DAVID PUGLIESE, OTTAWA CITIZEN
Updated: July 2, 2020
The defence department denies it ever misjudged the cost of a project to buy new naval ships even though the price tag jumped from $2.3 billion to $4.1 billion in less than two years.
And DND admits the cost to taxpayers for the vessels could rise even more in the coming years.
The Liberal government acknowledged on June 15 that the cost of the project to buy two Joint Support Ships has increased to $4.1 billion. The vessels are needed by the Royal Canadian Navy as they would provide fuel, ammunition and other supplies to warships at sea.
But the $4.1 billion price tag is just the latest in a series of steadily increasing cost figures. In June 2018, the government acknowledged the cost of the ship project had, at that time, jumped from $2.3 billion to $3.4 billion.
But Seaspan, the Vancouver shipyard that is to build the vessels, provided a new set of numbers in October 2019 and by February 2020 government approval was received for a new budget of $4.1 billion, DND confirmed in an email to this newspaper. “As with any large-scale procurement project, all project values are best estimates that are based on the data and figures available at the time,” the email added.
There has been no misjudging of costs on the JSS project, the department noted.
In 2013, the Parliamentary Budget Officer questioned DND's JSS cost estimates and warned that the project would require $4.13 billion.
DND stated in its email to this newspaper that taxpayers can be assured they are getting value for money on JSS and that those working on the shipbuilding project in both the department and Public Services and Procurement Canada are top notch.
“The Department of National Defence and the Canadian Armed Forces, along with our counterparts at PSPC, have a first-rate cadre of experienced, professional procurement officers, subject matter experts and financial administrators who take great pride in their work and in their accomplishments,” DND said in an email. “Our team has – and will continue to – ensure that Canadians get value from their investments in the Armed Forces.”
But DND also acknowledged costs could continue to rise.
“While the total project budget includes contingency funding for these types of reasons, some events may happen unexpectedly and thus excel what the contingency funding allowed for,” the DND email noted. “As a result, it's possible that cost estimates may change for a variety of reasons that can't be controlled or predicted.”
Conservative MP Kelly McCauley said DND's claim that project costs weren't misjudged is “BS.”
“I don't even have faith in their latest cost of $4.1 billion,” added McCauley, who is behind the effort to get the Parliamentary Budget Officer to do a new report looking at JSS. “It's going to go up.”
McCauley said the JSS design is based on the Berlin-class, an existing and proven German Navy ship. But he noted that DND and PSPC keep making changes to the ship, driving up costs and adding delays.
DND noted that, “it's not uncommon for the cost estimate to change throughout the duration of a project, especially for a first-of-class ship.”
DND also pointed out the construction contract with Seaspan may be changed throughout the duration of the project but added that does not necessarily mean the project budget will increase.
The Standing Committee on Government Operations and Estimates recently passed McCauley's motion to request the Office of the Parliamentary Budget Officer undertake a costing analysis of building the JSS in Canada as well as the leasing of Asterix, a commercial ship converted into a supply vessel for the Royal Canadian Navy to use. The PBO report will be presented to the committee by Oct. 15.
The Asterix, converted by Davie shipyards in Quebec, was at the centre of the two-year legal battle Vice Adm. Mark Norman found himself in when the RCMP charged him with breach of trust. The police force alleged Norman had tipped off Davie that the Liberal government was planning to delay its Asterix deal.
The legal case against Norman collapsed in 2019, forcing the federal government to pay the naval officer an undisclosed financial settlement as well as prompting questions about whether the charge had been politically motivated.
The Asterix turned out to be a procurement success and since 2018 has been used to refuel and resupply Royal Canadian Navy and allied warships.
The Liberal government tried to derail the Asterix project shortly after being elected in the fall of 2015. The move came after cabinet ministers, including Scott Brison and defence minister Harjit Sajjan, received a letter from the Irving family with a complaint that the Irving proposal for a similar supply ship was not examined properly. Irving has denied any suggestion it was involved in political meddling.
But after receiving the letter from the Irvings, the Liberals decided to put Asterix on hold. The government, however, had to back off that plan after news of its decision leaked out to the news media. Shortly after, the RCMP began investigating Norman.
October 6, 2022 | Local, Land
The country's top military commander said Thursday that the Canadian Armed Forces' (CAF) problems with recruiting and retaining soldiers, sailors and air crew are going are get worse before they get better.
