N.L. government paid $300K for ferry thruster it doesn't need

Newfoundland and Labrador's Department of Transportation and Infrastructure bought a $300,000 ferry thruster it didn't need. 

"The department could not provide an explanation for the purchase," reads a report from the province's comptroller general that found "significant procedural deficiencies" regarding procurement and inventory.

"The bow thruster was purchased in June 2019, but to date, has not been installed. The department has confirmed that there was and continues to be no immediate need for a new bow thruster on the MV Beaumont Hamel," reads the 20-page document dated May 2023.

The report, obtained through access-to-information legislation, says the part can't be used by any of the other ferries in the provincial fleet without major modifications, "increasing the likelihood that the bow thruster will eventually become obsolete or unusable."

The thruster cost the provincial government $299,997. 

Before going into storage, it underwent $27,000 in modifications so it could fit the Beaumont Hamel, a vessel servicing mostly the ferry route between Portugal Cove-St. Philip's and Bell Island, in eastern Newfoundland.

The report states that after receiving the part, the department decided it was taking up too much space in its main warehouse in St. John's. The thruster was sent about 400 kilometres northwest to a depot in Lewisporte, costing an extra $16,000.

Unused, obsolete parts worth millions kept in warehouse 

The comptroller general's investigation also discovered millions of dollars of old and obsolete parts being kept — seemingly for no reason — at the department's main warehouse.

Investigators found a $1.28-million vacuum mooring system that was quietly gathering dust years after it was meant to be installed in Portugal Cove-St. Philip's. A similar system has been in place on Bell Island since 2016.

According to the report, the minister hired a consultant — after receiving the mooring system — who determined that installing it in Portugal Cove-St. Philip's would cost $1 million. The consultant also warned of the high cost of maintaining the system long term, given upkeep was "sole source and not domestic."

"While both sites were assessed for the mooring systems prior to purchase and were approved for installation, as a result of the consultation, the installation of the mooring system was not approved," says the report.

The report also states the department was keeping three generator sets at the warehouse with a combined value of $1.2 million. The systems were purchased for the MV Nonia but never installed.

The Nonia was decommissioned in 2013.

"The department has advised that a disposal tender has been approved and issued in an attempt to recover some of what was paid for unused or obsolete inventory items. However, given the age of some of the inventory reviewed, attempts to recover costs should have been taken in a timelier manner," reads the report.

Almost no records kept on tender evaluation process

While a tender was issued for the thruster, the department could provide no detailed documentation explaining why the selected bid had been chosen. The department must do so, according to provincial regulations.

In her report, the comptroller general writes it was "surprising" to learn that the department chose an electrical contractor to supply the thruster rather than a manufacturer with experience building ferry parts. 

The department provided no documentation that the successful bid satisfied all tender criteria.

While the comptroller general found "no confirmed evidence of wrongdoing," the report notes that the pervasive lack of documentation and oversight "increase the risk of wrongdoing."

Department blames restructuring, reduced staffing

The report indicates the department believed many issues stemmed from reduced staffing levels.

"The department advised inventory and purchasing processes at the time of the tender issue were compromised due to restructuring and reduced division staff. As a result, a lot of trust and responsibility was placed on the [redacted] at the time", it says. 

"Efforts have since been made to formalize processes regarding capital expenditures."

Transportation and Infrastructure Minister Fred Hutton was not available for an interview.

In an email, department spokesperson Maria Browne said the thruster was originally purchased to "ensure reliability" and that procurement was in keeping with the Public Procurement Act, despite the issues raised by the comptroller general.

"Following the purchase of equipment required for the replacement of the bow thruster assembly on the boat, a further and more detailed inspection of existing equipment was completed, and it was decided not to move forward with a full replacement," she said.

"The decision not to proceed was also based on potential impacts on ferry users, given the estimated 14-week downtime that would accompany replacement work."

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