I'd say that's a more likely explanation the fully Biotech to be honest. As Aardwolf stated, the Shivans used Biomechanical armour, most likely an enhanced muscle frame with metal carapace or the like, and I seem to recall that Volition confirmed that the Shivans were inside those suits, though I'm not certain about that, which would mean that kind of tech was certainly available to them if it is true.
Things like muscles simply won't function in space for the main part, it's too cold for non-rigid biological constructs, but a biological framework with embedded technology sounds more plausible. Ships would still be constructed, but by creating the under-systems using biological techniques, the construction time could theoretically be greatly reduced.