SNC Lavalin contract with BC Ferries raised questions in 2012… so why is the public still in the dark nearly a year later?


From Hansard transcripts, April 2012, excerpts:

Gary Coons:

 I do have a question about B.C. Ferries and a partnership

agreement they’re entering, a fi ve-year partnership

agreement. Again, maybe the minister knows about this.

Hopefully, the staff have been versed on this. It is with

SNC-Lavalin. It’s a fi ve-year partnership agreement for

“the management of all master planning, engineering,

maintenance and…construction of new…ferries and

terminal facilities.”…

I’m just wondering if

the minister or the staff have any input on this fi ve-year

partnership agreement with SNC-Lavalin

 Blair Lekstrom:

The last question you asked: do we have input into the

issue with B.C. Ferries and SNC-Lavalin? No, that’s an

operational question. B.C. Ferries will make those determinations

 Gary Coons:

On that note, getting back to the SNC-Lavalin. Again,

I guess the minister sort of put it off , saying that there’s

a ferry commissioner who will regulate it and that it’s an

independent company.

 But when we start looking at what’s happening with

B.C. Ferries and this fi ve-year partnership agreement….

I put in an FOI, so that’s the only way I can try to get

the amount of it. Right now the agreement is for the engineering,

maintenance, construction, new ferries and

terminal facilities, and right now B.C. Ferries has a minimum

of 46 management positions dealing with terminal

operations and engineering.

 I would think that it must astound ferry users and

those watching this, that they’ve signed a multi-year

contract to deal with this, and we have 46 management

positions within B.C. Ferries who deal with terminal

operations and engineering.

So, here we have a contract, a multi- year, big dollar contract signed with a company that have snagged big $$ contracts with the BC Liberal government time and time again…and there seems to be very little anyone knows about it ..

Gary Coons tried to find out more about it, Blair Lekstrom confirmed the government had no input into this contract, certainly the good people of B.C. getting bilked every time they have to take a ferry anywhere didn’t know anything about this contract…

SNC Lavalin, on the other hand, has been lauding this ‘strategic partnership’ all over the web…



BC Ferry Services Inc., a newly independent company responsible for the management of British Columbia’s provincial ferry system, has engaged SNC-Lavalin to manage the construction and maintenance of all 47 of its terminals in British Columbia. The partnership arrangement between BCFS and SNC-Lavalin involves the formation of a new business unit, known as Terminal Asset Management (TAM), consisting of both BC Ferries and SNC-Lavalin personnel.

The TAM group manages an annual program of $40 million in capital construction and $15 million in annual maintenance. By bringing efficiencies and best practices to the BC Ferries Maintenance Group, the TAM team is establishing a comprehensive preventative maintenance program that provides best use of assets. The TAM team is also looking at third-party opportunities for asset management outside of the BC Ferries organization.

And here:

snccontract renewal

Ah… a contract renewal…. ( Seriously  SNC Lavalin must really be worried about the Liberals reign coming to an end)

.. which takes us back to  the very beginning of this ‘strategic partnership’ .. which occurred way back in 2003- 2004…. the very beginning of the contracting out era the Liberals have become known for :


This left me with more than a few questions.

How much is this “strategic partnership” costing BC Ferries every year?

Is there a review of what appears to be an ongoing contract every 4 years?

Is there any consideration given to putting another request for proposals out to see if there are worthy competitors?

And most importantly, since BC Ferries keeps insisting on fare increases on the backs of the good people of British Columbia who are having a hard enough time keeping up with insurance rates, tolls on bridges that dump ice bombs on them, and the price of gas in a province who has the highest gas taxes around…..

Would BC Ferries share with us the total cost to British Columbians that SNC Lavalin receives for such a strategic partnership that boasts a capital plan of around $60 million dollars annually?

SNC Lavalin: The strategic partner of BC Ferries they would rather you not know about.

Following the posting of this, I spoke with Erik Andersen, a retired economist who practiced as a transportation economist with the Canadian Transport Commission; with Airports Branch, Transport Canada; with ICAO and at private corporations.

