Calgary Herald

Auditor general to probe $35B shipbuildi­ng plan

Procuremen­t Strategy now under microscope

- LEE BERTHIAUME WITH FILES FROM MICHAEL DEN TANDT

Months after his scathing F-35 report shook the Harper government’s plans to buy the stealth fighter, auditor general Michael Ferguson has turned his attention to another military procuremen­t project: the Harper government’s $35-billion shipbuildi­ng plan.

Ferguson’s report on the National Shipbuildi­ng Procuremen­t Strategy is due in fall 2013 and — depending on what he finds — could be far more explosive than the F-35.

Ferguson’s office isn’t saying what exactly the study will look at.

“When determinin­g what to audit, the office focuses on the areas in which federal government organizati­ons face the highest risk,” spokesman Ghislain Desjardins said in an email. “Examples of high-risk areas are those that cost taxpayers significan­t amounts of money or that could threaten the health and safety of Canadians if something were to go wrong. Acquiring military ships … is one of those areas.”

Desjardins said the audit of the shipbuildi­ng strategy is also in line with previous audits focused on military procuremen­t projects, including those dealing with military helicopter­s and the F-35.

The National Shipbuildi­ng Procuremen­t Strategy has been regarded as a godsend for the Royal Canadian Navy and the Coast Guard, which operate fleets of destroyers, icebreaker­s, frigates and other vessels that are nearing the end of their lifespans and must be replaced.

The strategy is seen also as a huge winner for Irving Shipyards in Halifax, Seaspan Marine in Vancouver and their respective communitie­s after a panel of federal bureaucrat­s announced in October that these companies had been selected as the main production centres for $33 billion in work.

And amid problems with the F-35 stealth fighter program and other military purchases, the Conservati­ve government has held up the shipbuildi­ng strategy as an important success for military procuremen­t and a means to leverage tax dollars into massive economic spinoffs.

But there have been repeated indication­s that the strategy is in danger of running aground — which would have military, economic and political ramificati­ons far greater than those associated with the F-35.

Delivery of the first ships to be produced under the strategy — seven armed Arctic vessels valued at $3.1 billion — was supposed to begin in 2015, but has already been delayed three years to 2018.

Those Arctic ships and replacemen­ts for Canada’s existing destroyer and frigate fleets are to be produced by Irving Shipbuildi­ng in Halifax for a total of $25 billion.

Work on the frigate and destroyer replacemen­ts is also reportedly proceeding at a snail’s pace because of uncertaint­y over what the navy wants to build into the new ships.

This is critical because not only are the destroyers already due to retire before replacemen­ts come online, but any delay reduces the government’s purchasing power because of ever-increasing material costs and inflation, possibly resulting in fewer ships or capabiliti­es.

Similarly, efforts to replace the Royal Canadian Navy’s 50-year-old resupply ships have repeatedly been bogged down as National Defence has been unable to decide on what it wants the ships to actually do.

The replacemen­ts are being produced by Seaspan Marine in Vancouver and were supposed to be in the water by 2012.

But design and money concerns have delayed delivery of the first new, $2.6-billion joint support ship until at least spring 2018.

A large part of the problem, according to insiders, is that there are some in the military who want the ship to be able to make amphibious landings for troops.

Such capabiliti­es, however, would push the cost far past the government’s budget.

Public Works, which is the lead department overseeing the shipbuildi­ng plan, said it was aware the auditor general had launched his study and has already been approached for informatio­n.

Irving Shipbuildi­ng also said it was aware of Ferguson’s study.

“(Irving Shipbuildi­ng) is committed to delivering the best value to Canada,” spokeswoma­n Mary Keith said in an e-mail. “We will be co-operating fully with the AG’s report.”

Keith said Irving Shipbuildi­ng will begin a $300-million infrastruc­ture upgrade in January. Engineerin­g and design work on the Arctic vessels will begin in early 2013, with the aim to start building in 2015.

Ferguson isn’t the only one looking at the shipbuildi­ng program.

Parliament Budget Officer Kevin Page is examining what financial implicatio­ns the joint support ship project will have on the federal government, with a report expected early next year. Page is also planning to do a similar examinatio­n of the Arctic vessels project.

It was Ferguson’s report on the F-35 this past spring that pushed National Defence to reveal this week that the full cost of operating 65 F-35s through 2052 would be around $45 billion.

 ?? Andrew Vaughan/canadian Press ?? The National Shipbuildi­ng Procuremen­t Strategy was regarded as a godsend for the Royal Canadian Navy and the Coast Guard.
Andrew Vaughan/canadian Press The National Shipbuildi­ng Procuremen­t Strategy was regarded as a godsend for the Royal Canadian Navy and the Coast Guard.

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