Judicial review for submarine contract

[old medic]

Company wins judicial review of submarine deal

Canadian Press article, 17 July 2007

OTTAWA -- The Federal Court has cleared the way for a judicial review of the Conservative government's decision to steer a $1.5-billion submarine maintenance contract towards a West Coast firm.

Irving-owned Halifax Shipyards challenged the decision earlier this year, but the Crown attempted to shut down the case. It is latest the controversy involving big-ticket military purchases.

"The judge has determined we were directly affected by the Crown's actions in the tender of the Victoria-class submarines and that we do have standing to bring forward an application for judicial review," Mary Keith, a spokeswoman for Irving Shipbuilding, said Tuesday.

"We believe a full judicial hearing is merited and we're very pleased that that ruling has come forward."

In September 2006, the federal government announced it would open to tender the Victoria Class In-Service Support Contract. Last January, it identified Canadian Submarine Management Group - CSMG - of British Columbia as the company "most compliant" with the contract aims and began negotiating a final contract.

But Halifax Shipyards and Fleetway Inc. - part of a rival consortium led by British defence giant BAE (Canada) Systems Inc. - challenged the decision by calling for a judicial review.

The four diesel electric submarines, which Canada purchased from the Royal Navy, were built by Britain by BAE Systems in the late 1980s and early 1990s.

The two Nova Scotia-based subcontractors stood to receive $750 million in subcontract work had their group been the winning bidder.

The federal government sought to have the request for a judicial review thrown out and in court documents filed last spring said: "The applicants have no standing to make this judicial review application. The Attorney General of Canada states that both Irving and Fleetway, as subcontractors, are not 'directly affected by the matter in respect of which relief is sought."'

Government lawyers claimed that "a judicial review can only be made by a party directly affected" by a decision.

In written decision rendered late Friday, a Federal Court judge disagreed with the Crown and dismissed its application to halt the review.

Keith says lawyers for Halifax Shipyard have yet to receive a copy of the judge's ruling and will have to see it before deciding on the next step in the fight.

"We've been concerned in the awarding of this contract that process was flawed and that there was conflict of interest and a failure to ensure a safe process," she said.

There are growing complaints in the defence sector that in fast-tracking recent military purchases, the federal government has unfairly excluded some companies.

Airbus Military recently took the unusual step of appealing directly to the House of Commons defence committee to consider its A-400 transport plane, even though National Defence had said it was only interested in negotiating with Lockheed-Martin for the purchase of the C-130J medium-lift aircraft.

There have also been charges of bias in the program to buy new fixed-wing search and rescue aircraft.

In launching its initial court challenge, Irving named CSMG and claimed one the firm's parent companies, Weir Canada Inc., developed the bid evaluation criteria.

This gave their rival "an advantage over other potential bidders," said court documents.

The application for review went on to say elements of the bid that would have put CSMG at a disadvantage were left out of the government's technical evaluation and instead made part of the negotiation process once a bidder had been selected.

The federal government was also accused of a bias and conflict of interest.

In its court records, Irving claimed CSMG's new facility - to be built because of the contract - was going to be constructed on Crown land and subject to a Crown lease.

"Accordingly, the Crown's financial interest in CSMG's construction of new facilities creates a further apprehension of bias."

 

[Rowshambow]

I really dislike Irving, when I was in Gagetown, I was visiting some Family in St John, and the Irving's were threatening to shut down a local lumber store, if a Home Depot moved into the area!, dorks, afraid of a little competition! but then again, if other stored (which they had no control over) moved in, they would lose their control over the east coast!!

 

[scoutfinch]

The issue was that the market could not sustain two stores and that Home Depot was a multi-national along the lines of Wal-Mart with which the Irving operation was unable to compete.  It was a matter of 'controling the east coast' inasmuch was it a practical business decision.

Or should they have kept the store open and operate at a loss after Home Depot arrived?  Let's be realistic here -- JDI is under no obligation to fight losing business battles nor can they 'control' where other business open shops.  They can only make decisions as they pertain to Irving operations.