Erik had this comment on the renewal of the contract between BC Ferries and SNC Lavalin :

Extending a service contract by 5 years just  when there is unfinished Ministry of Transport business regarding BC Ferries’  future has to be so wrong it forces the question as to just who the BCF Board of  Directors is working for.  Certainly not those BCF captive customers in  ferry dependent communities. More probably for free-riding political  insiders.

In recent times it has been convenient to  characterize ferry dependent Islanders as undeserving of any sympathy or  financial support such as a simple cost of living clause, exactly like  those contained in every provincial road maintenance contract.

BCF expense  allocation to minor routes is arbitrary and not service specific.  BCF cost  allocation practices are exactly what one expects from an  insensitive monopoly service provider.

This is exactly when Minister Polak should use her discretion and over rule the BCF Board; at least until the discussion she launched has been given a thorough examination and we all think we have settled on a BCF future that may or may not include the participation of SNC Lavalin.. “

31 Comments on “SNC Lavalin contract with BC Ferries raised questions in 2012… so why is the public still in the dark nearly a year later?

  1. The TAM team is also looking at third-party opportunities for asset management outside of the BC Ferries organization. …. wouldn’t the relationship between BC Ferries and SNC Lavalin constitute a Third Party Relationship?

    “For example, a manufacturer may employ a third party to pack and distribute a product.”

    The example provided by Wikipedia sure seems to fit the bill as to who the Third Party is …… SNC Lavalin… therefore if SNC etc is looking for opportunities outside of BC Ferries and SNC Lavalin is Definitely not INSIDE of BC Ferries… but only via TAM… just who is the fourth Party going to be who will be providing an opportunity Outside of the Organization?

    • SNC Lavalin…. is like a tenant that you can’t get rid of. And for some reason, the BC Government is just fine with that.

      There is very little that I’ve found that explains the nature of this strategic partnership. It doesnt appear to be a normal contract per se, but like a seperate business venture completely.

      So, the question is, does this mean BC ferries and SNC. in this seperate, ongoing, contracted in and out business entity… are getting into business say.. managing other BC crown corp activities?

      The NOP did an FOI on this, as per the BC Ferries FOI website but it stated : Discontinued as the status.

  2. “The new business unit provided improved efficiency and productivity” Where is the proof for this statement and does improved productivity mean less riders and less sailings? Does improved efficiency mean that some of the latest editions to the fleet are tied up and not used in regular service. The ferries once were a low frill service providing basic transportation for the residents of BC that has been turned into a frilly tourist trap money losing corporate trough.

  3. So, we’re paying for two parties (BC Ferry Management and SNC-Lavalin) to do the same job, with all the perks etc of high management, if understood correctly?
    My question then is; if they are entering into an agreement to provide certain “specific” services that are technically (maybe literally?) the doubles of the current positions held by 46 BC Ferries management, wouldn’t it be safe to say that would make the 46 positions within BC Ferries redundant? Can we have them removed and save that money?
    Does SNC-Lavalin take over control of BC Ferries?

    *head spinning*
    Kudos on being able to keep track of that whipping tail called LIEberal (or harpercons in another word) politics and spin-information Laila.
    Thankfully they have to leave some kind of paper-trail and we have people like you who know how to look for that kind of trail and spot the inconsistencies.

    • Still digging.

      The budget is beyond words. I’ll have a pointed commentary on that tomorrow. For now the SNC Lavalin thing is eating at me.

  4. Sorry, but off topic. Someone please explain to me what I heard this afternoon on CTV news about Harper creating a Ministry of Religion. Is this guy serious? My head is about to explode with rage if he thinks that another ministry will help this freakin’ country with a $600 Billion federal debt.

    Back on topic…
    CC’s budget appears like it was created by elementary school students. The provincial debt is out of control, ppl!!!!!

    • Ministry of Religion ? So much for seperation of state and religion.

      Yes, Christys budget commentary is coming. Wow. It was worse than I imagined. I really cant understand why Mike de Jong and Christy were smiling so much ?? It seems like they are the only people who don’t get how people are responding to the budget. Clearly they think British Columbians are stupid – certainly I’ve heard from many who feel insulted by this budget.

