A $50-million lifeline the Harper government threw to ailing shipyards in 2007 lacked basic record-keeping, raising questions about the management of Canada's national shipbuilding program.

The so-called Structured Financing Facility, a fund designed to keep shipyards on life support until this year, lacked any "rigorous" reporting on how well the money was spent, says an internal evaluation.

Bureaucrats did not properly monitor the eight ship projects that received millions in federal subsidies, leaving no record of basic information such as the number of jobs created.

The navy supply ship HMCS Preserver sits at dry dock while undergoing refit in Halifax in 2010. A fund designed to keep shipyards on life support until this year lacked any rigorous reporting on how well the money was spent. Andrew Vaughn/Canadian Press

"Quantitative information, e.g., actual number of person years employed on projects, was not completed," says an evaluation commissioned by Industry Canada.

"Site visits were conducted one to two months after the project began, which was far too early to capture useful information…Several impact assessment reports simply used the ones created during the application process."

The $83,000 study by consultants Goss Gilroy Inc. was completed in February but only made public after the May 2 federal election.

The fund, created in 2001, was renewed in 2007 as a bridge to help keep shipyards in business until this year, when Ottawa solicited bids to build $35 billion worth of ships for the military, coast guard and others.

The National Shipbuilding Procurement Strategy, announced in June last year, hits another milestone Thursday. That's the deadline, recently extended by two weeks, for bids by shipyards to become Ottawa's favoured shipbuilders.

The amount of work in play over the next three decades is enormous: some 28 large ships, most for the navy, and more than 100 smaller vessels.

The Structured Financing Facility, in the meantime, provided taxpayer subsidies to help mitigate the 20 per cent price disadvantage Canada's shipyards typically face when bidding for projects that often gravitate to cheaper shipbuilders in South Korea and elsewhere.

B.C. and P.E.I. shipyards benefited

Three shipyards had benefited under the new 2007 rules by the time of the evaluation, two in British Columbia (Deas Pacific Marine; Vancouver Drydock) and one in Prince Edward Island (Irving - East Isle).

Goss Gilroy found that the federal subsidies reduced the 20 per cent pricing disadvantage to about seven per cent, helping to win new business in Canada.

Citing interviews with executives, the evaluation suggests the Irving shipyard in Prince Edward Island "would likely have closed without SFF-funded projects."

But the two British Columbia yards "reported that it was not essential to their survival, as refit and life extension for Canadian navy and coast guard ships provided a source of relatively steady work."

The eight subsidized projects together represented about 38 per cent of industry revenues between 2007 and 2009, says Goss Gilroy, noting that shipbuilding remains a troubled sector.

"The overcapacity challenge facing the Canadian shipbuilding industry continues to this day," says the evaluation, with about 30 yards chasing a dwindling number of projects.

Number of new jobs unknown

The investigators were unable to calculate how many jobs were supported by the Industry Canada fund.

"Because of insufficient reporting, there are no reliable figures on actual direct and indirect job creation," says the report, citing only the 1,410 jobs the applicants promised rather than delivered.

A spokeswoman for Industry Canada says the fund spent $25 million until March 31 this year, just half of $50 million that had been allotted under the four-year extension.

Lauren Hebert says $15 million of the unspent money has been "reprofiled" to 2011-2012 and 2012-13, when the bridging program is scheduled to end.

"Canada's shipbuilding industry plays a key role in protecting Canadian sovereignty and security," Hebert said in an email.

"A viable shipbuilding industry is important to retaining shipyard capacity to meet government procurement requirements."