By the way, the Irving Shipbuilding (whom owns the Halifax Shipyards) and Kents -- while both owned by JDI, are two entirely different companies, managed and run by entirely different organizations.  The corporate culture in each is entirely different and not really capable of comparison.  It's like comparing apples and oranges.

 

[Cdn Blackshirt]

These stories kill me....

Why on earth doesn't someone in procurement come up with the new & exciting idea (that has existed in the private sector, for oh, 50-years) that each bidder must sign a litigation waiver prior to being allowed to bid.

What a complete waste of time & resources.


Matthew. 

 

[Ex-Dragoon]

Great another delay....thanks JD

 

[scoutfinch]

No one would ever call me a fan of the Irvings; however, I have to say that if there is any merit to the allegations that the parent company of the winning bidder actually drew up the bid requirements, I think arguing the matter is the right thing to do.

 

[3rd Herd]

Irving Shipbuilding Inc

The Depth of Experience Offshore:

Irving Shipbuilding Inc. (ISI) combines the individual expertise of each of its companies under one management, offering clients quality shipbuilding, offshore fabrication, ship repair and engineering services on the Atlantic seaboard.  The group's locations are second to none on the East Coast, and include:

Divisions:
• Halifax Shipyard
• East Isle Shipyard
• Shelburne Ship Repair

Affiliates:
• Fleetway Inc.

ISI has valuable experience in complex project management derived from large multi-million and multi-billion dollar projects for various clients, where numerous subcontractors were involved.  From total system responsibility and design to construction and delivery, projects were completed ahead of schedule and within budget.


Halifax Shipyard:
Halifax, Nova Scotia
Halifax Shipyard has built four UT722 Offshore Supply Vessels designed for the deep water harsh environments of the Atlantic Ocean.  Halifax Shipyard has also built seven drill rigs for SEDCO which include the SEDCO 704 for work in the Norwegian North Sea, STADRILL and SEDCO 709, both for positioning in the North Sea and the internationally acclaimed dynamically positioned vessel SEDCO/BP 471. At Halifax Shipyard’s Woodside site in Dartmouth, Nova Scotia, the yard completed the construction work on-board the world’s largest semi-submersible drilling rig, the Eirik Raude, together with winterization, mechanical completion and commissioning assistance. In 2004, the yard built the 2,400 tonne South Venture Topsides module for ExxonMobil.
East Isle Shipyard:
Georgetown, Prince Edward Island
Over 30 years experience in building workboats has set the standard for the series production of, amongst others, the highly successful ASD ship assist & escort tugs designed by Robert Allan Ltd. Further experience includes the fabrication and repair of several sizes of tugs for harbour and open sea operations, patrol craft, ferries, barges, fishing vessels up to 46m, offshore components.

Shelburne Ship Repair: Shelburne, Nova Scotia

The Shelburne shipyard offers a full range of marine repair and refit services, from basic blast and paint or minor welding to major refits and conversions. The skilled workforce is also expert in engine overhaul, shafting and structural modifications.  Specific expertise includes: naval and Coast Guard vessels, submarines, small/medium commercial coastal vessels, fishing vessels, offshore supply vessels and drill rigs, tugs, barges and container ships.

WoodSide Industries
• Main Assembly Shop – 114.5m x 29.9m x 23.7/12.2m. Complete with 2 x 40 tonne, 2 x 20 tonne, 2 x 15 tonne overhead cranes and 2 x 1 tonne crane
• Pipe Shop – 46.1m x 18.5m
• Warehouse – 40m x 24.6m, complete with heating & sprinkler systems
• Additional stores – 15m x 15m
• Laydown Area – 2,200m2
• Offices – 600m2
• Load-Out wharf – total length 229m
• Module Assembly Pad – 13,600m2
• Module Shop – 2,500m2

Financing
Qualified customers are eligible for financing through EDC and Industry Canada's Structured Financing Facility (SFF).


