Cost of Bluenose II rebuild inflated by questionable markups: taxpayers group

Bluenose II, Nova Scotia's sailing icon, receives some last-minute work in Lunenburg, N.S. on Friday, Sept. 28, 2012. (THE CANADIAN PRESS/Andrew Vaughan)

HALIFAX -- The Nova Scotia consortium rebuilding the Bluenose II is routinely adding hefty markups on the bills it submits to the provincial government, the Canadian Taxpayers Federation says.

Kevin Lacey, the federation's Atlantic Director, said Monday the advocacy group has obtained documents showing that some materials purchased for the much-delayed project included a 43 per cent premium for the builders.

"The province has botched this project from the beginning," Lacey said in an interview.

Lacey said the documents -- obtained through the Freedom of Information and Protection of Privacy Act -- show that taxpayers are being charged too much for a project that is already two years behind schedule and over its $16-million budget, though the government won't say by how much.

"There's been so many questions about the spending on the Bluenose II," Lacey said. "That's why we want the auditor general to come in and make an independent determination."

Part of the province's contract with the Lunenburg Shipbuilding Alliance stipulates that any modifications not included in the original contracts are subject to the markup.

Last month, Heritage Minister Tony Ince called for a review of the project amid questions about rising project management costs.

Ince declined a request for an interview Monday. Instead, his office released a statement saying the 43 per cent markups apply only to materials subject to so-called "change order requests," which represent less than one per cent of the total cost of the project.

"These markups compensate the builders for the process of making the Change Order Requests happen, and are standard practice in the industry," Ince said in the statement.

He said the review of the project will be conducted by an independent body, though the details are still being worked out.

"However, the overall review of the project will include looking at the contracts to see if they secured the best product at the best price for Nova Scotia taxpayers," Ince said.

Lacey said if the minister wants a truly independent appraisal, he should asking the auditor general to conduct it.

As well, Lacey took issue with Ince's position that the marked-up materials comprise only a small portion of the project.

"It shouldn't matter what percentage it is, the minister should be fighting to protect every last taxpayer dollar," he said.

The taxpayer's federation says that on Dec. 14, 2011, the province purchased two washing machines and two dryers at a total cost of $5,399. That price included $2,321 in markups charged by the builder.

"By most calculations, that's just not reasonable," Lacey said.

On Nov. 21, 2012, the alliance purchased new portholes for $12,194 -- marked up by $5,243.

Peter Kinley, president of the Lunenburg Foundry and one of the partners in the Lunenburg Shipyard Alliance, could not be reached for comment.

The Bluenose II, launched in 1963, is a replica of the original Bluenose, the 1921 Grand Banks fishing schooner that won worldwide acclaim for its graceful lines and speed.

Nova Scotia's 43-metre sailing ambassador was supposed to return to regular sailing in the summer of 2012 after an extensive two-year rebuild, but that deadline has been put off until this summer.