With news the BC Ferries vessel Spirit of British Columbia is about to sail to Europe for an extensive refit, I bump this article back to the top.
When first published on March 26, my article referred to “maintenance costing five times what refitting the same ships cost in BC ten years ago.” That was based on press reports that BC Ferries would spend $140 million for work on its two largest ships. However, North Van’s Grumps of Blog Borg Collective uncovered a confidential order issued by the British Columbia Ferries Commissioner, one of about 20 patronage appointees who “oversees” the ferry corporations’ management.
In October 2015, the Commissioner approved $173 million for the project but, as evidenced by the confidential order three months later, increased the approved amount by $46 million to $219 million. Instead of five times cost of the last refits, the 2016 multiplier is eight.
So, whether it is $140, $173, $219 millions or an even higher cost subsequently revealed, whether the contract is completed by 2018, 2019 or later, I predict the refits will be advertised as completed on-time, on-budget. That tag is applied to all BC Liberal projects, no matter how many times the budget or completion date must be altered.
The following was first published March 26, 2016:
When BC Ferries added a newly built ferry to its fleet in the 20th century, the vessel was constructed in BC shipyards. During the mid-nineties, two Spirit Class ships, currently the company’s finest, largest and most efficient per unit of traffic, were built in lower mainland and Vancouver Island yards for about $134 million each. In 2005 and 2006, $27 million was spent on refits and upgrades of the two ferries, with the work also done in BC.
With proven and efficient designs in hand, the BC Government surprised observers when it decided that three large ferries were to be built in Europe. The vessels cost about $190 million each but have fewer amenities and almost 25% less passenger and vehicle capacity than Spirit Class. Ferry corporation VP Mike Corrigan, its current CEO, claimed in 2004 that BC shipyards were only qualified to build small open-deck boats for short routes. That claim had already been proven false by Spirit Class vessels and by the subsequent federal decision to award BC shipbuilders an $8-billion contract for seven non-combat ships, an average of $1.15 billion each.
Critics argued that ferry construction in BC, even if contracted at higher prices, would have provided net benefits to the local economy. Economists credit the multiplier effect, which says:
An injection of extra income leads to more spending, which creates more income, and so on. The multiplier effect refers to the increase in final income arising from any new injection of spending.
The shipbuilding industry has a significant multiplier. A European economic study reports:
Shipbuilding is labor intensive and therefore provides jobs for a large number of people. …Moreover, it is technologically demanding and …also employs a large number of other industries and therefore results in many spillovers…
When contracts for the Super-C ferries were awarded to an overseas builder, people in the labour movement blamed the anti-union attitude held by the Campbell government and its appointees. However, my own conclusion about the motivation remained uncertain. The move seemed to make no sense, particularly since BC Ferries would have a continuing demand because its entire fleet needed renewal. Washington State, where the ferry system has slightly less traffic, has long required that all government-owned ferries be built in-state because of “the benefits to the state of a stable shipyard work force and economic benefits of in-state jobs.”
So, capability of building large ferries was not at issue, and benefits of domestic construction to the broad provincial economy were clear. So, why did Liberals decide to go abroad? They spent $700 million (in today’s dollars) on Super-C ferries, another $170 million for intermediate ferries built by Poland’s Remontowa Shipbuilding and now will spend yet more millions at the same yard for maintenance costing five times what refitting the same ships cost in BC ten years ago.
B.C. ferries will head to Poland for refits, Andrew Duffy, Victoria Times Colonist, March 25, 2016
A Polish shipyard has won a $140-million contract from B.C. Ferries to conduct the mid-life upgrades of the two Spirit-class vessels.
Gdansk-based Remontowa, the largest ship-repair yard in Poland, won the contract…
B.C. Ferries spokeswoman Deborah Marshall confirmed it is the first time the corporation has sent a vessel offshore for refit.
My audit training many years ago taught that if a situation cannot be explained by the ordinary, you must consider the extraordinary. As with BC Hydro, LNG and gas producer deals, I am left with gnawing suspicions; concerns not allayed by news that broke today.
