The Bluenose II schooner, with a rebuild that is two years overdue and millions of dollars over budget, is now officially the problem of the Nova Scotia government and taxpayers.

The province announced Wednesday that the Lunenburg Shipyard Alliance has formally handed over the vessel to the government on Friday.

The contract signed with the alliance in July 2010 stipulates that the province will only take ownership of the schooner "provided that all defects have been corrected."

The steering mechanism still needs to be attached to a hydraulic system to allow the wheel to turn properly. But David Darrow, the senior bureaucrat who is overseeing the trouble-plagued project, suggests that's not a "major defect." 

Darrow also said it's unclear who is responsible for the fact the steering system doesn't work properly.

"We haven't established that the steering is a workmanship issue," he said Wednesday.

The design of the new hydraulic system is complete and the parts have been ordered but Darrow refused to put a price to the extra work.

"It's not $1 million," he said. "Somewhere between $10,000 and $1 million."

Darrow said he'll provide a final figure soon.

12-month warranty

Beyond fixing the steering problem, the schooner still needs painting, which the new Bluenose II crew members are currently doing.

Even though the vessel now belongs to the province, Darrow said that doesn't mean if something breaks or is broken, taxpayers will be on the hook to fix it.

"The builder is responsible to correct deficiencies, any deficiencies that we know of and any deficiencies that we discover in the coming days. There's also a 12-month warranty period," he said.

David Darrow deputy minister Bluenose II

David Darrow, the senior bureaucrat who is overseeing the Bluenose II rebuild, said repairing the steering system will cost "somewhere between $10,000 and $1 million." (CBC)

Beyond that, he is continuing to suggest legal action is pending.

"If we are able to determine that there was faulty work, errors in work that was carried out doesn't matter who it was, whether it's the designers, the builders or what have you and there's an opportunity to take recourse to recover costs we will pursue that," said Darrow.

The schooner was supposed to return to regular sailing two summers ago after an extensive two-year rebuild at a cost of $14.4 million, with $7.2 million coming from the federal government.

But the restoration has suffered from budget overruns and repeated delays, prompting Premier Stephen McNeil to ask the province's auditor general in January to review the project.

Darrow said the province won't proceed with possible legal action until the auditor general reports back on his audit of the project.

At last count, the cost of rebuilding the Bluenose II sat at nearly $19 million, but that doesn't include another $5 million worth of work that is being disputed by the province.

Moved next to museum

Meanwhile, after being docked for two years at the Lunenburg Foundry, the iconic schooner has been moved to its new berth beside the Fisheries Museum of the Atlantic a short distance away.

"Tourists and visitors to Lunenburg will be able to view the Bluenose II up close for the rest of the summer while it awaits the installation of a new steering system," said the province in a news release.

"Bluenose II is undergoing finishing touches by the builder and the crew, however, the move will allow people to view the boat from the waterfront, take close-up photos and chat with the crew."

Moving the schooner to the museum was prompted by requests to give people a closer view of the Bluenose II.

The province is hoping the schooner will be able to remain at that dock while the repair work on the rudder goes ahead.