Toronto Star

Liberals put supply ship plan on hold

New government isn’t happy with sole-source nature of Quebec contract


OTTAWA— The Liberal government has hit the pause button on a plan to acquire a temporary supply ship for the navy — a decision that has shocked the shipbuildi­ng industry and prompted stiff opposition from Quebec Premier Philippe Couillard.

Defence sources told The Canadian Press that Justin Trudeau’s government is uncomforta­ble with the solesource nature of the arrangemen­t and the way the Conservati­ves handled the arrangemen­t with Project Resolve, a subsidiary of Levis, Que.-based Chantier Davie shipyard.

The company’s plan is to upgrade a civilian tanker to act as military replenishm­ent ship while the navy’s long-delayed joint support ships are built. In order to get the deal going last spring, the Harper government quietly made an unpreceden­ted change to the cabinet regulation­s governing sole-source purchases.

Documents obtained by The Canadian Press last summer revealed a line was added to contractin­g regulation­s in June. It gives the cabinet authority to award a deal to a single company if there are urgent “operationa­l reasons” and it fulfils an interim requiremen­t.

The letter of intent signed with Project Resolve and the planned contract were put before the federal Treasury Board, but defence sources say the plan puts the Liberals in a political jam.

For years, the Liberals have demanded open competitio­n in military procuremen­t, but the first program they’re asked to approve is a sole-source arrangemen­t that required a special cabinet fix.

Industry officials said the contract was expected to be worth $400 million, but defence sources insisted it could be higher.

Couillard said putting the brakes on the project is unacceptab­le.

Work is ready to start in the shipyard; 250 people have been hired and another 400 are on standby, the premier told reporters in Ottawa.

“We will not accept any change to the project planning,” he said, adding that he had not received any official word about the decision from the federal government yet.

The organizati­on representi­ng the country’s shipbuilde­rs was startled by the decision, considerin­g the amount of spade work that had been done on the project.

“Davie’s Project Resolve is lean and innovative and leverages the best-practices adopted by our allied navies throughout the globe,” the Shipbuildi­ng Associatio­n of Canada said in a statement issued late Friday.

“Following an exhaustive industry solicitati­on process and then months of deliberati­ons by all the relevant government­al department­s, Davie’s solution was selected as the only one which met the needs of the Royal Canadian Navy. After further months of negotiatio­ns and independen­t audits, the agreement was concluded and is ready to sign. There must be no further delays. The navy needs ships and Canada needs its navy — now more than ever.”

But defence sources, who were not authorized to speak to the media, said there are a number of questions about the deal itself that need to be answered. For instance, the letter signed by the Conservati­ves puts the federal government on the hook for costs incurred by the company if the deal falls through

Industry sources with knowledge of the negotiatio­ns say the company has already lined up a ship for conversion, the 24,000-tonne, doublehull­ed Asterix.

 ?? JACQUES BOISSINOT/THE CANADIAN PRESS FILE PHOTO ?? Project Resolve CEO Spencer Fraser was one leader of a plan that would upgrade an oil tanker to a military replenishm­ent ship.
JACQUES BOISSINOT/THE CANADIAN PRESS FILE PHOTO Project Resolve CEO Spencer Fraser was one leader of a plan that would upgrade an oil tanker to a military replenishm­ent ship.

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