Polish Remontowa shipbuilder management promised €1.2 million bribe, The Baltic Course, March 25, 2016
Polish shipbuilding company Remontowa Shipbuilding president Andrzej Wojtkiewicz and board member Jan Paszkowski transferred about 800,000 euros to the former management of the Estonian state-owned port company Port of Tallinn, while the total bribe was supposed to be 1.2 million euros… ($1.8 million CAN)
“Two people in management positions with the Polish shipbuilding company have been declared suspects in bribe-giving on a large scale. At the end of October employees of a Polish law enforcement agency questioned the men as suspects at the request of the Estonian Prosecutor General’s Office, an official of the Estonian Internal Security Service was present during the conduct of procedural acts,” Public Prosecutor Laura Feldmanis told BNS on Tuesday.
There are troubling patterns of BC government agencies contracting with companies outside the province that have ethical deficits, subjects even of accusations that bribery gained contracts. SNC-Lavalin is one, Kiewit and Malaysian Government owned Petronas are others. Ethical questions have been raised also about Site C contractors.
When BC Liberals destroy communications and fail to document government business, they are either involved in or setting the stage for illegal activities. Christy Clark runs a government that lacks moral principle.
ADDENDUM:
This is an extract from the application to the British Columbia Ferries Commissioner for Spirit Class Vessels Mid-Life Upgrades. It demonstrates the degree of transparency that keeps Liberals comfortable.
About four years ago, before the last election, Premier Clark was touting the capabilities of BC shipyards, shaking hands of workers and taking credit for promised federal contracts. However, it was photo-op time so her words were not meant to be believed.
 |
| That was then, this is now. |
ADDENDUM
Prosecutor expands Port of Tallinn inquiry to cover purchase of icebreaker, The Baltic Course Magazine, March 3, 2016:
“Hence the Internal Security Service and the prosecutor’s office are checking over the circumstances related to the purchase of the icebreaker Botnica in the framework of the already ongoing criminal procedure,” he added….
Officers of the Internal Security Service (ISS) detained Port of Tallinn CEO Ain Kaljurand and board member Allan Kiil as suspects in bribe-taking on Aug. 26 last year. They were released at the beginning of January and placed under electronic surveillance.
The former Port of Tallinn top executives are suspected of accepting bribes on a large scale over a period of several years at least since 2009. The Public Prosecutor’s Office has said the placement of orders for the construction of two new ferries at a shipyard in Gdansk, Poland is a central point of the investigation.
Categories: BC Ferries, BC Liberals, Budget & Estimate Disasters
in-sights.ca 
November 2014 Commissioner Okays Mid-life upgrades for Spirit Class
http://www.bcferrycommission.ca/reports-press/whats-new/commissioner-releases-decision-on-capital-expenditure-for-mid-life-upgrades-to-the-spirit-class-vessels/
Click here for Commission Order 14-03 outlining the commissioner’s decision and review
http://www.bcferrycommission.ca/wp-content/uploads/2014/11/FC-Order-14-03-s.55-Spirit-Class-MLUs.pdf
Page 42 of 62
…. In Canada, while several engineering firms are involved in the design of LNG-filled ships being built offshore, there is only one shipyard currently building LNG vessels (Davie Shipyard in Quebec). The conversion of vessels from diesel to LNG is not as mature a business and there is an even smaller pool of global experience and none in Canada. ….
Mature a business???? is that what's missing from the LNG business that Christy Clark keeps talking about “Jobs Start Here”
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I'll agree, Lew, that the traditional media is THE place to reach the masses — at least those who are still paying attention… and thinking and questioning.
A friend and I were watching a news piece on the new ferries with the orca designs on the sides. I don't recall there being any mention of where they would be built, so I added: “Too bad they're being made in Poland.”
“What? They can't make them in BC?”
“The shipyards are too busy, they say…”
“How about somewhere else in Canada at least?”
“Well, it couldn't be in Alberta.”
“Why not?”
“No access to the ocean, for one.”
“How about by truck?”
There's a LOT of work still to do…
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Despite the sorry state of journalism hereabouts, the traditional media is still the best way to widely reach the general public. Any thunder the Opposition is able to generate comes from publicity, which is very hard to obtain without an independent and unbiased press or a massive advertising war chest. The current opposition enjoys neither.
