One bureaucrat’s $26-billion sign-off
A sole- source deal involving naval shipbuilding contracts worth $ 26 billion was signed on behalf of the government of Canada by a single federal bureaucrat at the end of his tenure, after his successor had assumed her duties.
An eight- page outline, entitled Agreement on Principles Between Canada and Irving Shipbuilding Inc. ( ISI) For The Canadian Surface Combatant Project, obtained by the National Post, describes terms of an agreement between Ottawa and ISI naming the latter “prime contractor” on the federal plan to build a new Canadian naval fleet, budgeted to cost $26 billion.
The document does not appear to be a formal, final contract and contains no fixed fee estimates, delivery schedules or dollar figures to be paid to Irving for rendering this service, which is akin to a construction firm acting as general contractor on a home renovation project, while also bidding on parts of the work itself.
In a prepared statement late Tuesday, Public Services and Procurement Canada ( formerly Public Works and Government Services Canada) confirmed no overarching contract has yet been signed. “Canada has designated Irving Shipbuilding as the Prime Contractor for the Definition and Implementation Phases of the CSC project. While three preliminary services contracts have been awarded to ISI for work relating to the CSC project, the Definition Contract for CSC has not yet been awarded. It is Canada’s intention to award the Definition Contract to ISI following the completion of the competitive selection of the Combat Systems Integrator and Warship Designer subcontractors.”
Dated Jan. 22, 2015, the “agreement on principles” is signed on behalf of Irving Shipbuilding by co-chief executive James D. Irving, vice-chairman Ross Langley, president Kevin McCoy, and vice- president of programs Scott Jamieson.
Thomas Ring, a former senior bureaucrat at the Defence and Public Works departments who played a leading role in framing the former Conservative government’s national shipbuilding procurement strategy in 2011, is the sole signatory for the government of Canada. His signature is dated Jan. 21. No job titles are included with his or the other four signatures.
Ring i s now a senior fellow in the University of Ottawa’s graduate school of public and international affairs. His retirement from his last federal post as assistant deputy minister ( acquisitions) at Public Works became public in late August 2014, nearly six months before the Irving deal was signed.
According to a defence industry source, Ring served his f i nal days at Public Works in mid- to- late January 2015. He did not respond to a telephone request Tuesday for an interview. His successor and the current ADM ( Acquisitions) at Public Works, Lisa Campbell, formally assumed the role Jan. 16, 2015, according to an internal Public Works memo reported by the Ottawa Citizee at the time.
In its prepared response, Public Services and Procurement Canada added: “On January 21, 2015, ( the) date of the signature of the agreement on principles between Canada and Irving Shipbuilding, Mr. Ring was the assistant deputy minister responsible for Acquisitions Branch. To ensure that there was a smooth transition in Acquisitions Branch, Ms. Campbell joined the department prior to Mr. Ring’s retirement.”
News of ISI’s appointment as prime contractor broke last Jan. 20, a day before the memorandum was signed by Ring and two days before it was signed by ISI. It set Ottawa officialdom abuzz due to the arrangement being sole- sourced — meaning it was awarded without formal bids — and because of the staggering sum of public money involved.
The National Post’s John Ivison reported Jan. 21, 21015, that the arrangement had been run by the ministerial working group responsible for procurement, but not the cabinet, because, according to an unnamed source at Public Works, it was an “administrative contractual decision.”
Like the vast majority of current federal military procurement projects, the Canadian surface combatants program is behind schedule and plagued by ballooning costs. An initial commitment to build 16 warships was scaled back to 15, then “up to 15,” and most recently downgraded to possibly as few as 11. The selection of a combat systems integrator and warship designer for the project has yet to be made.
Irving’s dominant role in managing the CSC project has important implications for the ultimate disposition of the systems and design work, which comprises upwards of 60 per cent of the cost of building a modern warship. IS I has long-standing ties with U.S. defence giant Lockheed- Martin. Several other global defence firms, including Thales Group and DCNS Group, are also expected to bid on parts of the work.
The CSC program forms the backbone of the previous government’s shipbuilding initiative, unveiled with great fanfare in October 2011. It is also central to the new Liberal government’s promise to reform and improve byzantine military procurement practices that have bedevilled every Canadian administration since the Brian Mulroney era.
During the recent federal campaign, Prime Minister Justin Trudeau promised to set aside once and for all the star- crossed F- 35 fighter- jet purchase, find a lower- cost fighter for the Royal Canadian Air Force, and plow any savings into rebuilding the Royal Canadian Navy.