For further information:
Irving Shipbuilding Inc.
3099 Barrington Street
PO Box 9110
Halifax Nova Scotia
B3K 5M7
Tel: (902) 423-9271
Fax: (902) 422-5253
EMail: marketing@irvingshipbuilding.com
Web site: www.irvingshipbuilding.com

Contacts:
Kevin Hudson,
Executive Vice President

Seems to me they already have a nice slice of pie. Or is it just easier to maximize profit through over runs on government projects.
"Canada First" Defence Procurement - Joint Support Ship"
Two consortia will be awarded contracts ($12.5 million each) for the project definition phase, and will compete for the final Implementation contract. Based on the definition phase plans, one consortium will be chosen for project implementation. The overall project cost is $2.9 billion. This includes a base cost of $2.1 billion, plus an estimated $800 million in contracted in-service support over 20 years. http://www.forces.gc.ca/site/Newsroom/view_news_e.asp?id=1958

Planning Contract Awarded for Chicoutimi Repairs
NR-05.014 - February 16, 2005

OTTAWA – The Department of National Defence has awarded a contract valued at approximately $560,000 to Irving Shipbuilding Incorporated of St. John New Brunswick for the first phase of the repairs to HMCS Chicoutimi. http://www.forces.gc.ca/site/newsroom/view_news_e.asp?id=1598

Chicoutimi Repairs Proceed
NR–05.070 - August 19, 2005

OTTAWA - Phase II of the repairs to HMCS Chicoutimi has begun with the award of an $11.76 million contract to Irving Shipbuilding Incorporated of Saint John, N.B, at its Halifax Shipyard facility. This phase involves detailed materiel surveys and assessments, as well as the development of the engineering and job specifications needed to begin Phase III, the repair and other concurrent work. Phase II is expected to be completed by the end of 2005. http://www.mdn.ca/site/newsroom/view_news_e.asp?id=1722

News ReleaseMateriel Group Announces May/June 2004 Contract Highlights
NR–04.063 - August 16, 2004

REPAIR AND MAINTENANCE CONTRACTS

HALIFAX, NS – A $19.3-million contract was awarded to Halifax Shipyard, a division of Irving Shipbuilding Inc., for work on HMCS Iroquois. HMCS Iroquois is slated for a nine-month refit in Halifax during the summer of 2004. The refit will involve repair and refurbishment of a number of ship systems as well as significant painting and preservation work. Upgrades will also be completed on environmental, communication and engineering systems. The contract work is expected to be completed in March 2005 http://www.mdn.ca/site/newsroom/view_news_e.asp?id=1430


Defence Minister Gordon O'Connor confirms Ottawa will go ahead with its plan to commission the construction of three naval supply ships at a cost of $2.1 billion. Irving Shipbuilding, ThyssenKrupp Marine Systems AG, BAE Systems Ltd. and SNC Lavalin ProFac Inc. are bidding for the contract to build the 28,000-tonne ships. The winning bidder will also receive an $800 million contract to provide support and maintenance throughout the life of the ships. http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20060626/defence_spending_060626?s_name=&no_ads=

Navy job for Halifax
A C$9.4-million competitive contract awarded to Les Chantiers Maritime Irving Shipbuilding Corporation (operating as Halifax Shipyard) for maintenance and repair work on the HMCS Athabaskan will create 85 jobs and maintain an additional 30 until the end of June 2002. The contract was awarded on behalf of Canada's Department of National Defence (DND). http://www.marinelog.com/DOCS/NEWSMMI/MMIaug23.html

OPENING OF THE VICTORIA CLASS SUBMARINE TRAINER
The Canadian Submarine Group (CSG) – a consortium led by CAE Inc.  partnered with General Dynamics Canada and Irving Shipbuilding Inc. won the $24 million contract to relocate, operate and maintain the trainers for a period of four years with an option for two additional years. Said Mosher “having the equipment in place on time allowed training to commence before the official opening” http://www.marpac.dnd.ca/marlant/news/marlant_news_e.asp?section=9&category=37&id=3513


Danish tug order for Canadian yard

Danish owner Stevn, part of the Nordane Group, has ordered two Z-drive multifunction, ice class tugs from Irving Shipbuilding's East Isle Shipyards, Georgetown, Prince Edward Island. The order is worth Canadian $19 million.http://www.marinelog.com/DOCS/NEWSMMV/MMVmar20.html

 

[scoutfinch]

I don't mean to sound rude but what is the point of your post?  (I know that sounds hateful but is not intended in such a manner -- dang internets!)