  5. Good luck Laila. This thing is structured in layers, and it is going to take time to peel off the layers. Perhaps there is a formula one can find out of the Skytrain fiasco, which seems to be layered in the same way with their merging of companys and re-merging. It is frustrating trying to read all the reports or articles and trying to piece it together. But that is what is was designed to do. You’ve done a great job so far, keep digging.

    The other frustrating thing about B.C. Ferry’s is the so-called loan out of Germany, co-signed by the Government, and then given back to the Government, which we, the taxpayer are paying for. Norm Farrell explains it in his blog better than anybody I’ve seen, and yet there is no pressure on these people to explain what is basically a Ponzi Scheme.

  6. you would think after all the money we pay the execs at B.C. Ferries they might be able to manage this themselves. the contract to the lieberal’s friends is just another example of why this corrupt government needs to go. We don’t have money to clean hospitals, they are raising medical premiums 4%, they want school boards to find the money in their almost non existent budgets to pay for wage increases, we don’t have enough courts to avoid letting criminals go free and we hve $60M to pay their buddies . Nice.

    I do hope when the NDP comes into government they cancel the contract asap and makes B.C. Ferries a crown corp. again so we can save 7% interest on the billions campbell borrowed from the German banks.

    • Just an FYI.. it is often as expensive if not more, to cancel a contract, in particular with a company like SNC with deep pockets,good lawyers and strong influence. Not unlike paying out a crappy cell phone contract just to get free of the mess 😉

      I’ve got some calls and inquiries out so we’ll see what happens.

  7. Well, I’m not sure it’s so nefarious as all that. Terminals require maintenance – housekeeping services, repaving the parking lots, re-roofing, new efficient lighting, wiring upgrades, compliance orders from fire departments and the Ministry of Transportation etc., and all that causes disruption to users, staff and suppliers. For a $40 million operating budget, that won’t go very far in the current construction climate, so you have to establish priorities on your upgrade – can you live with potholes in the parking lot at Earl’s Cove for a couple more years while we redo the electrical at Slocan Lake and add sprinklers to the walk-on waiting room in Comox?

    One might think that a couple of those 46 positions in Terminal Maintenance Planning might be well-enough equipped to do a little planning and prioritizing on their own, but I guess not. Based on my experience in Health Authorities, it’s usually a job that done badly when it’s done in-house, and one that’s done with varying qualities when contracted out. Usually, the first few years are wasted as the consultant gets to know your business and needs.

    It’ll be interesting to see what you and the MLAs find out.

    • I’m not sure what any MLA’s are still trying to find out – the FOI was discontinued that the NDP filed, still need to find out why.

      There is nothing nefarious about terminal maintenance. What is nefarious is the lack of information available.

      I spoke with the BC Ferries Commisioners via a staff member, and neither had any more information to offer on how the contract was determined,value etc…. was there a clause in the original contract that allowed a resign without another FRP or bid/tender process? How can anyone be assured of the value this multi year contract offers when so little is known about it?

      Its been my experience that SNC contracts are ones to be examined in detail, from the beginning of the process to the end. Certainly at this juncture with BC Ferries and the discussions surrounding the future of the organization and the direction, one would absolutely wonder why so little is known and why so little information is forthcoming.

      • Zalm,
        Why is it that the BC Ferries Deas Dock in Richmond ( next to the Deas Tunnel) has a full compliment of employees in the middle of Peak Tourist season in the summer?

        Zero ships in the yard but a full parking lot of BC Ferries employees?

        All the ferries are out on their summer runs…..
        WHY? In Gods name does BC Ferries have to have a full compliment of staff sitting around picking their noses during the ‘non maintenance” peak tourist summer season?

        If a ferry has a major breakdown it is usually repaired in the Vancouver Drydocks or the Victoria Drydocks where they have the proper cranes and support staff.
        Unlike Deas Dock, which was the original site for the construction of the Deas tunnel concrete forms……and was never meant to be used as a shipyard……has substandard RENTAL cranes and “major” repair staff are subcontracted from other Drydocks ( please see the previously mentioned companies) to fix the ‘big” problems that Deas cant handle.

