Not as bad as it looks

Murray Brewster, writing for CBC News, says that “The federal government has spent slightly more than $1.01 billion over the last seven years on design and preparatory contracts for the navy’s new frigates and supply ships — and the projects still haven’t bought anything that floats … [and he adds] … It’s an enormous amount of money for two programs that have been operating for more than a decade with little to show for their efforts to date … [and, further] … It will be years before the Canadian Surface Combatant project — which aims to replace the navy’s frontline frigates with 15 state-of-the-art vessels — and the Joint Support Ship program for two replenishment vessels actually deliver warships.

Sounds dreadful, right?

But he makes a key point to address the biggest issue: “The head of the Department of National Defence’s materiel branch said most of the preparatory contracts were Canadian DD 281 at Trumbo Point pier in 1976.  Photo by Raymond L. Blazevic.needed to re-establish a Canadian shipbuilding industry that had been allowed to wither.” After the projects to upgrade our (now sold for scrap) Tribal class destroyers and to build new frigates, both planned in the thumb2-hmcs-charlottetown-ffh-339-royal-canadian-navy-canadian-patrol-frigate-halifax-class-frigate1970s and delivered in the 1980s, successive federal governments, both Liberal and Conservative, ignored the Royal Canadian Navy and let our shipbuilding industry wither. Finally, in the 2000s, the Navy got the attention of the Conservative Harper government, but in many respects, it was 1939 all over again. Our shipyards could not build a modern warship. They had none of the design, planning or production capabilities necessary. Some, like Davie, in Québec had decent facilities but terrible management, others had adequate management and poor facilities and some had neither. Finally, the Harper government established a ‘tiger team’ of very Seaspansenior civil servants who came up with the National Shipbuilding Procurement Strategy and, initially, allocated a ridiculously small amount of irving_shipyard_3money to two shipyards ~ Seaspan in Vancouver and Irving in Halifax to build new fleets of ships for the Royal Canadian Navy and the Canadian Coast Guard. The Trudeau Liberals, to their credit, preserved the programme and added more money and things actually happened: the new Harry DeWolf class Arctic Offshore Patrol Ships and some new Coast Guard vessels are in the water, now, and work has begun on the new Type 26 warships (Irving) and the new support ships (Seaspan) but delivery is years away. In the interim, there was a crisis in naval support and the Conservatives went to Davie to rush a conversion project ~ Project Resolve which saw the MV Asterix enter service ~ for some quite murky reasons the Trudeau Liberals wanted to, at least, delay Project Resolve and when the then vice-chief of the defence staff acted (on standing government orders) to protect the project he was subjected to a (failed) malicious prosecution.

One of the complaints that one of Mr Brewster’s informants makes is that steel is being cut but the designs are still not quite finished.  That’s perfectly normal in a lot of business/engineering areas. When that team of senior civil servants created the National Shipbuilding Procurement Strategy they were highly conscious of the fact that their main client, Prime Minister Harper, was very risk-averse and the Royal Canadian Navy wanted the most. modern, but still proven, design. One tactic they adopted was to contract out the design (the high-risk component) to the Canadian prime contractors, Irving and Seaspan. They wanted to have a fixed price contract, offloading even more risk, but that almost never happens in government. The simple fact is that the designs are, probably, about 98% complete but the Navy and the shipyards are still fiddling with how to fit some technology into some spaces. It’s rather like buying a new house. The house is probably more than half-built before you decide on which refrigerator you want in the kitchen or which sink you want in the downstairs bathroom.

Canadians are right to worry that a lot of money is being spent on a couple of big projects. I am inclined to believe that we are not getting the best possible value for money, but that, I believe, is because of some strategic choices we made, including to build Canadian warships in Canadian shipyards. We are [aying a very large price premium for that. I think it is a strategically sound decision but I doubt that we will get much commercial return from the sale of warships. I am not worried about design choices. I think that both the British Type 26 combat ship and the German Berlin class replenishment ship designs are good ones and I am certain that the engineers in the Royal Canadian Navy who are signing off on every nut, bolt and computer chip are well qualified and diligent in their work.

seaspan-to-begin-canadian-joint-support-ship-construction-768x502d1c80f05200c81fac78c20b9353b213d--royal-navy-the-nextThese ships are going to costs many, many tens of billions of dollars to design, build and then maintain in service of the next several decades ~ Canadian warships have a typical service life in excess of 30 years ~ and I am convinced that it is money well spent.

2 thoughts on “Not as bad as it looks

  1. There are a lot of problems with the program, including

    both Seaspan and Irving have little capacity for building multiple ships at the same time
    the “non-build” costs appear to be completely out of line with any numbers published worldwide
    HMCS Protecteur is being built without a contract with an estimated cost approaching 2 billion!?

    but the biggest deficiency is that that contract awards on the ship construction are done without competition. Hopefully this can be rectified after this first round with Seaspan, Irving, and Davie competing on the subsequent construction/design contracts, otherwise cost will continue to be impossible to control

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