05/29/2014 09:14 EDT | Updated 07/29/2014 05:59 EDT

Harper Government Rejects Offer To Save $500M On New Icebreaker

Public Works Minister Diane Finley has firmly rejected an offer by Quebec's Davie shipyard to save the government half a billion dollars on a new icebreaker.

Finley told reporters Thursday that "it's very hard to believe" that Davie could actually build the icebreaker for the budget originally set six years ago. 

"I don't see how any reasonable person could suddenly believe they can do the same job for half the price," she said.

The new icebreaker — dubbed the Diefenbaker — was originally priced in 2008 at $720 million. However, since construction has been delayed for at least 10 years, that figure's been drastically revised to $1.3 billion.

Although no construction contract has been signed yet, the work has been assigned to the Seaspan shipyard in North Vancouver. However, Seaspan requires a $200-million upgrade before it can handle the job, and has also been assigned two new supply ships for the navy.

Since the work on the Diefenbaker won't even begin until those two ships are finished, it's not likely to enter service for a decade at least.

Finley was responding to an offer Davie made six months ago, but made public only this week, to start work on the icebreaker immediately, for delivery in two years. Davie is Canada's largest shipyard and requires no upgrade to do the work, according to Alex Vicefield, the CEO of Davie's parent company. 

Vicefield told CBC News Thursday that his offer is both firm and realistic.

"We'll guarantee the costs. We're not asking for a cost-plus arrangement. We can guarantee the price," said Vicefield.

He added that the reason the government's budget for the job has soared to over a billion dollars is that costs in the shipbuilding industry commonly rise between five per cent and 10 per cent a year. 

"Each year you wait to build the ship, the more expensive it gets."

Finley, however, insists that Davie lost out in the original bidding for the job and that its offer comes too late.

"Davie did not qualify. That procurement is done. It's over. And there's absolutely no reason to believe that those numbers would be credible. We already have a contract in place and we're going to move ahead with that."

Davie shipyard turnaround

When a reporter noted that there is, in fact, no construction contract with Seaspan, the minister added, "Well, we don't have a contract, but we have made an award under that procurement based on the credibility, the viability, the reliability of the companies at the time."

"They had a chance to compete. At the time, they weren't successful."

When the government made that decision in 2011, however, the Davie shipyard was in bankruptcy. Today, Vicefield says that's history, because Davie is now part of a competitive international shipping conglomerate. 

"We're a competitive international shipbuilder today," he said.

"We're building these ships today. We're building similar vessels. What we would do here is, we would add this vessel[(the Canadian icebreaker] into our existing schedule, which maybe helps us to reduce some of the costs as well, compared to other shipyards where you really have to build the shipyard to build the ship. We have it going today."

The Davie yard recently finished a 130-metre offshore construction vessel for a Norwegian customer. Named the Cecon Pride, it was delivered on time for $200 million. The yard is now building two similar ships.

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