Friday, March 18, 2016

Irving President fires back at Davie CEO of NSPS

Originally Published  by the Chronicle Herald on March 17, 2016.

Irving president Kevin McCoy is firing back at the CEO of Davie shipyard’s parent company for criticisms over Canada’s National Shipbuilding Procurement strategy.

In an interview with CBC, Alex Vicefield, CEO of Inocea, an international shipping conglomerate that owns Quebec’s Davie Chantier shipyard, called the NSPS a “national embarrassment” because of cost overruns and delays.

Speaking with the CBC from Inocea’s Monaco headquarters, Vicefield slammed the government for using a cost-plus approach that ensures profits based on a percentage of the cost incurred instead of fixed-price contracts, which he said are the international norm, and encourage builders to keep costs low.

In the interview Vicefield said in his entire career working in the international marine industry he had never witnessed a country so willing to spend money unnecessarily. He also called out the contractors for failing to deliver a single ship since the program was announced five years ago.

In a statement issued Thursday, McCoy said his company, which was selected as the prime contractor for largest portion of the NSPS, rejects the “outrageous” claims made by Vicefield and defended the program as being a “widely recognized as a robust, open and fair procurement strategy.”

McCoy then slammed Vicefield for spreading what he called baseless claims about exorbitant prices and incorrect information about cost incentives for the program.

“Irving Shipbuilding is incentivized to reduce costs. If costs go up, our profit goes down,” McCoy said. “All cost estimates have been vetted and accepted by independent third parties. It appears that Vicefield has little experience in complex military shipbuilding programs and his comments are uninformed.”

McCoy also defended timelines for the project, and boasted that since being selected as prime contractor for the Arctic Offshore Patrol Vessels and Canada’s new fleet of surface combatants Irving has finished ships that were under construction at the time, demolished their old shipyard and built a new one, hired and trained 600 employees and finished the design for the patrol ships.

The spitting match comes after reports last week that Davie had presented the government with an unsolicited bid offering a Polar Class 3 icebreaker, three smaller River-class icebreakers and two multi-purpose research, border control and search and rescue ships. Due to the slowdown in oil prices, Davie claimed it could deliver the ships for a fraction of the price of the current set of non-combat vessels being built by Seaspan in Vancouver as part of the NSPS and in under 18 months.

The bid was criticized by both Irving and Nova Scotia Premier Stephen McNeil at the time, and the federal government has since said it does not intend to respond.

Davie and Irving also butted heads late last year when the Liberals decided to go ahead with a sole-sourced $700 million proposal — originally accepted by the previous Conservative government — to convert a civilian cargo ship into a badly needed interim supply vessel for the navy while Seaspan completes construction on two new supply ships as part of the shipbuilding strategy.

McCoy accused Davie Thursday of trying to continually undermine the NSPS.

Though it is now solvent, Davie, the largest shipyard in Canada, was in bankruptcy when Seaspan and Irving were chosen as the contractors for the $39 billion NSPS in 2011.