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.
4:35 p.m.
Liberal
January 31st, 2017 / 4:35 p.m.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Thank you very much, Mr. Chair.
Thank you, gentlemen, for being here.
My riding is Dartmouth—Cole Harbour, so I was fortunate enough to see steel being cut in Dartmouth, and across the harbour, get a chance to visit the assembly hall at the Irving shipyards a couple of times, once with the Prime Minister and once with some local politicians.
It seems like the oil-replenishing vessel is a success. It seems like this is a stopgap sole-source contract success. I'm happy to hear that you're 15% ahead of schedule, and it sounds like you're on budget.
Can you tell me a bit about what other contracts Davie has under the shipbuilding umbrella, whether it be repairs or service? What else are you doing for the Government of Canada under the shipbuilding contract? Is that the only thing?
4:35 p.m.
Chairman, Chantier Davie Canada Inc.
We're not doing anything under the national shipbuilding procurement strategy.
4:35 p.m.
Chairman, Chantier Davie Canada Inc.
This is something that's a common myth, I think. The national shipbuilding procurement strategy is based on two contracts: one contract to Irving Shipbuilding and one to Vancouver Shipyards. Those are called umbrella agreements. Those umbrella agreements, as we've said before, are sort of non-binding letters of interest to say, “We're going to negotiate with you to build ships, but we're going to do it on a piece-by-piece basis and the government isn't obliged to build anything, any number of vessels.” Those umbrella agreements are actually restricted to a certain number and type of vessels, which are listed in annex A of those umbrella agreements.
4:35 p.m.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
The vessel we're talking about that you're supplying now is under this shipbuilding strategy, correct?
4:35 p.m.
Chairman, Chantier Davie Canada Inc.
No, it's not. It was outside of the shipbuilding strategy.
4:35 p.m.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Oh, it's separate? Is that right? Okay.
Tell me about the inspectors who routinely go to the yard to check on the progress of the contract we have with your company or all companies. I understand that there was a delay of several months when the shipyard didn't let the inspectors in to check on the....
4:35 p.m.
Chairman, Chantier Davie Canada Inc.
That's the first we've heard of that. Where did you hear that from?
4:35 p.m.
Voices
Oh, oh!
4:35 p.m.
Chairman, Chantier Davie Canada Inc.
I'd like to know where you heard that. That would be interesting.
4:35 p.m.
Chief Executive Officer, Federal Fleet Services Inc.
I think what's germane to the discussion is that during the negotiation, which lasted almost four and a half months, the Government of Canada employed five third-party external auditors to audit what we were proposing to the Government of Canada to fill this urgent operational requirement.
There was KPMG, which reviewed the financial model to make sure it was fair and reasonable. We had Aon, I believe, do the insurance. We had FMI International look at the shipbuilding capacity. Norton Rose looked at the contractual arrangements to make sure the Government of Canada wasn't getting itself into.... I would challenge anyone to find another project that has been under that many external reviews simultaneously. It was a very thorough process.
4:40 p.m.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
I don't think I need my entire five minutes, Mr. Chair, but I did think that Davie was under the shipbuilding contract with this particular ship as a stopgap.
4:40 p.m.
Chairman, Chantier Davie Canada Inc.
No. This was a fix to the national shipbuilding strategy.
4:40 p.m.
Liberal
The Chair Liberal Stephen Fuhr
We have about one minute or a minute and a half.
Is there another quick one from that side?
Mr. Bezan, you have the floor.
4:40 p.m.
Conservative
James Bezan Conservative Selkirk—Interlake—Eastman, MB
Thank you, Mr. Chair.
I want to thank our witnesses for taking time out of their busy schedules to help us with our study.
I want to also thank you for bringing forward your unsolicited proposal on the Resolve class oil replenisher. I think that showed courage, but it also gave us an opportunity to look at where there were some gaps when we were in government and to fill them, and I'm glad cabinet supported that. Personally, I do think what you're proposing here today, which is to go with a second Resolve class to allow us to get caught up at Seaspan with some of the other ships, may be something that the government should look at. Again, put it in writing and sit down with the ministers that are affected. I think that's a good way to go.
You make a good argument as well about the capacity and trying to maximize what we have here in Canada to expedite some of these projects that are lagging. Is there anything under the national shipbuilding strategy that's in place right now with Irving or Seaspan that prohibits them from actually farming out some of that work to Davie?
4:40 p.m.
Chairman, Chantier Davie Canada Inc.
The simple answer is no. I will tell you that when we first arrived in Canada, we did have communications with both of the shipyards, and from the outset there was a reluctance to go that route. That was an offer specifically for the polar icebreaker that we had made to your friends on the west coast.
4:40 p.m.
Conservative
James Bezan Conservative Selkirk—Interlake—Eastman, MB
You mentioned that in the U.K., since all ships are built in blocks now, some of these blocks could be built in Davie—
4:40 p.m.
Conservative
James Bezan Conservative Selkirk—Interlake—Eastman, MB
—or even at other shipyards, and be moved in for final assembly.
4:40 p.m.
Chairman, Chantier Davie Canada Inc.
That's the way to speed up the programs, to save money for the taxpayers, and to get these ships built for the armed forces.