where we are now?” Canadian Global Affairs Institute, Calgary, AB, March 2016, p. 7, https://d3n8a8pro7vhmx.cloudfront.net/cdfai/pages/884/attachments/original/1458850491/The_National_Shipbuilding_Procurement_Strategy.pdf?1458850491
12 thoughts on “Trying to Evade the Terms of the Strategic Partnership Agreement?”
Irving upgraded in accordance with the specifications given them as winners of the combat package part to the NSS. Years later they now asking for assistance from the government as change requests from the government has ballooned the tonnage of the ship. They are looking to upgrade the building to accommodate the building of the CSC based on lessons leaned for the type 26, upgrade its docking facility to accommodate a significantly larger ship tonnage wise with a possible syncrolift. There is speculation on this 300M dollar figure being quoted, from my sources its actually less.
I think people are missing the big picture. The CSC will be launched and more importantly should be maintained in the future at or near the Halifax dockyard but the current syncrolift is too small. Even now the Halifax Class can only be docked and undocked several times a month when its at maximum tides.
At the Halifax shipyard the graving dock will accommodate the Halifax class however it is too small to accommodate the CSC. The only other place is at Davie shipbuilding as they do Halifax Class dockings and they do have the docking facilities to accommodate the CSC however hundreds of millions if not billions would need to be spent to upgrade their dilapidated facilities. #1 priority in my opinion is to have a docking facility for the CSC in Halifax ideally in the Halifax dockyard and at ISL. #2 would be Davie. The only issue with Davie is timely repair of fleet assets in case of crisis and the high cost of moving the ship there if by tugs and the cost of moving personnel back and forth which the RCN is incurring how with the Halifax Class. Strategically it would make sense to have these docking facilities in Halifax so it is a strategic asset and should be open to possible additional funding by the government. Lets face it no-one is cancelling the NSS agreement with ISL over this and it makes sense to have these facilities available to our ships.
Hello Ted: As I have said before, when Irving signed the agreement with Ottawa to deliver these CSC “frigates”, they knew, or should have known that government “change requests” would be forth-coming. If Irving wants to bid for CSC Frigate refits or upgrades, that would be left to Irving to ensure their own docking facilities were upgraded. Otherwise the work will go to other shipyards. It is not, or should not be, up to the Canadian people to support Irving’s bottom line. The Canadian government should and probably will upgrade their own synchro-lift in CFB Dockyard in order to support the CSC Frigates. It would have to be lengthened by at least 65 feet and strengthened somewhat to accommodate the CSC Frigates length and weight but is do-able for the RCN. CFB Esquimalt’s graving dock is 357m long, 38m wide and 10m tall and can easily handle the CSC Frigates. Davie’s Champlain Graving Dock is the largest in Canada at 357m in length, 36m wide and was refurbished in 2001 so it can certainly handle the CSC Frigates. You seem to be a great proponent of Irving shipbuilding. I am not saying that ISL does not deserve the CSC Frigate bid, but they should have had their ducks-in-a-row before they entered into this agreement.
I’m a “great” proponent of Irving because it’s common sense to have at least 2 docks in the vicinity of HMC Dockyard in Halifax to accommodate a CSC, right now we have none. At some point we will have up to 8 CSCs and the ability to rapidly maintain them without sending them inland to Davie strategically if not economically makes sense.
The existing syncrolift will most likely stay the same as to maintain the legacy Halifax Class and Victoria Class. Talking to personnel who run the dock on Halifax it would more than likely be an entirely new lift instead of an upgrade due to its design.
I can’t see how Irving could foresee building a type 26 but not at the sheer size it’s become. That is on the government not them. Bottom line the government better pony up the cash and what I have seen, they will and is an investment in a strategic asset. Think big picture not a narrow one.
The Irving Graving Dock is 173m in length, so just long enough to fit a CSC Frigate build. Irving is not that senseless Ted. If the government does give Irving the extra cash (what ever the amount-$100/300M), hopefully they will not make it a “forgiveable loan” and make sure they get Irving to sign for it to be repaid when the last CSC Frigate is completed-with interest! It will be interesting to see where the RCN would build this larger “new” synchrolift in Halifax Dockyard. Perhaps right beside the old one? It would however be just a “little” expensive but probably worth it.
The max draught the graving dock is 27 feet,the CSC is 26.3 feet, that.in itself is an issue along with the age and weight it can support. So it’s not that simple.
The new lift would probably be built at the land in NAD.
Best Irving gets busy now and starts to deepen the graving dock soon to refurbish and deepen the dock to accommodate the CSC Frigates, lest they lose any future CSC Frigate docking contracts. A new syncro-lift at NAD would be an interesting thought and could work if designed properly. Cheers!
I’m sure they’ll get busy when they get their “300” million. I doubt they will be doing any upgrades to the graving dock as that puts it out of commission to current Halifax Class maintenance contracts.
There are more than just Irving Shipyard in the NSS that could easily do maintenance contracts on the Halifax class. We did have at one time another Graving Dock in St John N.B. that could have also done the Halifax class maintenance, but alas, those days are long gone.
And who would that be? Davie? I guess you missed the whole part about how much money and time it’s taking to send ships to Davie for the existing maintenance contract. In peace time it’s bad enough, in time of crisis it would be disastrous.
Are you saying Ted, that, even though Davie has become a partner in the NSS world, they really don’t matter and are not a “true” partner with Irving or Seaspan and the Canadian Government? I think not.
The mainteance on our platforms is not really under the NSS. Unless you take Halifax or Esquimalt and physically move them to Davie, then strategically and ecomicially we will be at a disadvantage trying to get our platforms maintained in a timely manner.
Hi Ted. If the maintenance of the CSC Frigates does not come under the NSS for our NSS Shipyards, then we will be going backwards to the old “boom-and-bust” times again for our dockyard refits. When you say “we will be at a disadvantage” to maintain our CSC Frigates in a timely manner, what exactly do you mean by that? If we build a new CSC synchro-lift at the NAD dockyard specifically for the CSC Frigates and we have the graving dock at CFB Esquimalt, do we really need the NSS? Irving, Seaspan and Davie could still bid for CSC refit contracts, just using the “new” synchro-lift and Esquimalt graving docks. The NSS does not necessarily depend on physical dockyard facilities. If other CSC Frigates are in need of refits or up-dates, then NSS shipyards could still be used.