House watchdog vows to press Transportation Department over bungled ferry purchase

·4 min read
The auditor general report found a list of problems during the construction phases of the MV Legionnaire and MV Veteran. (Department of Transportation and Infrastructure - image credit)
The auditor general report found a list of problems during the construction phases of the MV Legionnaire and MV Veteran. (Department of Transportation and Infrastructure - image credit)

Public hearings into the bungled construction and implementation of two high-priced ferries for Newfoundland and Labrador's intraprovincial fleet may take place this fall, says the man in charge of the House of Assembly public accounts committee.

Tony Wakeham said it's standard practice that hearings take place following the release of a report by the province's auditor general.

"Members of the [Department of Transportation and Infrastructure] will come in and we'll sit down and we'll ask questions, and the auditor general will be there and we'll follow up on further information in relation to the recommendations," said Wakeham, the Progressive Conservative MHA for Stephenville-Port au Port and chairman of the seven-member all-party committee.

The final report by the Office of the Auditor General into the process used to purchase the MV Legionnaire and the MV Veteran was released late last month.

The investigation was requested by the public accounts committee in 2018 following a series of mechanical issues and delays, and concluded that the Department of Transportation and Infrastructure did not effectively manage the construction and preparing for service of the two vessels.

It was "a real missed opportunity with respect to project management," auditor general Denise Hanrahan told CBC News.

Ted Dillon/CBC
Ted Dillon/CBC

The missteps "may have contributed to the significant operational delays, service disruptions and unplanned costs" for the two vessels, the report concluded.

What's more, the report determined the Department of Industry, Energy and Technology — formerly Industry, Business and Rural Development — did not do enough to ensure business development initiatives promised by the shipbuilder were delivered.

The potential value of the direct spending committed by the Dutch shipbuilder Damen was over $1 million, with economic activity in the tens of millions over a period of five years, but commitments such as a service centre, a local partnership and an arctic research centre never materialized.

Wakeham said the committee is awaiting a written response from the Department of Transportation and Infrastructure about the findings of the report, and will then make a decision about whether public hearings will be held.

But the normal process is to have a public hearing, he said.

The auditor general recommends the Transportation Department establish and follow a project management process for the procurement of vessels that follows industry standards, with particular attention to risk management, onsite supervision, document management and training. The report also recommends root causes for vessel mechanical issues be quickly identified and addressed.

Curtis Hicks/CBC
Curtis Hicks/CBC

Transportation Minister Elvis Loveless has said the department will act on the recommendations.

"Reading that report gives me some concerns, but there's a lot of things we've done as a department that … we've certainly come a long ways since 2013," Loveless said recently.

The two ships and upgraded wharf infrastructure for the Bell Island and Fogo Island-Change Islands-Farewell ferry services cost to the public treasury nearly $120 million.

The MV Veteran entered service in late 2015, followed by the MV Legionnaire in 2017.

According to the report, both vessels were completed on schedule, under contracts that were found to be generally aligned with shipbuilding practices.

However, during the first three years of operations, the two vessels reported a combined 607 out-of-service days, and some mechanical failures were the result of human error.

In fact, crew training was lacking to a point that the shipbuilder issued a warning to government officials.

And while the ships were under construction in Romania, there was insufficient oversight by the department, according to the auditor general, with the department's project management team meeting only a handful of times during the procurement process.

The report also found the department had a draft project management manual that was consistent with best practices, but was not used.

Meanwhile, the Legionnaire was unable to begin operations on its intended route for 20 months after it was constructed due to delayed wharf upgrades, a scenario the auditor general says could have been avoided with better planning.

The two 80-metre vessels were ordered by a former Progressive Conservative administration, with the contracts signed in late 2013.

Despite being asked multiple times, Wakeham refused to give an opinion on the findings of the auditor general's report.

"We're focused on finding out exactly where the department stands on the recommendations that have been made," he said.

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