Posted at 5:00 a.m.
(Ottawa) After many delays and an intense lobbying campaign, the Trudeau government is preparing to correct “a historic error” by integrating the Davie shipyard into its shipbuilding strategy, learned The Press. Quebec is ready to guarantee part of the hundreds of millions required to modernize the group’s facilities, a sine qua non for the awarding of contracts, according to our information.
Federal contracts, demanded for years by Davie, could exceed $10 billion over the next few years. If the company goes through all the steps until the final green light, it will be responsible for building seven new icebreakers for the federal navy – enough to provide work for its employees and contractors for many years. The Davie shipyard alone has more than 900 suppliers in Quebec, spread over several regions of the province.
In addition, the global geopolitical context, which has been greatly disrupted by Russia’s war in Ukraine, could force the Trudeau government to revise its order book upwards, opening the door to other lucrative contracts for Davie, it was said.
The Trudeau government should confirm Thursday that it has reached an agreement in principle with Davie, according to our information.
It was not in the country’s interest to see the Davie shipyard, which accounts for 50% of the country’s shipbuilding capacity, continue to be excluded from the shipbuilding strategy. We will correct this historical error.
A government source who requested anonymity because she was not authorized to speak publicly about the case
Federal Health Minister Jean-Yves Duclos, who represents the Quebec City region at the Cabinet table, and Justin Trudeau’s political lieutenant in Quebec, Pablo Rodriguez, also Minister of Canadian Heritage, played prominent roles. in the ministerial ranks to end the exclusion of the Davie from the shipbuilding strategy.
“Seaspan in Vancouver and Irving in Halifax are failing to meet shipbuilding demand. La Davie has a workforce recognized throughout the world. It had to be included in the shipbuilding strategy,” the government source added.
Quebec vouches
The owners of the Davie shipyard and several Quebec elected officials have been crying foul for years in this matter. Stephen Harper’s former government excluded the Lévis shipyard when it announced its National Shipbuilding Strategy more than 10 years ago, awarding all contracts to Seaspan in Vancouver and Irving in Halifax. At the time, Chantier Davie had just been taken over by a Monegasque group, after once again coming close to bankruptcy.
“Mistrust had developed between officials and Davie following its exclusion from the shipbuilding strategy. It took work to rebuild the relationship. Basically, it’s like throwing a vase on the ground and picking up the pieces,” a source said.
The tide turned for Davie after the election of the Trudeau government. Ottawa launched a new “competitive process” for building icebreakers in May 2019, and Davie was finally “pre-qualified” in December 2019 to be able to bid.
The evaluation process has since dragged on, in part due to the dilapidated state of some of Davie’s facilities. Investments of around 400 to 500 million would be required to bring them up to standard, we learned.
According to our information, the government of François Legault has helped to resolve this impasse. Quebec is ready to guarantee loans, or to lend itself sums to Davie, to carry out these megaworks of approximately half a billion.
Such an approach would not be unique. In Vancouver, Seaspan had to invest $188 million to modernize its facilities, while in Halifax, Irving Shipbuilding obtained a $260 million grant from the Nova Scotia government to refurbish its facilities.
Several strings remain to be tied, it is indicated. But basically, Investissement Québec is ready to vouch for part of the hundreds of millions required, in order to help Davie obtain financing from private lenders. Quebec is waiting for the official green light from Ottawa before making its announcement. It is expected that a formal agreement will be reached no later than the fall.
More in-depth studies will be necessary before Quebec releases the funds, underlines a government source well informed of the file. In any case, the benefits will be enormous for Davie and its suppliers, if the group indeed goes through all the required steps after the green light from Ottawa.
Why so much time?
All sorts of hypotheses are circulating to explain the long delays between Davie’s prequalification in December 2019 and the signing of a framework agreement two and a half years later. This process had taken about 18 months with Irving and Seaspan, in the early 2010s.
Public Services and Procurement Canada (PSPC), the department that manages contracts awarded by the federal government, has defended itself in recent weeks for having dragged out the accreditation process for the Davie shipyard.
“This is a complex, multi-step qualification process, and it is imperative that Canada conduct this process with integrity,” a PSPC spokesperson told The Press. “Every effort is being made to finalize this process, while ensuring the best value for the Government of Canada and for all Canadians. »
Despite his initial exclusion from the Canadian naval strategy, Davie has secured more than $2.2 billion in contracts of various kinds from the federal government since 2014.
With the collaboration of William Leclerc, The Press