Ottawa to spend $187M to extend navy supply vessel lease amid shipbuilding delays

Click to play video: '2021 auditor general report: Canada’s ship building strategy slow to deliver'
2021 auditor general report: Canada’s ship building strategy slow to deliver
WATCH: 2021 auditor general report: Canada's ship building strategy slow to deliver – Feb 25, 2021

Ottawa is forking over another $187 million to add two years to its lease of a converted civilian ship the navy has been using as a temporary supply vessel while it waits for permanent replacements to finally arrive.

The federal government announced the amended deal with Quebec-based Chantier Davie shipbuilding on Friday, months after revealing the navy will have to wait an extra two years for the delivery of new support ships.

Officials said in June that the first of two new support ships being built by Seaspan Shipyards in Vancouver will not be delivered until at least 2025 — two years later than the most recent estimate, and six years later than originally anticipated.

Canada has been without a permanent supply ship since 2015, when the navy was forced to retire its existing two vessels earlier than expected after one caught on fire while at sea and excessive corrosion was discovered on the other.

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The government initially relied on allies to fill the gap before agreeing to lease a converted civilian container ship from Davie named MV Asterix.

The initial five-year lease agreement between Ottawa and Davie for the Asterix was launched in January 2018 and valued at $620 million, before the government added another $70 million in 2020 because it was being used more than expected.

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The new deal will see the government pick up two of five one-year options that were included in the original contract.

Documents obtained by The Canadian Press in 2020 showed the navy expects to continue relying on the Asterix and allies to help resupply Canada’s fleets at sea even after the two joint support ships are built.

Click to play video: 'Procurement Minister Anand responds to auditor general report on ship building, says they have sound data to move ahead'
Procurement Minister Anand responds to auditor general report on ship building, says they have sound data to move ahead

Canada originally planned to buy three new navy support ships when it launched the project more than a decade ago, but cost overruns saw the order cut down to two.

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Navy officials continued to indicate that two support ships were not enough to meet the maritime force’s long-term needs, as the government’s policy requires the military be able to operate two fleets at sea at the same time.

The fear is that the navy will be hamstrung whenever one of the two so-called joint support ships is out of commission, either for repairs or for some other reason.

Parliamentary budget officer Yves Giroux estimated in November 2020 that the price of buying MV Asterix and another converted container ship from Chantier Davie would be around $1.4 billion.

That compares to around $4.1 billion to build two brand-new joint support ships.

But when asked in June whether the government was looking to purchase the Asterix outright from Davie, senior officials said no, in part because it is not designed for high-threat environments.

The initial deal between Davie and the government was at the heart of the failed prosecution of retired vice-admiral Mark Norman.

The military’s former second-in-command was accused of leaking cabinet secrets about the leasing agreement with Davie, but the breach-of-trust charge against him was stayed in 2019 when Crown prosecutors concluded that they had no reasonable chance of securing a conviction.

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The Crown also dropped its related case in June against a federal public servant, Matthew Matchett.

Both men had maintained their innocence.

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