Lack of expertise, poor negotiating at root of Quebec ferry fiasco, auditor general finds

The Société des traversiers du Québec's procurement of the ill-fated F.-A.-Gauthier ferry was doomed from the start because of a lack of in-house expertise and the STQ's inexperience at the negotiating table, says a new report from Auditor General Guylaine Leclerc.

The high-tech ferry was acquired to service the busy Matane-Godbout-Baie-Comeau crossing. It has been plagued with problems.

The auditor-general's office was called in last year after an explosive report from Radio-Canada's public affairs program Enquête.

The TV report revealed worrisome shortcomings with both the ship and the process to have it built.

Bungled tendering process

The auditor found the tender process "was not consistent with naval industry practices and only one proposal was considered."

In essence, the cabinet-approved 'mixed' tender process tied the STQ's hands by limiting the number of bidders.

Of the 16 expressions of interest, only eight were deemed qualified, and of those, just three resulted in formal bids. Two of them were disqualified on technical grounds, which left one bidder: Italian shipbuilder Fincantieri.

Leclerc questioned why those two bids were disqualified for bureaucratic reasons while Fincantieri's, which didn't initially specify which of its yards would carry out the work, was not.

The auditor general says the STQ made other mistakes:

• The ferry agency canceled its contract with the naval engineer who participated in the initial design phase.

• It hired a project manager who wasn't up to the job.

• It relied on Fincantieri to make sure the work was done correctly.

In short, the STQ found itself in a position where it didn't have the expertise to detect problems and insist that they be fixed.

"They trusted too much," Leclerc said.

Penny wise, pound foolish

The STQ was concerned about travel costs, in a time of government budget cuts, so it sent only a skeleton team to Italy to oversee the ship's progress.

"The personnel sent to Italy was not sufficient in number to keep up with the construction work," the report said. "... they were not on hand for certain crucial steps of the project."

However, the auditor notes, the agency could have approved the travel costs if it believed the project was a priority.

The F.-A.-Gauthier was commissioned in 2009 and delivered four months late in 2015 with 54 "non corrigible" defects, at a cost of $170 million.

The government has spent a further $22 million on problems, including a major engine failure that kept the ship offline for all of 2019.

Among the mystifying decisions made by the STQ in this process: it elected not to pursue $3.8 million in penalties for late delivery.

Never again

Overall, Leclerc said, "this was an experience that should not be repeated."

Transport Minister François Bonnardel, who criticized the deal while in opposition, went a step further.

The report, he said, is "devastating" and the government is committed to never having to read another one like it.

Going forward

The ship floated away from a Trois-Rivières repair dock earlier this month. It is currently undergoing scheduled maintenance.

The ferry agency says it accepts the auditor's conclusions and recommendations.

"The Société des traversiers du Québec has already begun a serious effort to improve its practices. A lot of work has gone into it, but there is still much to do," it says.

The agency also stresses that "major changes in its practices, and even a meaningful culture change, were undertaken well before the report ... from Enquête, which is where this particular audit originated."

'Negative consequences' for an eventual lawsuit?

The STQ said it has bolstered its in-house expertise, revised its approach to project management and improved its internal governance but admits it has more to do.

It is also considering legal action, but says the auditor's report won't help.

"The publication of certain privileged and sensitive information could have negative consequences as to the STQ's position in eventual lawsuits, which are currently being analysed," the STQ says in its reaction.