 

[Rowshambow]

I think he is trying to point out that the East coast companies have been getting quite a bit of jobs, and it's about time the west has some, so Irv should quit complaining!

 

[Neill McKay]

I think he is trying to point out that the East coast companies have been getting quite a bit of jobs, and it's about time the west has some, so Irv should quit complaining!

Their complaint is about an improper contracting process, and it's quite right for them to make that complaint if they think the process has been fiddled to their disadvantage.

Contracts should be awarded on the basis of the best proposal, not on the basis of geography (unless that's part of the stated evaluation criteria from the outset, which would be a perfectly legitimate thing to do, subject to things like free trade agreements).  People used to say (and maybe they still do) that you can't have any military equipment unless it was made in Quebec.  Clean and transparent contracting procedures reduce the likelihood of that sort of concern.

If anything, a company's having done a lot of naval work in the past should make them a more, not less, attractive proponent for a naval contract.

 

[3rd Herd]

I was trying to make is yes there is some disparity in the East verses West. But if you care to look at some of the contracts and some of the finished contracts we have the usual tale of  cost over runs. I only went back five years or so. The one I am thinking of is about 3 million on a 11 million contract, give or take a few hundred thousand. It is one of the contract examples I used.  You know a dollar here dollar there and we wonder why equipment costs so much. Look at the total value of the Irving contracts and apply a dollar here or there.

"ISI has valuable experience in complex project management derived from large multi-million and multi-billion dollar projects for various clients, where numerous subcontractors were involved.  From total system responsibility and design to construction and delivery, projects were completed ahead of schedule and within budget."

And yes I do think the West could use a little more work.

 

[NavyShooter]

Yeah, maybe "On time" or "ahead" but not very good work....

We're busy putting a ship back together after a refit, and you would not believe the crap we're finding.

Send them west.  Maybe they'll get some decent service, and Irving will smarten up and do some good work for once.

NS

 

[STONEY]

Irving Shipyards are no worse and probably better than any other shipyards in the world.

The US Navys LPD-17 is more than 840 million over budget and years late. The Navy has had this ship for 2 years and its still not operational with still over 30 major flaws. Set for a trial in March the ship couldn't even get away from the pier due to steering gear failure. The inspectors detailed their observations in a 45 page report. The worst problems were in propulsion, auxiliary and aviation systems. nearly 2/3 rds of those serious problems were discovered in an earlier inspectionand reported fixed. Fluid leaks, tangled wires and broken hardware were found across the ship 2 years after it had joined the fleet.  Inspectors found poor construction and craftsmanship standards.

This is just standard fare for the worlds shipyards and sailors have always complained about what they receive. I worked at the Navy's Trials and evaluation unit for 3 years and tested just about all the Navy's ships that came out of refits or extended work periods  during the period from every shipyard on the East Coast including the Naval Dockyard and can testify that Irving was as good as and better than most of them. Besides in case you don't know , a lot of the work on ships in refit is not done by the shipyard at all but by subcontractors who work at all shipyards. So if a particular piece of kit is not working it may not have been touched by the shipyard but by a subcontractor who would have done the same shoddy job at any shipyard. You seem to forget that the Navy sets the requirements of work to be done , in the contract and is supposed to test it before accepting it from the shipyard to ensure it meets specs .  I know i failed many pieces of equipment during my time and wouldn't accept it until it worked to my satisfaction.

Cheers

 

[3rd Herd]

Besides in case you don't know , a lot of the work on ships in refit is not done by the shipyard at all but by subcontractors who work at all shipyards. So if a particular piece of kit is not working it may not have been touched by the shipyard but by a subcontractor who would have done the same shoddy job at any shipyard.
Cheers

So that justifies it.

 

[Neill McKay]

So if a particular piece of kit is not working it may not have been touched by the shipyard but by a subcontractor who would have done the same shoddy job at any shipyard.

No doubt you're correct, but is a contractor not still accountable for the work of his subcontractors?

 

[3rd Herd]

Neil,
how about "performance bonds". It seems to work quite well in the construction industry. I recall just recently one of our former PMs is now repaying some money for "non completion"