Quebec shipyard at the heart of the Mark Norman case poised to become federal builder

A Quebec shipyard that was once at the centre of the now-dropped criminal case against former Vice-Admiral Mark Norman is now formally in line to become the federal government's third go-to shipbuilder.

Public Services and Procurement Canada announced Thursday that Chantier Davie, located in Levis, Que., has pre-qualified for the position and could join Irving Shipbuilding in Halifax, N.S., and Seaspan Shipyards of Vancouver in the shipbuilding program.

In a statement, the department said the company will now be asked to answer a request for proposal, which will be followed by an evaluation phase that will include an assessment of the yard's infrastructure.

Public Services and Procurement Minister Anita Anand said the announcement is "a critical milestone" for the National Shipbuilding Strategy and its ability to adapt to meet the federal government's needs.

A formal agreement is not expected to be signed until the end of next year.

Almost a decade ago, the former Conservative government selected Irving's Halifax Shipyard and Seaspan as the designated shipyards for construction of new warships and other federal vessels.

Under Prime Minister Justin Trudeau, the Liberal government modified the strategy to add a third yard and the construction of six icebreakers for the Canadian Coast Guard.

Since it was left out of the original strategy, Chantier Davie has conducted an aggressive campaign to convince the federal government to include it in new construction, refit and modification work.

It delivered a set of unsolicited proposals to the desks of successive federal ministers.

The former Conservative government agreed to allow the company to convert a civilian cargo shop for military use after the navy unexpectedly retired its supply ships.

The $668 million contract for the MV Asterix became a political football — and eventually a legal one, after Norman, the former commander of the navy, was accused of funnelling cabinet secrets to Chantier Davie in 2015 as the lease and conversion contract was negotiated.

Norman was charged with a single count of breach of trust in a high-profile criminal case that concluded last May when the Crown stayed the charge.

A former senior defence official, who was one of the architects of the initial shipbuilding strategy, wrote a policy paper last October on the inclusion of a third yard, examining some of the advantages and pitfalls.

"A third NSS shipyard is a big idea," retired rear-admiral Ian Mack wrote in an analysis for the Canadian Global Affairs Institute. "If done right, it requires the [National Shipbuilding Strategy] enterprise to grapple with a number of other important big ideas."

Until two years ago, Mack was the defence department's director general in charge of the strategy. He wrote that federal officials could learn valuable lessons from the existing program when it comes time to negotiate a deal with Chantier Davie.

One of those lessons, he suggested, should acknowledge that the Quebec firm's lobbying for inclusion in the program created some bad blood.

'Soured relations'

"The use of what some have interpreted as an aggressive posture by potential third shipyard bidders may have soured relations with both [existing] shipyards and disappointed many government officials," Mack wrote. "If this is the case, it will be important to mend fences relatively quickly and put in place strong mechanisms to allow for productive relationships to be created."

If there are to be infrastructure improvements to the Davie Shipyard, he said, they should not be done at the public's expense. In 2014, the former Conservative government quietly handed over $40 million to Seaspan to help with upgrades to the Vancouver shipyard.

Mack said the two existing yards "have struggled to find or develop sufficient numbers of skilled blue collar workers, experienced foremen and capable white collar expertise" and that the federal government needs to be cognizant of the limitations of the labour pool.

In Australia, the government's shipbuilding plan included a "government-sponsored strategic skills development program," he noted.

'Ultimate battle'

Another perception that needs to be addressed is the notion that having another yard would defeat the original purpose of having go-to builders, he said.

The strategy "was created to try to end the government shipbuilding boom-and-bust cycle by providing a drumbeat of almost continuous shipbuilding for the selected shipyards," Mack wrote.

"With the addition of a third shipyard, it is difficult to see all three being fully employed beyond 2040, thereby requiring rationalization."

He said the shipyards involved "could view this as an ultimate battle or even a betrayal" and the "government would be wise to provide the NSS shipyards with clarity on the longer term vision for work that could extend NSS beyond 2040."