Homer wrote about war and weapons, not military procurement. But if ever a government program had the potential to turn into Greek tragedy, it’s the National Shipbuilding Procurement Strategy — a six-year-old program that seems far better at procuring political embarrassment than anything else.
Last month, the Quebec-based Davie Shipyard submitted an unsolicited bid to the federal government to produce Coast Guard vessels. Nova Scotia Premier Stephen McNeil, worried about protecting Irving Shipbuilding’s share of the procurement envelope, called on Ottawa to ensure that Davie’s attempts to undercut the Vancouver-based Seaspan shipyards — which has the corner on civilian shipbuilding under the NSPS — don’t affect Irving’s exclusive right to build warships for Canada.
The federal government quickly shot Davie down, insisting that it remains committed to a “competitive” process. But the damage was done; Davie’s pitch to play outside the NSPS rules only underlined how completely the NSPS process is failing.
The National Shipbuilding Procurement Strategy, launched by the Harper government, is an ambitious, 30-year program with a low-balled cost estimate of $50 billion. Its purpose is to replace 50 large ships and 115 smaller ones for the Coast Guard and Royal Canadian Navy, and reinvigorate the Canadian shipbuilding industry along the way.
This is Canada’s largest fleet replacement project since the 1950s. It’s woefully behind schedule and its costs have been steadily climbing — either because the costs weren’t fully appreciated to begin with, or because the delays in construction are leading to inflation-driven cost spikes.
Last June, Seaspan ‘celebrated’ the start of construction on its first offshore fisheries science vessel. Seaspan is supposed to build three of these ships, but costs have already soared to close to $700 million in 2015 — about 181 per cent over budget.
This week, the Liberals announced that the government will provide an additional $30 million for these vessels and another 35 million to prioritize the much-delayed Joint Support Ships (JSS).
That kind of cost adjustment is particularly troubling when you consider the fact that Ottawa no longer has the skill set to keep an eye on program costs, according to a leaked report from Pricewaterhouse Coopers. This report, which was leaked to the Canadian Press, suggested that both Public Works and Department of National Defence do not have the in-house staff and expertise to understand the technical matters that contribute to higher project costs.
With the prioritization of the JSS comes another looming problem: an icebreaker gap. Canada only has one vessel capable of navigating the high Arctic — the CCGS St. Laurent, built in 1967. In 2014, the Shipbuilding Association of Canada stated that the feds desperately need a fast-tracked solution as the St. Laurent’s replacement is “facing major delays and cost increases, primarily due to a lack of shipbuilding capacity on the West Coast as well as the prioritization of the Royal Canadian Navy’s Joint Support Ships.”
The unsolicited bid from Davie was to build medium-sized icebreakers for the Arctic. Davie is providing an affordable, fast-tracked interim solution for the JSS delays. Davie’s Project RESOLVE will convert a commercial cargo container ship into a supply ship. This project was approved by the government for the obvious reason: It made sense.
The reinvigoration of the NSPS should not be about throwing contracts at Irving and Seaspan, along with more public funds to improve their facilities. It should also help our shipbuilding industry prepare to compete globally. In some cases, that might mean work-sharing. Our Halifax-class fleet was built at two different shipyards. The modules for the U.S. Navy’s new Virginia-class submarines are built at various shipyards and then assembled together at a single shipyard. This also could be done for Canada’s large ships such as the Surface Combatants, as we know the RCN is leaning towards a modular design.
Instead, it looks like our embarrassing and costly odyssey will continue. Each new government suffers the fallout from the previous government’s mismanagement; on and on the cycle repeats. “We inherited a bit of a mess,” said Public Services and Procurement Minister Judy Foote. Epic understatement.
Last month, the Shipbuilding Association of Canada stated that it wants to see the government overhaul the NSPS to “include any Canadian shipyard capable of delivering ships to the program.” We need to face facts: It’s been six years since the NSPS was announced and we’re already discussing cost overruns, delays and even downgrading of specifications for some ships such as the Arctic Offshore Patrol Ship and the Canadian Surface Combatant. We need to come up with alternatives now.
To correct the course of the NSPS, it will need a navigator. Course adjustments will have to be made. It will take forward-thinking, determination and at least some of the wit of Odysseus. But the time to get this program back on track is now … assuming we don’t want to spend the next decade the way Odysseus did — desperately trying to bring this ship into port.
Stewart Webb is the editor for DefenceReport and a defence consultant. He has written numerous reports on defence procurement, including naval procurement. His most recent report, Canada’s hidden plan for predicted failure: Planning for the introduction of the Canadian Surface Combatant was published in January through the Canadian Global Affairs Institute, which can be found here.
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