Evidence of meeting #34 for National Defence in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ships.
A recording is available from Parliament.
4:05 p.m.
Liberal
The Chair Liberal Stephen Fuhr
I had the feeling you had more to say there, but we can circle back on that if we have another opportunity.
I'm going to give the floor to Ms. Gallant.
4:05 p.m.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
Mr. Vicefield, you mentioned the success of the U.K. procurement, with the U.K. shipbuilding. No...?
4:05 p.m.
Chairman, Chantier Davie Canada Inc.
It has not been good in the U.K. A businessman called Sir John Parker came from industries like Airbus. He was on the board of Airbus. He has looked at how shipbuilding has worked, and how monopolies have been created there, and how that's not developing a sustainable industry with exports and so on.
The new national shipbuilding strategy in the U.K. is there to fix what was a very bad situation.
January 31st, 2017 / 4:05 p.m.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
When you have a successful strategy, for example in Denmark. They have a system that works on budget and on time. Is there a single project manager, an individual, in such successful strategies who sees a project from beginning to end, or is it just given to these amorphous entities of government to interact with one another, and nobody's really taking responsibility for anything and 20 years down the road you have nothing to show for it?
4:05 p.m.
Chairman, Chantier Davie Canada Inc.
Coming from the commercial shipbuilding and commercial marine industry, we're used to very lean projects. When I came to Canada, I came from that side. Everything was about doing something fast and cheap, but still very specialized and very high quality because I came from the oil and gas market, which is even more complex on many occasions than naval vessels.
I think the difference there is that you build thousands of those vessels whereas perhaps you don't build as many naval vessels, so in the government or in the parties who are supervising it, you probably don't get that level of experience, potentially.
Maybe Spencer could add some more.
4:05 p.m.
Chief Executive Officer, Federal Fleet Services Inc.
What's unique on this project is that when we started down the path of delivery this.... Quite frankly, the Protecteur caught fire in February and then in June of that year Preserver was deemed incapable of going back to sea due to rust out. When we proposed a fast-track solution, we did not specifically want to have layer upon layer of bureaucratic resistance.
In my comments, I made the point about how in a lot of the rules we looked at we had to say, “This isn't really adding to success. Why are we doing it? What is this policy guidance on a specific item?” What we settled on was a provision of service. To your point about what our penalty is, we don't get paid and our financiers who are funding the project are not going to be happy if we're late.
We do have a very lean, very innovative.... We've avoided the Frankenstein requirement. If we say it has to have monitoring machines that are not mil-spec, so they can submit to a nuclear blast, we try to bring over, as much as we can, the oil and gas expertise and people who get things done quickly.
What's important to point out, though, is that we have a really good model here. Right now my team of 10 people run the whole project. In the shipyard, there's a management team of about 30 or 40 engineers who are doing the production engineering and the kind of program management you talked about. There's one project manager in charge.
The government has a third-party assessor who comes into the yard once a month and has unfettered access to look at how things are moving, and then we get feedback. We have a quasi-governance group where we talk about any problems we're leading into. Touch wood, right now, as Mr. Vicefield said, we're ahead of schedule.
4:10 p.m.
Chairman, Chantier Davie Canada Inc.
I think when we started this project we said that the navy needs a ship and it's urgent; you have no supply ships. You want us to do this and we're going to do it quickly, in a lean manner, fast, and we're going to give you all the military systems you want, to have full interoperability with the fleet.
To come back to that point about how shipyards become efficient and how shipbuilding projects actually do end up working, you just have to look at some of the shipbuilding projects in Europe. As I've said, you have five different shipyards in Germany and each shipyard is building super blocks, big blocks, which are all taken to one shipyard. The blocks are fully outfitted with all the piping and electrical systems in them already. They get slotted together, and quickly. Speed is the biggest killer for any shipbuilding project. The longer a project takes, the more inflation gets added to it. They can go exponentially out of control, as you see in Canada.
