Defence Watch: New dates set for budget watchdog's reports on major naval projects

David Pugliese,

Two reports by the parliamentary budget officer looking into the costs of major Canadian naval equipment projects have been delayed.

The Commons Standing Committee on Government Operations and Estimates had unanimously passed a motion in June to request the Office of the Parliamentary Budget Officer undertake a costing analysis of the Royal Canadian Navy's new joint support ships as well as the leasing of the Asterix supply ship from a private firm. The PBO study was to also look at the cost of building the joint support ships in Canada at Seaspan shipyard in Vancouver. The committee asked that the PBO report be provided by Oct. 15.

Another motion from the committee, passed later in June, asked the PBO to examine the $60 billion price tag of Canada's proposed new fleet of warships – the Canadian Surface Combatant or CSC. Parliamentary Budget Officer Yves Giroux was tasked to investigate the cost of the CSC as well as examine the cost of two other types of warships: the FREMM and the Type 31. That study was supposed to be presented to the committee by Oct. 22.

But those original motions from the committee expired when Parliament was prorogued. So new motions have to be provided to the PBO.

The Commons committee passed a new motion on Oct. 19 on the Asterix and Joint Support Ship analysis. That analysis is to be delivered by Nov. 30, PBO spokeswoman Sloane Mask told this newspaper. A date for the analysis to be made public has not yet been determined.

“Currently, we are also in the process of confirming the revised timelines for the CSC report,” she added.There is particular interest in the defence community about what the PBO determines is the current price-tag of the Canadian Surface Combatant project.

Last year the Liberal government signed an initial deal on CSC that is expected to lead to the eventual construction of 15 warships in the largest single government purchase in Canadian history. Lockheed Martin offered Canada the Type 26 warship designed by BAE in the United Kingdom. Irving is the prime contractor and the vessels will be built at its east coast shipyard.

Construction of the first ship isn't expected to begin until the early 2020s.

But the Canadian Surface Combatant program has already faced rising costs. In 2008, the then-Conservative government estimated the project would cost roughly $26 billion. But in 2015, Vice-Admiral Mark Norman, then commander of the navy, voiced concern that taxpayers may not have been given all the information about the program, publicly predicting the cost for the warships alone would approach $30 billion.

The overall project is currently estimated to cost around $60 billion. “Approximately one-half of the CSC build cost is comprised of labour in the (Irving) Halifax yard and materials,” according to federal government documents obtained by this newspaper through the Access to Information law.

But some members of parliament and industry representatives have privately questioned whether the CSC price-tag is too high. There have been suggestions that Canada could dump the Type 26 design and go for a cheaper alternative since the CSC project is still in early stages and costs to withdraw could be covered by savings from a less expensive ship.

Canada had already been pitched on alternatives. In December 2017, the French and Italian governments proposed a plan in which Canada could build the FREMM frigate at Irving. Those governments offered to guarantee the cost of the 15 ships at a fixed $30 billion, but that was rejected by the Canadian government.

The other type of warship the PBO will look at is the Type 31, which is to be built for the Royal Navy in the United Kingdom. Those ships are to cost less than $500 million each.

In 2017, then Parliamentary Budget Officer Jean-Denis Fréchette estimated the CSC program would cost $61.82 billion.

The entry of the BAE Type 26 warship in the Canadian competition was controversial from the start and sparked complaints that the procurement process was skewed to favour that vessel. Previously the Liberal government had said only mature existing designs or designs of ships already in service with other navies would be accepted on the grounds they could be built faster and would be less risky. Unproven designs can face challenges if problems are found once the vessel is in the water and operating.

But the criteria was changed and the government and Irving accepted the BAE design, though at the time it existed only on the drawing board. Construction began on the first Type 26 frigate in the summer of 2017 for Britain's Royal Navy.

https://www.thetelegram.com/news/canada/defence-watch-new-dates-set-for-budget-watchdogs-reports-on-major-naval-projects-512897