Thales gets $5.2 B contract
OTTAWA — The Canadian subsidiary of French defence industry giant Thales has been awarded a multibillion-dollar contract to service Canada’s new fleet of Arctic offshore patrol ships and joint support vessels.
The federal government said Thursday Thales Canada, in a joint venture with the company’s Australian arm, will provide in-service support for the vessels under a contract that could total $5.2 billion over 35 years.
Acting Procurement Minister Jim Carr announced the awarding of the contract along with parliamentary secretary Steven MacKinnon at news conferences in Halifax and Ottawa.
The contract starts with an eightyear, $800-million service period.
Carr said it will provide “men and women in our military with the equipment they need to conduct their operations effectively while creating good middle-class jobs for Canadians.”
But the Union of National Defence Employees said the government is relying too much on the private sector when it should be doing the ship service work in house.
Rear Admiral John Newton said Thursday the Royal Canadian Navy maintains a “fine balance” between in-house capabilities and industry support.
“We are constantly migrating our in-house capability very slowly to keep a balance between what industry can provide, readiness of ships when we demand it, international deployments, and what we (the Royal Canadian Navy) can provide with specialized teams and specialized operational equipment, weapons and sensors,” said Newton, commander of Canada’s East Coast navy.
“We’ll have a navy that’s ready for operations globally and it’s a good navy that thrives on this kind of relationship.”
MacKinnon said the announcement is part of building the capacity for Canadians to do the work in the future.
He said Canada has suffered by allowing its shipbuilding capability to deteriorate, and the government is in the process of rebuilding from the floor up.
“We are literally, under the shipbuilding strategy, rebuilding an industry,” MacKinnon said in Ottawa. “This contract ... does bring new capability to Canada. It brings new efficiencies to Canada, it brings experience from across the world.
“But at the same time, it’s Canadians doing work on Canadian vessels that were paid for by Canadian tax dollars,” he said. “We’ll be building capabilities benefiting from the experience of our partners from around the world and using that right at home, using Canadians.”
Carr said the federal government received four strong bids. Winning bidder Thales Canada will retrofit, maintain and repair the ships, and will also provide training.
Officials say Thales will be required to hire subcontractors to complete the work in regions across the country to ensure economic benefits.
Work is to be completed in Canada, except when the ships need work overseas.
Thales Canada president and CEO Mark Halinaty said the company isn’t yet sure which shipyards will be used to do the maintenance and repair work.
“That’s all part of the competitive process that we plan to undertake,” he said.
The previous Conservative government originally launched the national shipbuilding strategy in 2010, budgeting $35 billion to rebuild the navy and coast guard fleets while also creating a sustainable shipbuilding industry on both the east and west coasts.
Six Arctic patrol vessels are being built by Irving Shipbuilding in Halifax, with the first expected next year.
Under the contract, Thales is required to subcontract work for ships delivered in the east to companies in the Atlantic provinces, Quebec and Ontario, whereas work on ships delivered in the west must be completed in the western provinces and territories.
John MacLennan, national president of the Union of National Defence Employees, said privatizing repair work puts public sector jobs at risk.
He also expressed concerns related to national security and the quality of the workmanship that will be done by subcontractors on the ships.
“The quality of work is very important. There is a pride and professionalism in the public service,” MacLennan said.
Carr said there will be no job losses because of the contract, estimating it will create or maintain 2,000 jobs over 35 years.
He added that everybody involved in the work will have a top security clearance.
“We’re fully confident that all the safeguards are in place,” Carr said. “This contract will conform to the highest standards of security for Canada.”