$800M 8-year maintenance contract awarded for new navy ships

The federal government has awarded an $800-million contract to perform future maintenance and repair work on the Royal Canadian Navy's new vessels to the Canadian subsidiary of a French multinational corporation.

The contract deals with the new Arctic and offshore patrol ships and joint support ships, which haven't yet been built, and initially covers eight years but can be extended up to 35 years for a total of $5.2 billion, plus taxes.

The contract is going to a joint venture between Thales Canada Inc. and Thales Australia Ltd. Thales is a French company with corporate headquarters in Paris.

Jim Carr, the acting federal procurement minister, made the announcement Thursday morning in Dartmouth, N.S.

Top security clearance required

He estimates work on the ships will create or maintain 2,000 jobs over the life of the contract, and said all subcontracting will be tendered to Canadian companies. The jobs will be spread across Canada, but "primarily right here in Halifax and in Vancouver and also other jobs in Nepean in Ontario."

The contract will "conform to the highest standards of security for Canada," Carr told reporters.

"Everyone involved in this project will have top security clearance. It's specified in the regulations. We are fully confident all the safeguards are in place."

Union concerns for the future

Despite the promises of job creation, the president of the Union of National Defence Employees said he and his members are bracing for problems.

John MacLennan said the government is already choosing not to fill some vacancies when people retire and he worries that will only continue as morecontractors are brought in to do work.

"The contractors are slowly creeping into the public sector workforce," he said.

Another major concern for MacLennan is cost accountability.

"There's situations that arise that aren't in the contract where the contractor says, 'OK, if you have us to do that work because we're doing most of the work now there's going to be an increase in [the cost of] doing business with us.' And they have to pay, because you have warships that are going to do the things that warships do."

'Not going to reinvent the wheel'

Maintenance work will only be done outside Canada if a ship requires it when it is already overseas, Carr said.

Mark Halinaty, president and chief executive officer of Thales Canada Inc., said his company was "not going to reinvent the wheel" and would work with in-house workers whenever possible.

He said he didn't yet know how much work would be done in Halifax.

"It's not exactly clear which docks will be used for what activities because that's all part of the competitive process we plan to undertake," he said.

4 bids received

Two Arctic patrol ships are now being built at Irving Shipbuilding's Halifax facility and four more are planned at a total cost to the federal government of $2.3 billion.

Earlier this year, the federal government awarded a $230-million contract to Seaspan's Vancouver Shipyards Co. Ltd. to design two joint support ships. The government said at the time that construction is expected to begin next year, with the first completed in 2021.

Carr said the decision to award Thales the contract was made after receiving "four strong bids" and following consultations with industry over several years. He said awarding the contract for both types of ships to one company was the most cost-effective option.

He also touted economic development, training and research opportunities that will come from the deal.

Previous work to upgrade combat, radar, communication and missile systems on Halifax-class frigates started in 2010 and was divided between Irving Shipbuilding in Halifax and Seaspan Marine in North Vancouver.