Mayor Sam Synard says the project would have meant 700 jobs and a $100-million investment in infrastructure for the town. (CBC)

There is disappointment in Marystown, on Newfoundland's Burin Peninsula, after the Canadian government cancelled two major ship building contracts, citing bids on the project came in over budget. The announcement came in a press release late Friday night.

"After receiving and evaluating the mandatory requirements for the Joint Support Ship project from the bidders, the Crown has determined that the proposals were not compliant with the basic terms of the request for proposals (RFP). Among other compliance failures, both bids were significantly over the established budget provisions," the statement said.

The shipyard in Marystown bid on one of the contracts to build 12 coast guard patrol boats. Peter Kiewit Sons Co., owners of the shipyard, also bid on the second tender to build the Joint Support Ship military vessels with Thyssen Krupp Marine Services. The companies had hoped to bring both projects to the Marystown shipyard, and Mayor Sam Synard said the cancellation of the projects is disappointing.

"It would have meant 700 workers working in Marystown, specifically building three large navy ships over a course of seven or eight or nine years," Synard said. "It would also, of course, meant the fast-tracking of the construction of a new shipyard here in Marystown with a large-scale graving dock, so adding a $100-million plus in new infrastructure."

Frank Smith, director of business development with Peter Kiewit and Sons, declined to comment to CBC on the military contract, saying Thyssen Krupp was the lead on that project, but he did say the cancellation of the $750-million coast guard mid-shore patrol vessel contract was disappointing, but not surprising.

"This was something that was going to develop further down the line a little bit, so in some ways the delay is better for us," Smith said. "We can finish off the provincial ferries and then go on to the other vessels if we're successful."

Peter Kiewit Sons is currently working on a provincial contract to build new ferries.

Smith said he hopes the government will revise its plans, as all bidders on the projects came in over budget.

However, just weeks before Friday's announcement that the Canadian bids came in over budget, the National Post reported the Defence Department was looking into the possibility of building the Joint Supply Ships in the Netherlands.

Irving Shipbuilding, BAE Systems Naval Ships, and SNC-Lavalin Profac Inc, also bid on the $2.9 billion Joint Supply Ship contract.

The three navy ships were to replace two 40-year old supply vessels.