In the old days of which you speak, the “hot tip” could confidently be slipped under the door or sent in a plain brown envelope to the press, and it would be gratefully taken from there. Not so today. Citizen bloggers are not stealing anything; they are filling a vacuum created by the abdication of journalistic responsibility by traditional news media.
John Horgan can’t hammer the IPP or any other issue because he doesn’t have a hammer. He has plenty of nails, most of which have been provided by citizen bloggers, and coffins await. But the lids can only be nailed down by the MSM. We must demand better from the pro media types who profess to do that work on our behalf.
Here is a very good and current example of holstered hammers.
http://pacificgazette.blogspot.ca/2016/04/this-day-in-clarklanddeflector-spike.html
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EE: Not that I want Norm and other citizen-bloggers, nor Bob Mackin, Dermod Travis or Rafe, etc., to stop what they are doing — but I wonder if they haven't stolen the thunder from the opposition party?
When I'm reffing soccer, for example, I squirm a little inside when I'm getting ready to blow the whistle and the aggrieved team (and their parents) are already throwing their hands up for a call. Or I'm reaching for my cards and I hear, “Come on, ref, throw the book at him!” We are trained to take that extra second, to better assess the situation — but then any call we make “looks” like we're being affected by the cries for justice, when in fact we were already leaning that way. It looks much more like we're in charge when WE get to be the first to make the call.
Back to Horgan: In the old days, the “hot tip” might be slipped under the opposition's door and they could be the first to reveal a scandal. Now, the scandals are coming in from all over the field. It's old news before Horgan hears about it. If he brings it up in the legislature, it's “Yeah, yeah… we knew that on Monday and we've already taken steps to avoid it.”
What's an opposition leader to do in this new reality? For one, I think he needs to get a small handful of key issues and keep hammering away at them… while providing a vision of how the NDP would approach those issues. For one, I'd like to see him hammer the IPP issue and keep demanding for a moratorium on any further builds (other than those that are in off-grid communities.) He can then expand on his vision for alternative energy sources and conservation of electricity through job-making retrofits.
I don't want to be a tail wagging the dog, so I'll stop here and “let the ref make the call.”
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APRIL FOOLS!
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Christy Clark announced that the Province is going to donate to the BC Ferry Corp the NG it was otherwise going to give to PETRONAS et al her LNG cronies. (Apparently they don't want it at any price!)
The savings in fuel costs realized by the Ferry Corp would result a 35% reduction in Ferry fares. Would these be passed on to the public? Don't be ridiculous!
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The NDP under Horgan are “as useless as tits on a bull”.
The mainstream media get their plain manila envelopes under the door and ignore any wrong doing by Clark (she must have the photos).
The public are screwed by a government entrenched in corruption; the MSN are nothing more than gadflies waiting to join the Premier's team. The courts and police, utterly useless.
In good old BC vernacular; “We are F***ed”!
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BC Ferries announced award of a $140M contract March 24, 2016. The contract was with Remontowa Ship Repair Yard S.A. of Gdansk, Poland to conduct the Spirit-Class mid-life upgrades, which includes the conversion of both vessels to dual-fuel so they can operate on LNG. In the same announcement, BC Ferries said it had signed an agreement with FortisBC Energy Inc to receive up to $10M in contributions under the Natural Gas for Transportation incentive, which would be used to offset the capital cost of LNG conversion.
So if the contract is for $140M and $10M will be recovered, why was the “authorization” for almost $90M extra required five days later? “Interest and supplemental Project expenditures” amounting to 70% on top of the contract seems to be something the Official Opposition (if not our vaunted local press) should be shining some light on. There’s a lot of room to play in that $90M.
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And then we can sell them to Fiji for ten cents on the dollar like we did with the MV Queen of Chilliwack? Why not?
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OK, budget updating via Orders in Council. Why bother with the “budgeting” process at all? Just do “everything” through Orders in Council and presto, who needs a democracy, we can do anything “without” transparency, and pesky opposition interference or voter scrutiny.
The Sparkle Pony Queen and the gang that couldn't shoot straight, B.C.'s “new dictatorship”.
