Feds announce $1.5B in frigate repair contracts to be split between three provinces

The Irving Shipyard is pictured in Halifax. (CTV Atlantic)

OTTAWA -- Warship repair contracts worth $1 billion will be split evenly between two shipyards, with a third deal on the way, the federal government announced Tuesday.

The Davie shipyard in Quebec and Seaspan Victoria Shipyards in British Columbia were each awarded a $500-million contract for maintenance work on the country's fleet of 12 Halifax-class frigates.

A similar deal with Irving Shipyards in Nova Scotia is being finalized now, the government said. In an emailed statement, Irving said details of its contract with the government would be released "in the near future."

“We have a long history of maintaining and modernizing the Halifax-class frigates at Halifax Shipyard,” Halifax Shipyard spokesman Sean Lewis. “Our shipbuilders are in the final weeks of a 52-weeks maintenance period for HMCS Montreal and HMCS Charlottetown will arrive in August for an extensive maintenance period. We are in the process of finalizing a contract for continued Halifax-class maintenance workload at Halifax Shipyard."

The contracts announced Tuesday cover a five-year period, with the value expected to rise as the government adds more work.

The federal government has promised to invest $7.5 billion to maintain the 12 frigates over the remainder of their operational lifespans, which are expected to last about 20 more years.

The oldest of the ships, HMCS Halifax, has been in service for 27 years. All recently underwent significant refits and modernizations.

Each shipyard will be responsible for refitting a minimum of three frigates each and work will begin in the early 2020s, the government announcement said.

In an emailed statement, Public Services and Procurement Canada said the work on the ships would be scheduled to ensure the fleet maintains operational readiness.

It said shipyards will be eligible for additional work based on performance.

"Each shipyard will have the opportunity to receive a minimum of $2 billion in maintenance contracts until the Halifax-class frigates (have) reached their end of the life cycle. The exact amount each shipyard receives will depend on several factors such as ship condition and performance," the statement said.

The Halifax-class frigates will eventually be replaced by new warships set for construction under the national shipbuilding strategy.

Davie was left out of the massive naval procurement program in 2011 because it was suffering from financial troubles at the time.

But it has since advocated to be allowed to build ships for the wider program. In May, Prime Minister Trudeau announced the national shipbuilding strategy would be adding a third shipyard.

In an interview Tuesday, a spokesperson for Davie said it is "an open secret" the company will become part of the national program.

"There is no doubt in our minds that we will be designated the third shipyard," said Frederik Boisvert, vice-president of public affairs at Davie.

Boisvert said Davie would continue to pressure the government to make an announcement to that effect before the election.

Cabinet minister and Quebec City Liberal MP Jean-Yves Duclos, who delivered the government announcement at the Davie facilities across the St. Lawrence River in Levis, Que., said parts of the National Shipbuilding Strategy have been delayed "because the Davie shipyard was excluded from the Conservative strategy for naval construction."

Duclos said this was an "error" that was "important to admit to" so that it could be more easily fixed.

That was part of why the government announced "structural investments that are long-term for Quebec, for Quebec City and for Canada as a whole," Duclos said.

Duclos won his riding by just under two percentage points in 2015.

Procurement Minister Carla Qualtrough delivered the government's announcement at Seaspan Victoria Shipyards. Qualtrough represents Delta, a riding in suburban Vancouver.

The government announcement said the investment will sustain or create 400 jobs at each shipyard.

In a release Friday, the Conservatives accused the Liberals of using the announcement as an electioneering tool in Quebec.

"There are less than 100 days to the next election, and the Trudeau government is once again campaigning on the taxpayers' dime, trying to buy people's votes with their own money," the statement said.

-- With files from Giuseppe Valiante and Martin Leblanc in Montreal and CTV Atlantic.

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Canada's multibillion-dollar national shipbuilding strategy, at a glance

OTTAWA -- The federal government awarded two contracts Tuesday totalling $1 billion to keep a dozen warships running for another 20 years as part of Canada's decades-long, multibillion-dollar national shipbuilding strategy.

It also announced that a third contract for similar work, worth $500 million, is on the way.

What is the national shipbuilding strategy?

The strategy, launched in 2010 by the then-Conservative government, is to supply new vessels -- for both combat and non-combat -- to the navy and the coast guard.

The plan includes the construction of new warships for the navy as well as icebreakers, patrol ships and search-and-rescue ships for the coast guard.

The investments have also been covering upgrades and maintenance for existing, aging fleets.

In addition, the strategy was to help encourage shipyards to make regular investments in their operations thanks to a predictable flow of procurement opportunities.

Another goal of the strategy was to create jobs near the west and east coasts, and to lift the national economy.

So is it a strategy to build ships or to promote industry?

Both. According to the government, the strategy was partly a response to a decade-long slowdown in orders for new Canadian-made ships, which had led the country's shipyards to decay. The companies that ran them weren't willing to expand or modernize them to catch the boom phases of a regular boom-and-bust cycle.

The promise of regular business is supposed to lead to steady private spending and reliable employment.

How big is the price tag?

In 2010, the national shipbuilding strategy was initially estimated to cost at least $35 billion over 30 years.

Government spending towards the plan has already been significant. And Canada will be making more commitments that are expected to bring total investments well beyond the estimate.

For example, a government plan from 2017 said one component of the strategy -- the purchase of 15 new warships -- is expected to cost between $56 billion and $60 billion. Last month, an analysis by the parliamentary budget watchdog predicted the price will reach almost $70 billion over the next quarter-century.

The plan includes smaller purchases as well.

Earlier this year, the government announced it would spend $15.7 billion on 18 new ships for the coast guard.

Tuesday's maintenance announcement was part of a $7.5-billion project to keep Canada's 12 Halifax-class frigates running for the rest of their operational lives -- expected to be another two decades.

Which companies have benefited from contracts under the strategy?

Seaspan's shipyards in Vancouver and Victoria, Irving Shipbuilding of Halifax and the Davie shipyard just outside Quebec City. Seaspan and Irving were selected as the main builders of new large ships. Last November, the government announced all three would share the maintenance work for the Halifax-class frigates.

What is a Halifax-class frigate?

Canada has a dozen of the patrol frigates, named after cities from Vancouver to St. John's, and they are considered the backbone of the navy, according to a government website. The were originally designed primarily for operations on the open seas, including anti-submarine warfare.

The navy says the ships now have to be equipped to address newer maritime threats closer to shore, which are "faster, stealthier, more manoeuvrable."