4:10 p.m.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
Mr. Vicefield, you described the national shipbuilding strategy as a prolonged procurement as opposed to eventually a commercialization. What would be the missing ingredient, the missing aspect that just isn't in our national shipbuilding strategy, to convert it from being just successive procurement to something that can be ongoing?
4:10 p.m.
Chairman, Chantier Davie Canada Inc.
It's capacity. It's lacking capacity. There's this very limited capacity in the current framework. I honestly don't think that when someone.... Actually, having heard from people in the past, I know that when the federal fleet renewal was being discussed at the very outset, no one ever envisaged not having Davie shipyard in there. It's the only shipyard of a large scale in Canada. I think that to end up in a situation where they weren't involved led to the kind of problems you experience today.
4:10 p.m.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
Mr. Fraser, would you explain more fully what the relationship is between your company and Davie shipyard?
4:10 p.m.
Chief Executive Officer, Federal Fleet Services Inc.
In shipping worldwide, vessels typically are a single-purpose company. That's done for a variety of reasons—the traditional history—so Federal Fleet Services is actually a company that is completely independent from Davie shipbuilding.
We've given a conversion order, just as any two legal entities would, for the conversion of the vessel. Then I have a whole other side of the company that's doing the crewing and ramping up in terms of Mr. Robillard's question as to the ramping up of that service.
We are under the Inocea group of companies, of which Mr. Vicefield is the chair. We're sister companies, but that's the extent of it. I report to a different board. There's a contractual relationship between us and Davie.
4:10 p.m.
Conservative
Cheryl Gallant Conservative Renfrew—Nipissing—Pembroke, ON
Okay. You'll have the crew, and there will be military on board when you're doing one of your refuellings.
4:10 p.m.
Conservative
4:10 p.m.
Chief Executive Officer, Federal Fleet Services Inc.
This type of activity is not unique.
4:10 p.m.
Chief Executive Officer, Federal Fleet Services Inc.
There are several precedents for this type of activity, such as the combined air training or combat air training systems program.
4:10 p.m.
Chairman, Chantier Davie Canada Inc.
In essence, the ship will be crewed, steered, and the engines maintained, and so on, by the Federal Fleet Services team. The navy will do all the deck operations and so on. That's the simple answer.
4:10 p.m.
NDP
Randall Garrison NDP Esquimalt—Saanich—Sooke, BC
Thank you very much, Mr. Chair.
Welcome back, everybody, after what I call the “winter break”.
Welcome to the two new members of the committee. It's good to see both of you here.
Thank you, witnesses, for your presentation, although I have to say, as someone who represents the west coast, that I think what you've presented is somewhat problematic for me. I guess I would say that there are some who, at best, would describe your presentation as an attempt to reopen the bidding in the last shipbuilding strategy. At worst, some would call it sour grapes.
My real question here, I guess, is that you seem to have implied that somehow those who won the contracts aren't doing their jobs. I wonder whether that's more a function of the administration of the shipbuilding strategy and the changes that have been made in the shipbuilding strategy, such as, for instance, changing the design for the supply ship from a ground-up to an off-the-shelf design. I mean, these are decisions that have been made not by the people who bid on the contracts, but by the Canadian government.
The implication on the west coast is that Seaspan is not doing anything. They're certainly already constructing ships for Fisheries and Oceans, and they'll be laying steel for the supply ship sometime later this year, but they had to wait for the design. You can't lay steel for ships until you have a design.
I guess that's my first question. You somehow seem to be arguing that it's the fault of the shipyard that we don't have any ships in the water yet, when I would say that perhaps that's due to changes the Canadian government made, particularly the last government, in constantly changing the playing field.
4:15 p.m.
Chairman, Chantier Davie Canada Inc.
If you're talking about Seaspan in particular, I think they build very good tugboats and very good barges, but going from that to building.... I think they can develop into building good small vessels for the Coast Guard, as was originally envisaged in the letter that I think you have.
Do you have the letter?