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Not the easiest article to read, but it seems they're up against the same freedom of information problem that we are. Seems that Chrispy never learned much at SFU or the Sorbonne but she's a quick read in Polish and Malaysian. Go for it Chrisp! Your taxpayer funded pension isn't all THAT great!
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Something like TransLink.
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Sorry, no set up. Clark, McPhail and Co. completely misread the Broadway Lougheed debacle and so many once loyal NDP types jumped ship, never to return. The big winners in the Millennium Line, were Bombardier Inc. and SNC Lavalin, who happen to own the patents for the proprietary railway. Big money for the owners of an unsalable railway.
That 2 seat rump never taught the NDP anything and they continue to wallow in the wind.
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Search Washington State Ferries and LNG.
No need for FOI requests that come back blank.
BC Ferries hasn't anything to hid, they just like to annoy everyone.
Its is their customer service model.
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It appears the noose may be tightening but the question is; does anyone have a firm grasp of the rope?
Hawgwash.
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I heard you on CFAX and came here to read the material. You are right, questions need answers.
Why is this refit contract such a high price? What proportion of that is for new engines and how much will be recovered for the old power plants, one of which had a full rebuild a few years ago? What are other ship fleets paying for dual-fuel engines?
How safe is a passenger vessel being fueled from a tanker truck on the car deck?
Why did the Ferry Commissioner allow redaction of cost information? Will BC Ferries' competitors learn something they shouldn't know? Who are the competitors? Every large ship operator in the world knows the cost of converting to dual-fuel engines so what is the point of secrecy, except to protect BC Ferries from an informed citizenry?
Keep up the good work Norm.
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Just a question for the readers who are in the legal profession. Would a provincial government not require some sort of Federal cooperation in order to “do business”, with foreign corporations and or governments? One would think that the Minister of State, or Foreign affairs would have oversight, with regards to a 'the questionable negotiations of a provincial government, in dealing with an “obviously corrupt foreign regime?” Furthermore, would it not be worth the Federal security services time and the Foreign Affairs, Fintrac, CSIS and other “interested” departments, time to initially “investigate” the involvement of key players within the B.C. Government and the B.C. Liberal party, with regards to negotiations with foreign nationals, foreign corporations being investigated for corruption and malfeasance as well as other crimes, within their own jurisdictions?
We all realize something is “wrong” in B.C., its time a brighter light was shone on the perpetrators and this provinces so called “provincial government”.
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@ Evil Eye
This smells like a set-up, designed to smear the NDP.
Real players, even by the text book standard of straight-forward land give-aways, i.e. Burke Mountain, don't get into the game for chump-change.
July Morning
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The NDP do not have clean hands as the Clark Government cast aside years of planning to build with SkyTrain for the Millennium Line. Clark and McPhail were wined and dined by the likes of SNC and Bombardier and brought us a fabrication plant for the Mk.2 cars with much hype and hoopla, that TransLink would be producing MK.2 cars for Asia.
Fabrication plants are the norm for large transit projects and the smell from the Clark and the McPhail deal still hangs over the NDP like a rotten corpse.
Coincidentally a police officer found a bag with $1 million in Clinton Park during the same time and later sued the VPD for the money and won. To date, no one has come forward to declare ownership of the money and insiders think that the money was not drug money, rather something else.
The very next election, the NDP were reduced to a rump of two seats and Clark got a job with the Pattison Group.
Today, the fabrication plant is gone; no MK. 2 cars were produced for Asia, and the $1 million has made one VPD Officer take early retirement and it is very hard to find any reference of the “find” at Clinton Park.
Connecting the dots should be very easy.
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Google Search Criteria Ain Kaljurand, Allan Kiil, BC Ferries
Translated from Estonian to English
Artur Talvik praamihankest discovered a huge price difference
Examined the expression of the price of the ferry in October senior associate Carri Ginter, who bribery affair coming to light in the port temporarily appointed to the board. Ship disclosure of the purchase price would not be something different. For example, in North America, operates the BC Ferries writes on its Internet side that subscribes to the same Gdansk REMONTOWE factory three new ferries total price of 156 million dollars. Along with the funding and management of the project will cost 252 million dollars for the acquisition of vessels.