May 31, 2019 | Local, Aerospace
The Canadian Press, Lee Berthiaume OTTAWA — The federal procurement minister is defending the government's plan to loosen procurement rules for the F-35 stealth fighter in the face of questions and concerns from companies that make competing jets. Speaking at the annual Cansec arms-trade show Thursday, Public Procurement Minister Carla Qualtrough insisted the move is needed for a robust competition to replace Canada's aging CF-18s. That competition is expected to result in a $19-billion deal for a new fleet of fighters. “The innovations and modifications we are adopting will enable participation from all eligible suppliers while applying the same rules to everyone on a level playing field,” Qualtrough said during a breakfast speech. “This is a complex process. As complex as any the federal government has ever conducted.” The government's plan involves lifting a long-standing requirement that companies legally commit to putting some of their contract money back into Canadian industry if they win a defence competition. The proposal followed U.S. complaints that the requirement violated an agreement Canada signed in 2006 to become one of nine partner countries in the development of the F-35, which is being built by Lockheed Martin. While partner countries can buy F-35s at a discount, they must also contribute money to the planes' development — in Canada's case, more than $500 million to date. Partners are also forbidden from requiring economic benefits as a condition for buying the plane. Companies in each partner country instead compete for contracts associated with the aircraft, with Canadian industry having won $1.5 billion so far. But representatives from Boeing and Saab, which make the Super Hornet and Gripen fighter jets, respectively, said Wednesday the previous policy worked well in ensuring defence contracts benefit Canada economically. And they warned abandoning the requirement that bidders commit to reinvesting in Canada could hurt the country's aerospace industry, which would in turn make it more difficult for the military to support its new jets. Industry sources say representatives for the Eurofighter Typhoon, the fourth aircraft expected in the competition aside from the F-35, Super Hornet and Gripen, have expressed similar sentiments. Qualtrough, offering the government's most extensive defence of the plan to date, insisted that despite letting bidders choose not to make contractual obligations to re-invest, the government is committed to ensuring the largest economic benefits possible. Under the new process, bidders can still guarantee that they will re-invest back into Canada if their jet wins the competition and get full points — which is the likely approach for Boeing, Saab and Eurofighter. Those like Lockheed Martin that can't make such a commitment will be penalized and asked to establish “industrial targets,” lay out plans for achieving those targets and sign a non-binding agreement promising to make all efforts to achieve them. “No one should misunderstand this: our government remains committed as strongly as ever to the (industrial benefit) policy in this competition,” Qualtrough said during her speech. “We're getting the fighter jet for the RCAF's needs, at the right price, and with the right economic benefits for Canadians.” The government has said it plans to launch the long-overdue formal competition to select Canada's next fighter jet in July, nearly four years after the Liberals were elected in 2015 on a promise to hold an immediate competition. Companies are expected to submit their bids next winter, with a formal contract signed in 2022. The first plane won't arrive until at least 2025. –Follow @leeberthiaume on Twitter https://nationalpost.com/pmn/news-pmn/canada-news-pmn/procurement-minister-defends-rule-change-for-f-35-as-necessary-for-competition
December 7, 2018 | Local, C4ISR
Project could lead to a new polar radar system to monitor the Canadian north CALGARY, Alberta, Dec. 4, 2018 /CNW/ -- Raytheon Canada Limited (RCL), a subsidiary of Raytheon Company (NYSE:RTN), will design, build and install two over-the-horizon radar sites in Canada's polar region to determine what effects, if any, the Aurora Borealis has on target detection along the Canadian north. These two contracts, totaling $30 million, resulted from a competitive solicitation posted on BuyandSell.gc.ca by Public Services & Procurement Canada on behalf of the Department of National Defence. These contracts will enable Defence Research and Development Canada to conduct a feasibility study of using sky-wave Over-The-Horizon Radar technology, in the arctic, to determine the effect of the Aurora Borealis on target detection beyond line-of-site. Working with Raytheon Intelligence, Information and Services, RCL will build two test sites to gauge how the Northern Lights may impact operations. Should those tests prove successful, Canada may decide to build additional radar sites to monitor its increasingly accessible arctic waterways. "Raytheon built and operates a similar radar system in the U.S. which has been key to defending America's borders," said David Appel, director for mission systems at Raytheon IIS. "A full over-the-horizon radar will monitor the arctic, as those waters have become more accessible to shipping traffic." Raytheon also will work with local companies to design and build the system. "We will be working with Canadian suppliers to secure the Canadian north," said Terry Manion, RCL vice president and general manager. "We understand the environment and can provide crucial technologies which may lead to significant long term economic growth." About Raytheon Canada Limited Raytheon Canada Limited (RCL) is a subsidiary of Raytheon Company. RCL is a leader in high technology solutions, engineering services, surveillance and navigation systems including air traffic control radars, highway traffic management systems, maritime surveillance radars and systems, and precision optics. About Raytheon Raytheon Company, with 2017 sales of $25 billion and 64,000 employees, is a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. With a history of innovation spanning 96 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I™ products and services, sensing, effects, and mission support for customers in more than 80 countries. Raytheon is headquartered in Waltham, Mass. Follow us on Twitter. Media Contact Chris Johnson +1-571-250-3418 Chris.Johnson@raytheon.com SOURCE Raytheon Company https://www.newswire.ca/news-releases/raytheon-building-canadian-radar-to-test-effects-of-aurora-borealis-701865451.html