Shipbuilder accused of conflict of interest

Irving linked to firm bidding on naval project

Irving Shipbuilding, which will play a key role in selecting the winner of a $26-billion program for the Canadian navy’s new warships, is now partnered with one of the firms bidding on the massive project, a development some competitors see as a blatant conflict of interest.

Irving and BAE, a British company, have joined forces to bid on a maintenance contract for the new Arctic patrol ships and supply ships.

BAE will also be bidding on the new Canadian Surface Combatant (CSC) program; Irving, which will build the warships, will help select the winners.

Initial cost estimates for the surface combatant program were set at $26 billion. But the price tag could rise to $40 billion, depending on the number of ships ordered.

Officials with other companies who hope to bid on the CSC privately say they are stunned Ottawa would allow what they feel is an obvious conflict of interest.

The winning bid is expected to be picked next summer.

But Sean Lewis, director of communications at Irving Shipbuilding in Halifax, says there is no need for concern.

“The CSC procurement is being conducted in a way that ensures that all bidders are treated equally, with no unfair advantage given to any individual bidder,” he said in an email. “We will continue to actively monitor the effectiveness of measures taken to avoid any conflict of interest.”

He added the two firms have brought in measures to avoid any conflict.

“Irving Shipbuilding and BAE have created separate working teams that are responsible for each program, and neither organization will tolerate any overlap,” he said.

The federal government has been told about such measures.

But the development could raise more problems for the Liberal government on the shipbuilding file. There is already growing concern in the industry that BAE is favoured to win the warship project.

Preparing a bid for the CSC project will cost companies $10 million to $20 million; if they see winning a contract as slim, they could decide not to enter, further narrowing the choices for the Liberals on a new vessel.

Anne Healey, a BAE official, has said the company looks forward to bidding in an open and fair competition.

BAE is a main contractor for Britain’s new Type 26 ship project, which will start next year. The surface combatants will be the backbone of the Royal Navy’s future fleet. The project has seen repeated delays, with the U.K. navy at one time expecting the ships by 2015. The first vessel is now planned for the early 2020s.

Ottawa has pre-qualified 12 firms, mainly European, as ship designers or combat systems integrators. The number of ships to be built has not yet been decided. The Canadian navy was originally hoping for 15 vessels.