Liberals learn lesson of F-35 and move to keep shipbuilding cost estimates under wraps till contract signed
By Murray Brewster, CBC News Posted: May 26, 2016 5:35 PM ET Last Updated: May 26, 2016 5:35 PM ET
Judy Foote, minister of public Works and procurement, addresses members of the defence and security industries at the CANSEC 2016 expo on Thursday. (Fred Chartrand/Canadian Press)
Canadians will not know the price tag for the navy’s frigate replacements — the largest, most complex military purchase in the country’s history — until the ink is dry on the contract, Procurement Minister Judy Foote said Thursday.
The decision to keep the numbers secret is just one in a series of measures being taken by the Liberal government to get a handle on the National Shipbuilding Strategy, which was launched almost six years ago with much fanfare.
The program commits the federal government to dealing exclusively with Irving Shipbuilding in Halifax for the construction of combat ships and Vancouver’s Seaspan Shipyards for civilian vessels.
The strategy has faced increased skepticism, however, because it has yet to produce a ship and there has been a series of published and broadcast reports with eye-popping cost projections.
Foote’s speech to a defence industry trade show Thursday is an attempt to shut down the speculation.
“We will not be announcing a new cost estimate for the Canadian Surface Combatant until we have signed a build contract,” she told delegates, most of them defence contractors. “Given the number of variables that can change and the very long planning periods involved, we have seen how these estimates cause confusion.”
Ottawa is not expected to award a design contract until next year. The agreement to build the warships won’t be signed until 2019.
The Liberals, who promised openness and transparency during the last election, appear to be learning the lesson of the searing political debate over the F-35 fighter, where arguments over price tags among the Conservative government, the parliamentary budget officer and the auditor general derailed the purchase.
A history of rising costs
When the Harper government first began talking about replacing the navy’s 12 patrol frigates with 15 modern warships, the construction cost was estimated at $26 billion.
But that was nearly a decade ago before delays and the corrosive effect of inflation began playing havoc with those assessments.
Last year, the commander of the navy told CBC News the cost of building the ships could well hit $30 billion, even without maintenance and long-term support costs.
The Canadian Press, quoting internal briefings prepared for the new Liberal government, reported in March that the total lifetime price tag could hit $104 billion, a figure stretched out over three decades that would include long-term maintenance, as well as the cost of the crew, fuel and other expenses.
Halifax-based frigate HMCS Montreal is one of the navy vessels slated to eventually be replaced in the federal government’s shipbuilding program. (Adrian Wyld/Canadian Press)
The solution for the Liberals is to stop talking about the numbers until they have signed agreements.
“It makes no sense to establish a budget today for a project that will not start for years, even a decade,” said Foote, who noted that the previous government never updated its initial shipbuilding cost estimates to reflect changes in material cost, the exchange rate and inflation.
All of this has led to a skewed picture, in her estimation.
“This is the main reason why projects appeared to be vastly over budget when actual contracts were signed,” said Foote.
Overcharging by contractors
The Liberals are developing a new costing method and promised Thursday to keep Parliament updated with regular reports and estimates.
The first retrospective of the shipbuilding plan was released Thursday along with the Defence Department’s annual list of anticipated capital purchases.
When the shipbuilding strategy was launched, federal officials promised that in exchange for ditching the competitive process they would conduct rigorous oversight to make sure taxpayers were not getting taken for a ride.
But a recent internal report prepared for Public Services and Procurement Canada said the federal government was routinely overcharged by contractors, to the tune of tens of millions of dollars in practices that have been going on for decades.
The Liberals have been warned that years of cutbacks have left the purchasing department without the staff to oversee such complex programs, and Foote announced Thursday that the number of employees working on the shipbuilding strategy will double, possibly triple.
Kevin McCoy, the president of Irving Shipbuilding, said that sticker shock among the public is always a concern, but promised the federal government will pay a fair price for its warships.
“What we have said consistently to the government of Canada is: Canada should pay no more for their warships than other nations with like-minded aspirations,” McCoy told CBC News.
“And that is really what is the focus of this strategy, which we endorse.”
Single Class Surface Combatant Project
The Single Class Surface Combatant Project, or Canadian Surface Combatant project, is the name given by naval observers for the Royal Canadian Navy procurement project that will replace the Iroquois class and Halifax class warships with up to 15 new ships beginning in about the mid-2020s as part of the National Shipbuilding Procurement Strategy.
