XPost: hfx.general, ns.general   
   From: Raisa@nyet.ca   
      
   Once again, it's too bad that our government is spending our tax money on   
   building WAR ships instead of search and rescue ships and helicopters.   
   We'll never get it right until we get 'the right' parties out of Ottawa.   
   ___________________________________________________________   
   National Post - John Ivison | January 21, 2015 |   
      
      
   $26B shock - Canada's largest ever defence procurement handed off in   
   sole-source contract   
      
      
   Show me a good loser and I’ll show you a loser. The old saying is doubly apt   
   in   
   defence procurement, where losing bidders always claim nepotism, corruption or   
   incompetence.   
      
   But accusations that the government has sole sourced a military contract even   
   larger than the one at the centre of the F35 fiasco may be more than just sour   
   grapes on the part of those frozen out.   
      
   There was genuine shock in Ottawa defence circles when an apparently routine   
   information session on the efforts to build a new warship fleet — Canada’s   
   largest-ever defence procurement project — revealed, without fanfare, that   
   Irving Shipbuilding in Halifax had been awarded the designation as prime   
   contractor on the $26-billion procurement to build up to 15 ships.   
      
   Irving had already won the right to build the ships in its Halifax yard, but   
   the job of prime contractor on the design phase could prove even more   
   lucrative, since up to 70% of the value of the vessels is in the complex combat   
   systems that are installed.   
      
   The role gives overall control of the management and delivery of all contracts   
   – the going rate for which is typically 12-15% on every dollar spent,   
   according   
   to industry insiders.   
      
   No financial details on the Canadian Surface Combatant project have been   
   released.   
      
   But the news that the contract had been awarded without a competitive tender   
   ran around the town quicker than Wee Willie Winkie in his nightgown.   
      
        Colin Kenny: The plan to replace Canada’s heavy warships may already be   
   going off the rails   
      
   “The price of the poker game has gone up without a competition,” said one   
   lobbyist.  “It’s great to have a Canadian company running a 30-year effort   
   but   
   what will it cost the taxpayer?   
     If they’d held a competition, we could have seen five or six contenders.”   
      
   Others pointed out that the sole sourcing appeared to run contrary to the   
   government’s much-vaunted Defence Procurement Strategy.   
      
   It certainly seems to violate government contract regulations that say sole   
   sourcing is permissible “if only one person is capable of performing the   
   contract.”   
      
   By handing the contract to a Canadian company, it may have fulfilled one of the   
   procurement strategy’s goals, but it may not have gotten the best price,   
   critics claim.   
      
   “The government wants 15 ships but they don’t have enough money for seven   
   ships   
   – and they have even less now.  Nobody tested the market,” said one   
   industry   
   source.   
      
   A senior government official at Public Works said the selection process took   
   place in 2011, when Irving was chosen as the lead yard for the surface   
   combatant vessels.  He said it was made clear “by exception” that the   
   shipyard   
   was the prime contractor.  “But in the umbrella agreement signed by the   
   shipyard, the Crown reserved the right not to make it the prime contractor.  We   
   wanted to do an industry analysis to make sure our intended course was the   
   right one.  It was clear to everyone that Irving was prime contractor during   
   the construction phase.  At issue was whether it was going to be prime   
   contractor during the design phase.”   
      
   It certainly does not appear to have been clear to Irving that it was in line   
   for the prime role in the design phase, since it launched a lobbying campaign   
   pointing out why the shipyard building the vessels should have overall control   
   when it came to managing subcontractors.   
      
   Contrary to suggestions that appointing Irving without a competition would   
   raise the overall price, the government official said it would save money by   
   avoiding the cost of having two contractors, each charging a percentage fee on   
   every dollar spent.  “It’s less risky, more efficient and likely means less   
   cost,” he said.   
      
   The unusual manner in which the news leaked out – via a Public Works   
   bureaucrat   
   at an information session – led to suggestions that the ministers responsible   
   have been blindsided.   
      
   But a spokeswoman for Diane Finley, the Public Works Minister, said the   
   ministerial working group responsible for military procurement was told about   
   Irving’s selection at its last meeting.   
      
   The senior bureaucrat at Public Works said that it was an administrative   
   contractual decision that did not have to get Cabinet’s blessing.   
      
   But this is a contract of unprecedented value.   
      
   To let the news slip out in the way it did is simply asking for trouble.  To   
   the surprise of many, the rationale is that a multi-billion-dollar contract has   
   been awarded on the basis of a four-year-old agreement that did not explicitly   
   state Irving had already been chosen as prime contractor.   
      
   Yet again, questions are being asked about Canada’s defence procurement   
   system,   
   and yet again the answers lack conviction.   
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            Loyalty to the country always.   Loyalty to the government when it   
   deserves it.    ~   Mark Twain   
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