Navy fleet will include Canadian design, but costs must be kept in check: Harper

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Prime Minister Stephen Harper addresses the crowd at the Halifax Shipyard in Halifax on Thursday, Jan. 12, 2012. The federal government and Irving Shipbuilding Inc. have reached an agreement in principle to build the navy's next fleet of warships. THE CANADIAN PRESS/Andrew Vaughan

HALIFAX - The next fleet of navy ships will contain components designed by Canadians, Prime Minister Stephen Harper said Thursday as he announced an agreement in principle in Halifax to begin building the vessels under the $35-billion federal shipbuilding program.

Harper made the announcement before several hundred workers at the Irving shipyard in the port city, three months after it won the lion's share of the largest military procurement in Canada's history.

He was asked whether the designs for the fleet — which include icebreakers, Arctic patrol vessels and destroyers — would be done by Canadian naval architects.

"Design work is all ultimately part of the package," he said.

"Obviously we try to minimize design costs, but there will be ultimately Canadian design components involved in all of this."

The Irving shipyard will build 21 combat vessels under its $25-billion deal.

The Seaspan Marine Corp. shipyard in Vancouver — where Harper made a related announcement later Thursday — will construct seven vessels under its $8-billion contract for non-combat ships.

Another $2 billion for smaller vessels is yet to be allocated to another shipyard.

The president of J.D. Irving Ltd., the parent company of the Halifax shipyard, echoed the prime minister's concern about keeping costs down.

"We want to keep ... jobs in Canada, we'd like to keep jobs in Nova Scotia," Jim Irving said after Harper's announcement. "But we have to get good value and the best expertise."

MP Peter Stoffer, who serves as the NDP's shipbuilding critic, said he is concerned that some of the best-paid work may end up being shipped offshore.

Stoffer said when the national procurement strategy was first announced last year, it wasn't clear whether the vessel designs had to be done in the Canadian shipyards or whether they could use off-the-shelf designs from other countries.

"When I hear the prime minister say that some components of the design process will be Canadian, I'm really not sure what that means," said Stoffer, who represents the Halifax area riding of Sackville-Eastern Shore.

"What I'm concerned about is the millions of dollars that leave the country that go to other countries looking for designs when I honestly believe we could do it here in Canada."

Steve Durrell, the president of Irving shipyard in Halifax, said he doesn't know who will do detailed drawings for the warships his workers will build.

"We don't know if we'll take an off-the-shelf design and Canadianize it, or if we do blue-sky approach and a clean piece of paper," he said in an interview.

Ottawa's goal in rolling out the national shipbuilding procurement program is to end the boom and bust cycle that has hampered shipbuilding in Canada in the past. The industry has struggled since the last major warship project ended in the 1990s.

The plan aims to see a steady flow of work over the next 20 to 30 years in order to sustain highly skilled jobs.

The Harper government promised to keep politics out of the process by having four senior bureaucrats evaluate the bids, and hiring a fairness monitor and an accounting firm to ensure an unbiased selection process.

Since winning the bid, the two victorious shipyards have promised a new era in Canadian shipbuilding, with thousands of workers expected to be hired.

Hours after his Halifax appearance, Harper made a similar announcement at the North Vancouver shipyard of Seaspan.

As welders sparks sprayed off a ship being fixed in the background, Harper announced that a new chapter was starting in the maritime history of Seaspan.

Seaspan CEO Jonathan Whitworth told the crowd of politicians, business leaders and Seaspan workers that the bidding process was an outstanding example of how to manage a procurement process of this size and magnitude.

The process was meant to be fair, open and transparent without any political interference, he said.

"To many people's surprise, this is exactly what happened," he said.

Harper said he would like to see that bidding process used as a template for other projects.

"This is obviously the biggest single example of that and is really unprecedented, because as you know in the past — particularly in this industry — these decisions tended to be highly politicized."

Harper said one of the things that first got him involved in politics was the "very political" decisions around awarding of such contracts that put companies in the West at a disadvantage.

Irving said his firm has received 7,000 applications for jobs at the Halifax yard, and his company is planning to go to universities and community colleges to help train the workers it will need over the next few years.

He also said the company is eager to recruit skilled workers from Western Canada.