        As a taxpayer….Deas should be a “Winter storage’ paint and clean up yard” …nothing more………Get rid of everyone else……..

      • Well, it’;s certainly hard to say why the re-sign was allowed without free tender. On the other hand, when we’ve found a good consultant – read detail-oriented, thrifty and not to concerned about what their head office says – we’ve bent rules to keep him or her on for the next project. I’m not saying SNC Lavalin is that type of consultant – in fact, based on their recent history, I’d believe otherwise – but without information who could know?

        • Perhaps its useful to introduce a parallel story into this discussion as it illustrates what happens when large engineering firms need to feed their corporate appetite and to do so need to pocket non-discerning politicians.

          In the 1940s Hanford Washington was the site where nuclear materials were developed for much of the then requirements of the US nuclear program. Subsequently it was closed as an active facility leaving vast amounts of toxic materials in dubious storage. A friend described visiting there in 88 a finding the place a frightening mess.

          Somewhere between then and 95 the US engineering firm Bechtel was given the general contractor role for clean up of this contamination.

          In 1996/7 the DOE convened a weekend seminar where the government had invited folks to come with technical suggestions. Among the group was one by two of us with the proposal to use fossilized diatoms to filter nuclear material suspended in water. The proposal was supported by test results from the Mackie School of Mines.

          Following that weekend my partner asked the DOE to fund an independent, small, site test. DOE referred us to the general contractor as that was where funding might be had. My partner rejected the idea of being a sub-contractor because of past unpleasant experiences.

          Fast forward to now and $11 billion dollars later the mess is still there and the chosen technology is yet to prove itself.

          My point here is that large engineering firms prefer to lock up open ended revenue streams much like the lawyers working on settlements from the Exon Valdies oil spill.

          SNC Lavalin is no different. Because of effective lobbying the status quo can run indefinitely as can be seen with the Hanford example, doing little to nothing about fixing the problem.


    Brings back memories of the Raid on the Legislature, and the theft of our railroad. We still don’t have answers.
    A judicial inquiry is needed. Public inquiry is not the way to go, can’t charge any one, just recommendations. Judical, bring on the charges, we should settle for no less.
    Hey Laila, apologies if not in the appropriate column, but I believe it’s time to hold these hypocrits accountable.

    • If you havent watched the live stream of this corruption inquiru in Quebec, you are missing out. It is in french, but if you can understand its just unreal to hear the testimony and this raid is sure to just snowball to other municipalities and provincial offices. In a related note, did you see this story from January?

      Corruption is far more widespread than anyone realises and takes many forms. One form, is no less offensive than another, because widespread corruption begins with little movements over time.That reminds me, I havent seen any updates on the courtcase of the planner in Surrey who was facing charges, wh -along with others- alleged that there was widespread corruption in the planning and development departments of Surrey city hall.

      I agree that a judicial inquiry is the way to go on every aspect of this deal, not just the payout to Basi-Virk.Allowing people to get away with wrongful actions and deception sets the atmosphere for more of the same.

  9. Pingback: SNC Lavalin contract with BC Ferries raised questions in 2012… so why is the public still in the dark nearly a year later? | Gwyn Morgan

  10. I am beginning to wonder if a Mr. Gwyn Morgan, chairman of the board of SNC-Lavalin and a close confidant of both Herr Harper and premier photo-op, has something to do about it?

    Also, those German Ferries, the “Das Zitrones”, prop-wash has created havoc to the landing stages the use, requiring huge sums of money to rectify (some estimates top $100 million) and I also wonder if a Mr. Gwyn Morgan and SNC Lavalin has come up with a scheme to hide the huge extra costs that are being rung up by the “Zitrones”?

    Where SNC Lavalin surfaces, the slimy ooze follows.

  11. As a former SNC employee…..
    May I suggest everyone keep an eye on how many BC Ferries senior managment employees are hired on by SNC Lavalin over the next few years of the contract.
    These “senior” BC Ferry employees would be the same people involved in the bidding process.

