On the rocks?

David Pugliese, the defence reporter for the PostMedia chain of newspapers, reports, in 1434585133625the Saskatoon Star Phoenix that “Canada’s quest for a new fleet of warships is off to a rocky start with all bidders failing to meet some of the federal government’s requirements …[and] … Procurement officials are now trying to regroup on the $60 billion project and figure out ways that bidders might be able to change their proposals to make them acceptable.”

The problems,” Mr Pugliese says “centre around technical issues. Some are minor but in other cases there is a view among defence industry officials that Canada is asking for too much in some areas such as radar, which may be causing problems with meeting requirements … [and] … Public Services and Procurement Canada spokeswoman Michèle LaRose said the three bids received for the Canadian Surface Combatant project have not been disqualified. The federal government and Irving Shipbuilding are still evaluating the proposals, she added. LaRose pointed out that the evaluation is at the second stage in the process … [and, further] … Government officials say that involves what is known as “the cure process” in which bidders will be given details of how their proposals have failed to meet the stated criteria. They will then be given only one opportunity to fix issues with their bids … [but] … If they are still considered “non-compliant” after the cure period they “will be eliminated from the competition,” according to the federal government.

David Pugliese says that “The final cost of the ships is still unknown. In 2008 the government estimated the total cost of the project to be about $26 billion … [but, he adds] … in 2015 navy commander Vice Admiral Mark Norman voiced concern that taxpayers may not have been given all relevant information, and publicly predicted the cost alone for the ships would be around $30 billion … [now, however] … Cost estimates for the project are now between $55 billion and $60 billion.” Explaining costs to Canadians, like you and me, is a constant problem for government. Politicians, themselves, and officials, including senior military officers, procurement executives and the Parliamentary Budget Officer, cannot agree on how to calculate the full “life cycle’ costs of complex systems like ships and aircraft and even if they could they are usually Inflation-1unable to agree on how to tell us what things cost ~some politicians and many senior military officers want to tell us only the “bare bones” or “fly away” costs while others want us to understand the full life cycle costs with future inflation added. That’s why two people might be being quite honest when they look at the exact same data and one says $26 Billion and the other says $60+ Billion.

About half of the cost is for systems and equipment that will go on the 15 ships,” Mr Pugliese’s article says, “according to federal documents obtained by Postmedia through the Access the Information law. Approximately one-half of the CSC build cost is comprised of labour in the (Irving’s) Halifax yard and materials,” the documents added … [and] … Last year, Jean-Denis Fréchette, the parliamentary budget officer, estimated the CSC program would cost $61.82 billion. He also warned that every year the awarding of the contract is delayed beyond 2018, taxpayers will spend an extra $3 billion because of inflation.

It is my understanding ~ I’m always happy to be corrected ~ that there are three bidders:

  • Alion_CSC_Frigate_Canada_1The British Type 26 frigate design proposed by Lockheed Martin Canada and BAE Systems;
  • The Dutch De Zeven Provinciën class frigate-based design proposed by Alion Canada and Damen Group; and
  • The Spanish F-105 design offered by Navantia.

I also understand ~ and again I actively invite correction ~ that the Franco-Italian Naval Group/Fincantieri group proposed the  FREMM-ER multipurpose frigate but the proposal was made outside of the formal bidding process as was rejected by the Government of Canada, and, further, that Denmark’s Odense Maritime Technology group’s Iver Huitfeldt class frigate and ThyssenKrupp Marine Systems Canada’s Baden-Württemberg class frigate were anticipated as candidates but, in the end, were not offered to Canada.

I have no knowledge about which systems may not be able to meet Canadians’ expectations of what the “state of the art” might be. Sometimes some people think that technology should evolve in certain ways but it doesn’t always play along with our hopes and dreams.

I am reasonably confident that at least two of the bidders will become complaint so that we will not end up in a “sole Source” procurement scenario … but I am far less confident that there will be enough money to build all 15 ships.


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