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My argument is not against converting ships to LNG if there are good technical and operational reasons, including environmental ones that include measurement of GHGs released all the way from production to consumption.
My criticism is the lack of transparency in the entire process of contracting with a foreign shipyard to do work that costs many times the highest amounts ever paid for refits, even ones that involved new engines. The price for this job will be more than half what it originally cost to design, build and commission these ships. The Spirit Class vessels have been the workhorses of the fleet, with outstanding reliability and fuel efficiency. When service levels were reduced on main routes, it was the newer German ferries docked because of higher operating costs.
The decision to contract overseas was troubling but learning the chosen European shipyard is involved in a bribery scandal pushes the alarm level higher. In the vernacular, the deal stunk before we learned that senior executives of Remontowa were accused of offering $1.8 million CAN in bribes to gain a customer. Now the smell is worse.
A full review must be conducted by experts who are completely independent of BC’s two ferry corporations and their many directors, the ferry commissioners and the provincial government.
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The LNG will be supplied from FortisBC’s Tilbury facility located in Delta, which recently broke ground on a $400-million expansion and the Mt. Hayes facility, located on Vancouver Island.
FortisBC also provided $6 million in incentive funding toward the three new vessels, which was made possible following the creation of the Government of B.C.’s Greenhouse Gas Reduction regulation in 2012.
Following those changes, FortisBC announced the $62-million program for fleet operators to offset part of the cost for a natural gas engine over a diesel engine.
Who is wagging the tail…
The LNG is needed for the converted ships and the ships need to be converted for the LNG.
Make sense in a circular kinda way.
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Excellent Article! It ought to be on the front page of the MSM newspapers.
it might have been nice if the provincial NDP did this type of work.
Norm raises some very interesting questions. Just why do the B.C. Lieberals keep doing business with people who have less than pristine reputations. Mother would have said, like attracts like.
My take on why these ships are being worked on in Poland is: when they built the ships in Germany, el gordo was able to “borrow” an extra $750M and put the money in the general revenue account saying it was now a balanced budget. Perhaps Christy is “borrowing” a similar amount to put in her new “prosperty” fund.
It makes no financial or ethical sense to send these ships to Poland. If we had kept the work here, we could have had the jobs here. As far back as the old Bennett days B.C. ship yards could cut a ferry in 2, stretch it and re float it. Was recently on one of those ferries. saw the plaque. just couldn't figure out why B.C. ferries are being build in Europe and not in B.C. or as a second choice, Washington State.
The only thing I can say, I do hope no one in B.C. is doing this for free. I would hate to think the b.c. lieberals are doing this because they are so stupid. I truly understand graft and corruption. I don't understand “throwing” anything anybodies way for free. of course there are those of us who are of the opinion the B.C. Lieberals are a very dumb bunch. Yes, here is the choice: dumb and honest or crooked and smart.
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Anonymous 11:38 That was back in 1982 for goodness sakes. Things have changed in the ensuing 34 years – and not necessarily for the better. Bids are altered at the last minute because of last minute adjustments unrelated to collusion. If you want to travel that far back, Kiewit was indicted in Canada for bid rigging dredging projects back east.
Wonder what penalty Baldwin and Thoendel received?
Regardless, we need some inquiry locally, at this time.
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What draws Liberals to deal with dishonest companies in contracts worth vast sums? It is probably the same reason that causes them to hide documents and correspondence from public view. My experience is that if you can't trust someone in one activity, you can'take trust them in anything they do.
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You missed Peter Kiewit and Sons, pled guilty to bid rigging down south. Built the Port Mann boondoggle:
“The federal highway bid-rigging probe moved into Oklahoma from Kansas and Nebraska where guilty pleas by construction firm executives generated agreements requiring subsidiary firms to help investigators.
South Prairie in Oklahoma City is a subsidiary of Peter Kiewit Sons Inc. of Omaha, Neb. Two Nebraska executives of Kiewit subsidiaries, James Baldwin and Joseph Thoendel, have pleaded guilty in connection with the probe.”
http://newsok.com/article/1976573
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I sail the ferries to and from Victoria on average twice a month. When the Spirit Class Vessels pass in Active Pass there is a good up close look at the exterior. Lots of rust. Rust like I haven't seen on a BCF for a long time.