    No conflict there………………

    SNC has done the same thing with the feds, the provinces, and military dictatorships…….all over the world.

    When will Quebec seperate so that I can call myself a proud Canadian once again…….?

  12. Here is the depressing reality. A transport system like BC Ferries should be designed to be efficient, not a safe harbor for incompents or a place to install the politically privledged.

    So what should it be? It should have simplicity of vessel types and uniformaty of the transport demand it services.

    BC Ferries has neither. It tries to operate over 30 different ship designs so it ensures the least efficiency in terms of spare parts inventory and crew training.
    It tries to understand, in a micro-ecomomic sense, at least 15 different transport markets where one size does not fit all.

    Since energy is a large component of their operating budget it has no clue as to which vessel design and engine combination provides the most efficient transport outcome.
    I know this because I asked. Neither the Ministry, BC Ferries or the Ferries Commissioner have a clue about this topic.

    In every transportation type you can be certain some designs and propulsion combinations delivery better reults than others but after 30/40 years of operation everyone who should know remain clueless.

    The sad feature of this legacy is that the reckless are forcing the innocents to pay for ignorance. Not sure when this will change but for ferry dependent communities it cannot be soon enough.

    • I use the BC Ferries system on a regular basis.
      The ticket booth people are professional 99% of the time. The ship crews are friendly and courteous 99% of the time. I dont have a problem with the “front line staff”
      erik’s comments about the different sized ships, zero uniformity in design, etc.etc.etc. are valid observations but he’s compareing Apples to Oranges..
      If you take the Tsawassen to Swartz Bay “run” ( 350+ cars)you will notice several other inter gulf island ferries plying the same waters at the same time. These are daily commuter ferries .Some of the ferries are small ‘car hoppers”(20 cars) , Some are intermediate passenger/car ferries(100 cars).
      One sized ferry doesnt fit all with the BC Ferry service. A ferry that sails from Port Hardy to Prince Rupert must deal with the worst seas imaginable therefore it is designed with a ‘deep V hull, completely differentl than a Saltspring to Swartz Bay car hopper with a flat bottom………..
      This doesnt deal with the problem of reduced maintenance budgets, increased staffing levels in the administration departments( hey BC Ferries! How’s that new computor system workin out?) and ever swelling budgets to pay for all the administration.

      Fares up……. sailings down

      And they wonder why people are staying away……..

      • Thanks for bring up what are the 30/40 years of poor operating economics. They are not about the quality of individual workers. They are about the transport system design.

        In most transport systems there is a union that confers financial and/or choice of route benefits based upon seniority. This totally understandable arrangement means that every time there is a retirement a job bidding shuffle takes place as union members exercise their seniority rights. Simply by having 30 or more different ships serving 10/15 different routes the potential for personnel re-positioning.

        Each time a person shifts to a new job there is revenue earning time lost to the employer because of retraining etc. To illustrate the magnitude of this element in system design these are values from the commercial air services industry.

        Southwest Airlines is a single model operator who needs 5-6 full crews to operate each ship over the full course of the year. The number of revenue hours for each of their ships per year is about 3,500.

        Contrasting that example is Air Canada, what some refer to as a legacy air carrier and is the term I use when talking about BC Ferries. Because of the extremely diverse nature of the Air Canada fleet and the very diverse nature of the various markets they try to serve their crew compliment per ship is about 13 and they produce no more revenue flying hours per year per ship than Southwest.

        The lesson here is that labor efficiency is only half or less when the operator tries to be the service provider in too many different markets with a very mixed bag of ship types and sizes.

        Now when it comes to selecting individual ship designs,fuel inefficiencies are vital to know about.

        BC Ferries has a fuel cost that is about 30% of operating expenses and there is nothing they can do as they are a price taker. To know what is the gold standard for fuel efficiency one must examine the fuel quantity consumed for a unit of transport provided. The expression should be lbs/gallons/liters used to deliver one square meter of salable vehicle deck space one nautical mile in normal cruise. Had BC Ferries understood this energy measure value we would probably never have seen the “Fast Cats” nor the new “Coastal” class. The operating inefficiencies from not applying this type of management discipline likely means current operations, in terms of fuel, are twice what they should be.