The replacement vessels will be somewhat larger than the existing Halifax class, and presumably provide a wide-area air defence capability, anti-submarine warfare capability, as well as anti-shipping capability. The design of these ships is currently underway and both the total number of ships and their capability will be dependent on the budget that is allocated to the project. The new Liberal government, elected in October 2015, is undertaking a defence policy review which will include addressing these issues. Some analysts believe the Single Class Surface Combatant may “closely resemble” the Danish Iver Huitfeldt class of frigate. The ships might also be based on the FREMM multipurpose frigate design, with Canadian modifications. However, the final design and configuration of the vessels will be determined through the defence policy review. @wikiwand.com
Iroquois-class guided-missile destroyer
The Canadian navy Iroquois-class guided-missile destroyer HMCS Algonquin (DDG 283)
Ordered in 1968 as anti-submarine destroyers, the four vessels of the Iroquois class comprise Iroquois, Huron, Athabaskan and Algonquin and are a revised version of the eight Tartar SAM-equipped Tribal class of general-purpose frigates cancelled in 1963. They retain the same hull design, dimensions and basic characteristics of the Tribals but have enhanced ASW features such as three sonars, a helicopter flight deck and hangarage for two licence-built CH-124A Sea King ASW helicopters: these can also carry 12.7-mm machine-guns and ESM/FLIR equipment in place of ASW gear. The weapons and sensor fit was a mixed bag with an Italian 127-mm OTO Melara Compact gun, two four-rail launchers for the US Sea Sparrow SAM system that retracted into a deckhouse in the forward superstructure, Dutch and US electronics and a British ASW mortar. The last was the ubiquitous triple-barreled Mk 10 Limbo weapon.
TRUMP (TRibal class Update and Modernization Project) in 1986 the ships were revised with a Mk 41 vertical-launch system (with 29 Standard SM-2MR medium/long-range SAMs in place of the Limbo installation). The electronics were also improved with more modern, capable systems, the process yielding ships with much enhanced anti-aircraft and anti-submarine capabilities. The original main gun was replaced by a 76-mm Super Rapid weapon from the same manufacturer and is complemented by a single Mk 15 Phalanx installation.
|Dimensions and displacement|
|Displacement, full load||5 300 tons|
|Propulsion and speed|
|Range||8 370 km at 15 knots|
|Propulsion||COGOG with 2 x Pratt & Whitney FT4A2 gas turbines delivering 50 000 shp and 2 x Allison 570-KF gas turbines delivering 12 700 shp, both to two shafts|
|Helicopters||2 x CH-124A Sea King|
|Artillery||76-mm Super Rapid DP gun, 1 x 20-mm Mk.15 Phalanx CIWS|
|Missiles||1 x Mk.41 vertical launch system for 29 Standard SM-2MR Block III SAMs,|
|Torpedoes||2 x tripple Mk.32 324-mm tubes for 12 Mk.46 anti-submarine torpedoes|
The Canadian navy Halifax-class frigate HMCS Calgary
The Halifax-class frigate (hull designation FFH) is a class of multi-role patrol frigates that have served the Royal Canadian Navy since 1992. The class is the product of the Canadian Patrol Frigate Project, which dates to the mid-1970s.
HMCS Halifax was the first of an eventual twelve Canadian-designed and -built vessels which combine traditional anti-submarine capabilities with systems to deal with surface and air threats as well. The Halifax class are the work horses of the Royal Canadian Navy (RCN) which deploys them extensively in task groups. All ships of the class are named after major Canadian cities, with at least one from each province (Ontario and Quebec, the most populous provinces, have two each). They are sometimes referred to as City-class frigates, a term left over from the preconstruction period when names had not been assigned to the hulls.
In 2007 the Canadian government announced a planned refit of the Halifax class which will be known as the Halifax Class Modernization Project (HCMP) or alternately as the Frigate Life Extension (FELEX). In November 2008, a Lockheed Martin Canada -led team including Saab AB, Elisra, IBM Canada, CAE Professional Services, L-3 Electronic Systems and xwave, was awarded the contract. The Halifax-class modernization program is currently underway and is scheduled to complete the refit and modernization of all 12 ships of the class by 2018.
|HMCS Calgary in July 2014|
|Type:||Guided missile frigate|
|Displacement:||4,770 t (4,770.0 t)|
|Length:||134.1 m (439.96 ft)|
|Beam:||16.4 m (53.81 ft)|
|Draught:||4.9 m (16.08 ft)|
·2 × General Electric LM2500gas turbines, generating 47,500 shp (35,400 kW)
·1 × SEMT Pielstick Diesel engine, generating 8,800 shp (6,600 kW)
·1 × Royal de Schelde cross-connect gearbox
·2 × Escher Wyss controllable pitch propellers
·4 × 850kW AEG Telefunkengenerators
|Speed:||29 kn (54 km/h; 33 mph)|
|Range:||9,500 nmi (17,600 km; 10,900 mi)|
|Armament:||·8 × MK 141 Harpoon SSM
·16 × Evolved Sea Sparrow Missile SAM/SSM
·1 × Phalanx CIWS (Mk 15 Mod 21 (Block 1B))
·24 × Mk 46 torpedoes Mod 5
|Aircraft carried:||1 × CH-124 Sea King or 1 ×CH-148 Cyclone helicopter|
See related articles:
Firms To Compete for Canadian Ship Program – Defense News May 10, 2015