The two Canadian defence contractors tasked with upgrading New Zealand's warships have become embroiled in a legal battle that has delayed getting the crucial frigates back from the British Columbia shipyards.
Lockheed Martin Canada and Seaspan Shipyards were contracted by the New Zealand Government to install new high-tech surveillance, self-defence, and combat capabilities systems on HMNZS Te Mana and the HMNZS Te Kaha.
Both ships – which together amount to New Zealand's frigate fleet – were due to return to New Zealand last year.
But only Te Kaha, which was kitted out with a multi-million dollar supersonic missile defence system, finally sailed home in December after a nine-month delay.
Te Mana remains at Seaspan's Victoria Shipyards, scheduled to return in April.
Now it has been revealed that the companies contracted to do the work are locked in a court battle, pointing the finger at each other for delays and rising costs.
Seaspan's Victoria Shipyards, which was subcontracted by Lockheed, filed a civil claim in BC Supreme Court alleging that problems with the Lockheed designs were costing the shipyard more than C$20 million (NZ$22.8m) in delays and workarounds on the first ship alone, according to CTV News Vancouver Island.
The media outlet reports that Lockheed Martin Canada responded with a counterclaim, alleging the project delays were due to negligence, understaffing and mismanagement at the shipyard.
Lockheed said the issues had set the company back more than C$10m (NZ$11.4m) per ship as of last July.
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According to CTV News Vancouver Island, Lockheed Martin Canada also disputed Seaspan's claim they were selected for the project because of its previous success in upgrading the combat systems on Canada's warships.
"Rather, New Zealand knew that LMC [Lockheed Martin Canada] was the leading provider of vessel weapons upgrade systems," lawyer Neil Abbott reportedly wrote in response to the shipyard's claim.
"LMC felt that New Zealand would more likely award the Anzac project to LMC if the work would be carried out at a shipyard in another Commonwealth country."
A spokesman for the New Zealand Defence Force (NZDF) today refused to comment.
"As this matter is currently before the courts, we have no comment to make at this time," he said.
A hearing is expected next month.
By 2018, the upgrade project for New Zealand's two Anzac-class frigates to extend the vessels' operational life to around 2030 had ballooned in cost by $148m to a total cost of $639m.
To fund the cost overrun, then Defence Minister Ron Mark said Cabinet agreed to reallocate a portion of the money that was provisioned in Budget 2017 for the Littoral Operations Support Capability project.
Te Kaha had upgrades to its surveillance, self-defence, and combat capabilities, including a new combat management system (CMS), radars, above-water sensors, and a hull-mounted sonar upgrade.
And its RIM7P Seasparrow missile will be replaced with MBDA's British-designed Sea Ceptor vertical launched Common Anti-air Modular Missile (CAAM(M)) missile system.
The new missile can reach speeds three times the speed of sound and can attack multiple targets simultaneously, protecting an area of around 1300 sq km over land or sea.
