Private firm to land government’s $5.2B ship maintenance contract
Thales subsidiary announcement expected soon
• The Liberal government will soon announce a $ 5.2- billion plan to privatize maintenance of new navy ships despite concerns the deal puts key portions of Canada’s military capability in the hands of a private firm.
A May 29 Department of National Defence briefing document obtained by the Ottawa Citizen outlines the unprecedented extent of the in- service support contract to be awarded to the Canadian subsidiary of the French defence giant Thales.
The firm will be responsible for much of the maintenance of the Royal Canadian Navy’s new Arctic Offshore Patrol Ships and the Joint Support Ships.
The company will be given significant access to Department of National Defence facilities and support equipment, as well as oversight of federal workers.
Treasury Board approved t he contact on May 11, according to the briefing document.
Pierre- Alain Bujold, a spokesman for Public Servi c es and Procurement Canada, said earlier this year the contract would be awarded in the fall of 2017. But sources say that date has been moved up and the Liberal government now plans an announcement by the end of June.
Earlier this year leaders of 10 unions whose workers are involved in navy ship maintenance wrote Defence Minister Harjit Sajjan to ask that the contract be put on hold.
The unions s ay t hey haven’t got a response yet from Sajjan.
“We’re telling them as their employees that they’re going into this with blinders on and they don’t know what the outcome of this ( plan) will be,” Jerry Ryan, president of the Federal Dockyard Trades and Labour Council East, said in an interview. “This is a significant change in how things are being done.”
The fleet maintenance facilities in Halifax and Esquimalt, B.C., are the largest industrial facilities owned by the DND.
Staff and equipment support naval operations but have also lent their assistance to army and air force endeavours.
The unions are worried that once private contractors take on significant roles in maintaining the ships the knowledge and skills built up over the decades among the federal work force will gradually decrease.
That, in turn, will prompt the government to hire more contractors.
In addition, Ryan pointed out it doesn’t make sense from a security point of view to turn over responsibility for preparing navy ships for military missions to a private firm whose main interest is making a profit.
“We’ve been the safety net for the Canadian navy and now they’re removing that,” he noted.
The unions are not alone in their concern.
The government had earlier been warned by DND that its strategy of having one firm in charge of maintenance for both fleets could cost taxpayers more money in the long run, according to documents obtained by the Ottawa Citizen.
Selecting one company for a single in- service support ( ISS) contract covering two types of ships could give one firm too much control, warned an April 2012 DND briefing note for then deputy minister Robert Fonberg.
“A single ISS provider may assume a ‘ take it or leave it’ attitude at the time of contract option renewal, forcing prices up.”
A dispute with the contractor could also force the Royal Canadian Navy to resort to conducting maintenance and support for the ships on a piecemeal basis, a development that would affect its operations, added the briefing note.
The deal with Thales would see the firm provide in- service support for an initial period of eight years, with options to extend services up to 35 years.
John MacLennan, president of the Union of National Defence Employees, said the unions have continually warned the federal government the plan is too risky but those concerns have been ignored.
He noted the government has yet to produce a business case showing turning over such maintenance to the private sector would save money or be more efficient.
The first Arctic Offshore Patrol Ship is being built by Irving on the East Coast and is expected in 2018.
Construction has yet to start on the two new Joint Support Ships. The first of those supply ships, to be built by Seaspan in Vancouver, is expected in 2021.