Irving concerned 'speed of decision-making' in Ottawa will add to shipbuilding gap

Federal officials are examining an unofficial proposal to extend construction of the Arctic offshore patrol ships to keep the Irving-owned Halifax Shipyard operating until the navy is ready to start building replacement frigates, CBC News has learned.

The discussions, according to several sources, have been quietly going on for months and involve adding two light icebreakers to the existing schedule, vessels that would be made available for the Canadian Coast Guard.

The cost of extending the current program would be roughly $600 million, said industry and government sources who spoke to CBC News on the condition of anonymity because of the sensitivity of the file.

The idea has been extensively discussed at "the officials' and [director general] level," said one source with direct knowledge of the discussions.

Production of the current batch of Arctic patrol ships is expected to total six vessels and to begin to wind down in late 2019.

Documents obtained by CBC News under Access to Information legislation show — under the best scenario — the navy will only be ready to "cut steel" on its frigate replacements in June 2020.

But the briefing notes for Public Works Minister Judy Foote say holdups in the often-delayed frigate replacement program could push that date to March 2022 or beyond, leaving a potential gap of two years or more for work at the shipyard.

"The primary concern is the risk of an efficiency gap if construction of the final Arctic and offshore patrol ships winds down before construction of the first Canadian surface combatant begins," said an Oct. 18, 2016, briefing.

That would mean scaling back the workforce at the yard and the loss of production momentum — something Irving officials have noted with increasing frequency.

Irving also pitches support ship

Aside from the proposal to build more Arctic patrol ships, the company has made other more formal pitches to the federal government to keep itself busy during the interim.

A separate set of briefings, also obtained under Access to Information by CBC News, shows the extent of the effort.

Federal public works officials encouraged Foote last August to meet with Jim Irving, co-CEO of J.D. Irving Ltd.

He wanted to discuss the shipyard's unsolicited proposal to build a maritime support ship for the navy, a suggestion that was passed along for consideration in the defence policy review.

But the company has become increasingly vocal, and testimony before a Commons committee made clear where the shipyard places the blame.

"We're very concerned about the speed of decision-making and keeping things going," said Kevin McCoy, president of Irving Shipbuilding, referring to the frigate replacement program.

"We already know that in the best-case scenario, there's going to be a gap of probably about 18 months that we're going to have to mitigate. If we don't have the speed in decision-making, that gap will grow."

The frigate replacement has slipped because of "delays in the program on the government side in understanding the requirements, getting the procurement strategy defined, getting the [request for proposal] out," McCoy testified to the Commons defence committee on Feb. 7.

But the internal briefings show federal officials have not been moved by the persistent arguments.

"Mitigating this risk is a shared interest for both the shipyard and Canada," said the Oct. 18 briefing to Foote, which noted the frigate replacement was the biggest procurement in the country's history.

"While the government would also like to move forward quickly, it is important that the process be done properly … Rushing to achieve interim milestones may increase risk and reduce benefits."

Does the coast guard need extra ships?

What is unclear about the pitch to build more Arctic patrol ships is whether the coast guard is actually interested.

CBC News requested an interview with the new coast guard commissioner to talk about not only the proposal, but the overall state of the fleet. Officials initially expressed interest, but eventually stopped responding to queries.

A defence expert said it's clear the coast guard is in desperate need of ships, but whether the Irving pitch fits the bill remains to be seen.

"It depends on the length of the gap they're trying to mitigate," said Dave Perry of the Canadian Global Affairs Institute. "If it's a question of building another one — or two — even if they are excess to demand, it's not like they won't find a use."

The average age of vessels in the coast guard fleet is 34 years. A report for Transport Canada released last year found the civilian fleet is understaffed, desperately in need of new ships and lacking in political support.

"Not only is it understaffed, but its fleet is one of the oldest in the world and urgently requires renewal," said the review of the Canadian Transportation Act led by former Conservative cabinet minister David Emerson. "Without such renewal, it will have to pull ships from service, further reducing reliability."

Although the extra coast guard vessels are being proposed for the Halifax shipyard, it is Seaspan, the West Coast shipyard, that is tasked with building ships for the coast guard under the National shipbuilding strategy.

The company has acknowledged the dilemma in testimony before a Commons committee.

"Seaspan looks forward to building the ships we've been asked to build," said Seaspan CEO Jonathan Whitworth.

"If the coast guard deems that there are going to be interim solutions, we look forward to hearing what they are, hopefully helping or bidding on that.

"How the coast guard is going to fill that gap really is in the coast guard's hands right now."