        Next we come to overhaul and maintenance done “in-house”. The Gabriola ferry recently completed a mid-life refit and came back onto the financial statements at a value of $26 million which means the depreciation charges for route 19 are about $2 million a year. In contrast, the Pierce Island ferry in nearby Washington recently entered service at a capital cost of less than $15 million and with an annual depreciation charge of about $150,000. Their ship is only slightly smaller than the Quinsum.

        Last but not least there is the absence of technology at BC Ferries.

        Remote condition monitoring has been available to the marine industry for at least two decades and in the aviation industry for more like 5 decades.

        Units exist to measure temperature. vibration and metal fillings in oil that can be transmitted to a central processor at a pre-determined frequency.

        These are not expensive packages as ones prepared for use on remote location wind turbines were priced at about $5,000. The value of these reading is not to detect catastrophic failure but to get an anticipation of a developing problem that could be remedied in normal out of service hours.

        I personally asked if the new “Coastal Class” were so equipment and got blank looks for an answer. As to using technology to manage demand, this has been a routine practice in the aviation industry since the 70s. Variable pricing has always applied in the transport sector simply because the service is explicitly perishable. On departure all unsold transport capacity is lost forever. BC Ferries has never been able to bring itself to really exploit the potential of this practice which on one level is understandable, simply because it is a natural monopoly.

        All of the above is not something needing research or invention.

        People in ferry dependent communities have every right to be displeased with the results of years of Vancouver-Centric managers and Boards, who after 40 years of being on the learning curve only can continue to do the same thing year in year out yet expecting a better financial/economic outcome.

  13. You Eric, should be hired to replace Commodore Hahn. One would think the quite valid points you’ve made would be common knowledge among seafaring management! Why aren’t they running on Natural Gas?

    • Thanks for the compliment Johns.
      I think inertia defines our world more than we would like. In the days of being a transport researcher,planner and economist I was constantly confronted with opposition to ideas of change for the better.I know that reads smugly opinionated but I use evidence before all else.

      A little story to illustrate my point.
      As an airline we operated a B 707 livestock transport out of Dorval Airport and other Canadian airports. One day I got a phone call from Montreal with an airport manager telling me that because we operated internationally we had to relocate to Mirabelle.

      What he did not know was my friend just died in Ottawa of a premature heart attack from the stress he was put under by the Minister of Transport to make traffic happen in Mirabelle.
      I told the Mirabelle Airport manager we would not be moving from Dorval and he told me we did not have the option of staying.

      Next time we had an aircraft in Dorval the AM came over to the captain and reamed him out for our non-compliance. Shortly thereafter the captain down loaded on me in Vancouver.

      After saying chill out I shortly got another call and had the satisfaction of advising the airport manager that his requirements were so costly that we decided to close the whole Quebec operation down.

      There was a profound silence because he was probably processing the idea of what it was to be a service provider.
      When people push on a rope they should expect a hanging.

  14. Pingback: Revisiting SNC-Lavalin: Working Draft | 404 System Error

  15. This company has been booted out of many countries.
    I have to wonder about what kind of “negotiations” were done here.
    SNC-Lavalin, Cementation Canada and the Morris Group sign MOU with First Nations to launch the First Nations Mining Corporation

    (Think I’d like to have been at the table hearing these “negotiations”.)

    Flying Post First Nation has a registered population of 162, all living off reserve.

    The registered population of Lac Seul was 2,837 persons in April of 2008, of which the on-reserve population was 77.

    The Mattagami First Nation. The First Nation members of the community primarily live on the Mattagami 71 reserve in the Sudbury District near Gogama.

    The on-reserve population is approximately 100 residents.

    Wahgoshig First Nation, formerly known as Abitibi-Ontario Band of Abitibi Indians or simply as Abitibi. They have reserved for themselves the 7,770.1 hectares (19,200.3 acres) Abitibi 70 Indian Reserve on the south end of Lake Abitibi.

    In January, 2008, the First Nation had 270 people registered with the nation, of which their on-reserve population was 121.