Ottawa's talks with Quebec shipyard to build much-needed icebreakers shrouded in fog

The Irving Shipbuilding facility is seen in Halifax on June 14, 2018. (THE CANADIAN PRESS/Andrew Vaughan)

OTTAWA -

Questions are swirling over yet another delay in Ottawa's nearly $100-billion plan to rebuild the fleets of Canada's navy and coast guard -- only this time the delay isn't due to the stalled construction of a ship.

The federal government announced in December 2019 that Quebec shipyard Chantier Davie was the only company to qualify for a piece of that work, namely the construction of six much-needed icebreakers for the Canadian Coast Guard.

Yet while that announcement kicked off negotiations toward an agreement Davie and its supporters in Quebec and Ottawa had long demanded, the subsequent discussions remain shrouded in fog more than two years later.

The delay is fuelling fears about the Canadian Coast Guard's aging fleet, which shrunk by another ship this week with the forced retirement of a 59-year-old science vessel, leaving Canada without a dedicated platform for ocean research.

"You really kind of wonder what's going on that it's been this long after having made such a high-profile commitment," said David Perry, president of the Canadian Global Affairs Institute and one of Canada's top procurement experts.

"And delivery on all the work that falls under them has got to be significantly impacted by not having come to an agreement."

Davie was first excluded from the shipbuilding plan following a competition in 2011 that selected Irving Shipbuilding in Halifax to build the navy's new warships, and Seaspan to build two new naval support ships and the brunt of the coast guard's new fleet.

The Quebec shipyard was able to pick up some piecemeal work, including the construction of two federal ferries and the provision of several second-hand ships for the navy and coast guard. Those included a supply vessel for the navy and three used icebreakers.

Yet it made no secret of its desire for more and, with help from allies in Quebec City and the opposition benches in Ottawa, the Levis, Que.-based company lobbied the federal Liberal government hard for official inclusion in the shipbuilding plan.

At the same time, Seaspan was struggling to meet its delivery schedules thanks to mismanagement by both the Vancouver yard and federal government. All the while, the coast guard's fleet was becoming increasingly decrepit.

The impact of those delays crystallized further this week when the coast guard announced it was retiring the CCGS Hudson ocean research vessel at the same time it revealed that Seaspan won't deliver its replacement until at least 2025.

It was in this context that the Liberal government announced in August 2019 that it was adding a third yard to the shipbuilding plan to build Canada's next icebreaker fleet, and formally called for shipyards to indicate their interest.

Ontario shipyard Heddle Marine wasted no time accusing the government of stacking the deck in Davie's favour. Yet the Canadian International Trade Tribunal was blocked from investigating Heddle's complaint after Ottawa invoked a special exemption.

In December 2019, the government announced Davie was the only shipyard to meet its requirements.

Yet while officials at the time said they expected a final deal ironing out the details by the end of 2020, that hasn't happened. The last official update in July said the government had revised that schedule to the end of 2021, which it also missed.

Both sides say discussions are ongoing, but have provided few other details.

"This is a complex, multi-step qualification process and it is imperative that Canada gets it right," said Public Services and Procurement Canada spokesman Marc-Andre Charbonneau. "Our evaluation team continues to assess the proposal Chantier Davie submitted."

He added that if Davie "was not able to successfully complete the process to become the third shipyard under the (national shipbuilding strategy), Canada would need to assess the impact across all programs intended for the third shipyard."

A Davie spokesman said the company remains committed to building Canada's new icebreakers, the delivery of which becomes more urgent with every passing day as the coast guard's existing fleet becomes increasingly older and harder to maintain.

Meanwhile, the company has yet to deliver the last of the three second-hand icebreakers ordered for the coast guard in 2018, which were billed as costing $610 million but whose price tag is now nearing the $1 billion mark.

The lack of a formal deal didn't stop the Liberals from announcing in May plans to have Davie and Seaspan each build a polar icebreaker, an announcement that some saw as politically motivated ahead of last year's federal election.

University of Calgary shipbuilding expert Timothy Choi said while the COVID-19 pandemic no doubt slowed down plans to add Davie, the lack of clarity surrounding the talks is both frustrating and concerning.

"The exact stage of their negotiations, and indeed what exactly needs to be negotiated or verified in order for Davie to become the official third yard, have been shrouded in silence," he said.

This report by The Canadian Press was first published Dec. 21, 2021.