10/19/2012 03:14 EDT | Updated 12/19/2012 05:12 EST

Irving Shipbuilding sets deadline of January for Arctic patrol ship work

HALIFAX - The president of Irving Shipbuilding Inc. is applying pressure on Ottawa to sign a contract on design work for eight new Arctic patrol ships.

Steve Durrell said Friday unless the contract is signed and engineering work begins by January, the company's Halifax Shipyard will have a tough time meeting its goal of cutting the first steel for the project in 2015.

"We'll be looking at this day by day," he said. "If it gets delayed a month, it will delay the program a month."

Durrell set the deadline during a briefing that marked one year since the federal government awarded the shipyard a $25-billion contract to build 21 combat vessels over 30 years.

"We are definitely not waiting to get started," he said. "We are doing everything we can to advance the timetables and begin building vessels for Canada as quickly as possible."

The company is still negotiating two contracts with Ottawa — one for design work and the other for the actual construction of the patrol ships.

Durrell repeated his company's promise to have the first patrol vessel built by 2018, which is already three years behind the original schedule.

The ships, first announced in 2007, were projected to cost $3.1 billion to build and $4.3 billion to maintain over their expected 25-year life cycle. Durrell declined to say whether he thinks the costs would rise in the years to come.

The business executive, speaking to reporters at the sprawling shipyard on the Halifax waterfront, also made a pitch to Ottawa concerning the maintenance contract, which has yet to be awarded.

"We feel that the most economical way for Canada is to couple the in-service support (maintenance) requirements with the basic engineering work that we're about to do," he said.

"We're investing ... some $300 million into our facility. We believe that as a result of that investment not only will we be able to build the ships efficiently, but we'll also be the most economical solution for Canada to do the in-service support."

Earlier this week, documents obtained by The Canadian Press revealed the patrol ships will cost more to maintain because National Defence won't be signing a long-term service contract until the ships are well into construction.

An internal briefing to former associate defence minister Julian Fantino last fall said the project was full of financial questions, starting with the actual cost of building up to eight warships.

Durrell said the final costs have yet to be negotiated. He said the cost of design work will be revealed early next year, but the cost of construction won't be known until 2015.

Irving Shipbuilding currently employs 1,150 at the Halifax Shipyard. It expects to hire another 1,500 over the next 10 years, providing a big boost to the Nova Scotia economy.

The company says it has 20,000 resumes on file and more than 1,500 companies have already registered on an online registry.

Durrell also announced that Hatch Mott MacDonald Engineering of Nova Scotia has been awarded the site engineering contract at the shipyard, though he declined to say what the contract is worth.

Irving Shipbuilding plans to spend $300 million to upgrade the shipyard by 2013. Among other things, the company is building a steel fabrication facility, an assembly hall, new piers and a new launch dock.

The Nova Scotia government has loaned the company $260 million for the project.

In July, Defence Minister Peter MacKay signed a $9.3-million deal with Irving Shipbuilding to review the design and specifications of the patrol ships. MacKay called it the "starting gun" for the project.

The Arctic offshore vessels are the first expected to be built under the national shipbuilding procurement project.

Ottawa's $35-billion plan also calls for Seaspan Marine Corp. of Vancouver to build seven vessels under an $8-billion contract for non-combat ships. A contract for another $2 billion for smaller vessels is yet to be awarded.