Being a seafarer of sorts, I have to ask;
Poor quality material?
Lack of proper maintenance?
Deliberate neglect?
What do they look like below decks?
Why do these relatively young vessels need such an extensive refit?
Out of sight, out of mind?
The last time I heard of Polish ship workers was aboard El Faro which now lies 3 miles deep off the Bahamas.
Hawgwash
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This should be headline news on every tv station, newspaper and radio broadcast across the country but I'll bet dollars to doughnuts that Northern Insights will be the only place it will be and unfortunately even that on a Saturday in the middle of a holiday long weekend no less when I suspect readership is lower than at other times.
I m not knocking NI, this is the best source bar none for exposing probable government employee malfeasance, but given recent cyber attacks on others I am not confident this concern of Norm's will ever get even whiffed by the lacklustre BC arm of the RCMP or the powers that be in the NDP and other media.
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Shipbuilding background: Burrard Dry Dock, Vancouver Shipyard, and the consortium's transient ship outfitter, Vito, on the Fraser Valley, downstream from the Alex Fraser Bridge.
The Spirit Class ferries were built in various locations with the hull components constructed at Yarrows (Esquimalt) and then floated into the Graving docks for assembly. Meanwhile back in the Lower Mainland's Delta area the superstructure was on the shore being built. The hull was towed from Vancouver Island to dockside Fraser and then the superstructure was rolled on. The whole of it went back to Yarrows for the finishing touches.
At Vito there was unlimited overtime, unlimited manpower, no cost was considered to be unreasonable in the first Spirit Class ferry. The only condition was to get it done on time, no budget.
The second Spirit Class cost just the same as the first one!!! No lessons were learned from the first one that should have reduced the overall costs. When the second Spirit Class vessel was finished, no audit was done.
Since the last world war Vancouver, and Esquimalt, have never had the capacity to build vessels larger than the Weather Ships or the C Class Ferries.
Building the Spirit class ferries here in British Columbia was never about creating a shipbuilding industry that would compete against East Coast shipyards, nor was it about being in competition with overseas yards. Anywhere but here the population is greater with more demands placed on federal governments = more votes to win elections. Just look to the unsolicited bid trying to grab the bottom portion of the 'iceberg' contract off of Washington's Seaspan North Vancouver yard's 30 year $8 Billion.
The real reason for contracts being awarded in British Columbia by the Provincial government has always been the same. High unemployment due to unforeseen circumstances; 21% mortgage rates; Premier Bill Bennett's restraint program; Gordon Campbell's 'not on his finance minister's radar' and the need for the HST.
When jobs dry up, the Federal UIC or EI kicks in, for a year, or less, coverage. When the employees' EI dries up the province has to take over the burden of providing funding. Shipyards are a major way of creating short term jobs of one, two, three or four years, Directly and Indirectly which then qualifies workers for EI.
Christy Clark's bandwagon of LNG jobs is exactly the same. No long term gain.
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I hope to hear more on this, Norm.
I can see getting the boats retrofitted in Seattle, if the price or technological expertise was just TOO good — but Poland? Paying two crews — and all that fuel — to sail them through the Panama Canal and over to Poland (then back, with flights and hotels covered)? How is it possible that Poland could offer THAT good a price? It smells rotten.
On another note, you say: “During the mid-nineties, two Spirit Class ships, currently the company's finest and most efficient, were built in lower mainland and Vancouver Island yards for about $134 million each.” NDP-bashers often mention the Fast Ferries… but here you remind us that the NDP were also in power during the BC shipyard construction of two excellent “old school” ferries. A useful bit of info.
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Good work Norm! Isn't it about time to off-shore some investigative research? Didn't the Malaysian crime detailed below involve shipbuilding? If it walks like a duck, quacks like a duck,……
Also, you're judged by the company you keep. Poland, Malaysia, Tantano Sakanto (Woodfibre LNG), Burke Mountain…Let's get at it before there's nothing left to steal.
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