Back to news

June 16, 2020 | Local, Naval

Ottawa awards $2.4B contract to finish building navy's supply ships

The decision signals the project won't be delayed by pandemic-driven deficit spending

Murray Brewster · CBC News · Posted: Jun 15, 2020 2:45 PM

The Liberal government has awarded a $2.4 billion contract to finish the overall construction of the navy's long-awaited supply ships.

Today's announcement moves forward a Joint Support Ship program over a decade-and-a-half in the making. It also appears to signal the federal government remains committed to its multi-billion shipbuilding program despite record levels of pandemic-driven federal deficit spending.

The contract, with Seaspan's Vancouver Shipyards, is for the construction of two replenishment vessels, Public Services and Procurement Canada said in a statement.

Now that the construction deal has been signed, the overall price tag of the program — including design — is expected to be $4.1 billion, up from an earlier estimate of $3.4 billion.

Seven years ago, the Parliamentary Budget Office (PBO) predicted the cost would end up where it has — an estimate that was roundly criticized and dismissed by the Conservatives, who were in power at the time.

"The government announcement today did not have a whole ton of detail, so it's hard to do an exact comparison, but I certainly think that PBO estimate from a long time ago has held up pretty well over time," said Dave Perry, an expert in defence procurement and vice president of the Canadian Global Affairs Institute.

The first supply ship is to be delivered in 2023, and the second vessel is supposed to arrive two years later.

The yard started construction on certain portions of the first ship in 2018, while final design work was still underway — something that alarmed and even baffled some defence and shipbuilding experts.

'Business as usual'

With the federal deficit expected to swell to over $252.1 billion because of COVID-19 relief measures, many in the defence community had been speculating that existing spending plans for the supply ships would be curtailed or scaled back.

In a statement, federal Public Services Minister Anita Anand suggested the Liberal government is committed to staying the course.

"This contract award is yet another example of our ongoing commitment to the National Shipbuilding Strategy, which is supporting a strong and sustainable marine sector in Canada," she said.

Perry said he takes it as a sign the Liberals intend to proceed with their defence construction plans in the face of fiscal and economic uncertainty.

"It is an indicator that, despite being business under some very unusual circumstances, it is still government business-as-usual under COVID," he said.

In the same government statement, Defence Minister Harjit Sajjan pointed out that an enormous amount of preparation work has been done already and he's pleased the project is moving forward.

"An impressive amount of work has already gone into the construction of these new ships, and I look forward to their arrival in the coming years." said Sajjan.

Construction during COVID-19

A senior executive at Seaspan said work to adapt the design from the original German plan (the Canadian ship is based on the German Navy's Berlin-Class replenishment vessel) was completed last year and work on the superstructure of the first Joint Support Ship — started in 2018 — has been proceeding apace, even through the pandemic.

"It is well advanced," said Amy MacLeod, the company's vice-president of corporate affairs. "We are ready to continue. We're very, very happy with the quality of the ship, the progress of the ship, the momentum that we have and the expertise we have gained."

The shipyard did not pause construction due to the pandemic — but it did have to figure out ways to carry on under strict physical distancing rules.

"We, like everybody else, had to understand how to run a business in a pandemic," said MacLeod. "We made a lot of changes on how we build our ships."

Turnstiles to enter and exit the yard were eliminated and the company went high-tech with a "heat map" that shows where everyone is working and how much space there is between individual workers.

"And where we couldn't ensure appropriate social distancing because of COVID, we stopped that work."

Perry said the gap between the construction of the two supply ships worries him to a degree. Seaspan intends to construct an ocean science vessel for the coast guard under a plan agreed to with the Liberal government in 2019.

Any delay or hiccup in the construction of that ship could mean the delivery of the second naval vessel is pushed back even further, Perry said.

Extending the navy's range

News of the contract will come as a relief to the navy.

Having replenishment ships to refuel and rearm frigates would allow the navy to deploy entire task groups to far-flung parts of the world.

"With these warships, the Royal Canadian Navy will be able to operate with even greater flexibility and endurance," said Vice-Admiral Art McDonald, commander of the navy.

"These ships will not only form part of the core of our naval task groups, they also represent a vital and strategic national asset that will enable the Navy to maintain its global reach and staying power."

A tortured history

It was 1994 when the replacement program was first discussed. The deficit-slashing years of that decade meant the plan was shelved.

Resurrected in 2004, the Liberal government of former prime minister Paul Martin hoped to have the ships in the water by 2008 to replace the three-decade-old supply ships the navy had been operating.

Faced with cost estimates well over what they had expected, the Conservative government of former prime minister Stephen Harper shelved the Liberal plan on the eve of the 2008 federal election.

More than five years later, the navy was forced to retire both aging supply ships after one of them was crippled by a devastating fire.

The absence of replenishment capability led the Harper government to lease a converted civilian supply ship from a private company, Federal Fleet Services, which operates out of the Davie Shipyard in Levis, Que.

That plan led to a political and legal scandal when the former commander of the navy, Vice-Admiral Mark Norman, was accused of leaking cabinet secrets related to the plan. The Crown withdrew the charge a year ago after a protracted pre-trial court battle.

https://www.cbc.ca/news/politics/supply-ship-navy-seaspan-1.5612770

On the same subject

  • Next defence policy must be achievable and fully funded

    July 7, 2023 | Local, Other Defence

    Next defence policy must be achievable and fully funded

    The last policy lacked the two key things necessary for implementation: it wasn't fully funded and lacked agile and timely decision-making processes. That these shortcomings exist is hardly a matter for debate. 

  • J85 Draft RFP

    November 3, 2021 | Local, Aerospace

    J85 Draft RFP

    LETTER OF INTEREST: J85 PROPULSION GROUP SUSTAINMENT (PGS) W8485-22SA02/A The Department of National Defence, Director General Aerospace Equipment Program Management, has a requirement for airworthy, cost-effective, and performance-based, support for the General Electric J85-CAN-40 Propulsion Group systems of the Royal Canadian Air Force CT114 Tutor fleet. This is a long-term requirement to the End of Life of the aircraft fleet. The intent of this LOI is to solicit market information, including availability and delivery schedule, as well as to determine industry interest in responding to a potential Request for Proposal. The RFP can be found (attached).

  • Driving job creation and innovation in Canada through defence spending

    April 23, 2018 | Local, Aerospace, Naval, Land, C4ISR, Security

    Driving job creation and innovation in Canada through defence spending

    Canada positioned to lead globally in five emerging technology areas while building on its strengths April 23, 2018, Ottawa Canada has a strong and innovative defence industry with over 650 companies that employ more than 60,000 Canadians. One way the Government of Canada supports this industry is the Industrial and Technological Benefits (ITB) Policy, which requires that for every dollar it spends on big defence purchases, the winning contractor must put a dollar back into Canada's economy. In the past 30 years, the ITB Policy has generated investments of $30 billion in Canada's economy, and generates around 40,000 jobs annually. Through Canada's defence policy, Strong Secure, Engaged, defence purchases are being used to unlock billions of dollars in economic benefits and create middle-class jobs. To maximize these opportunities, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, today announced that the government will use the ITB Policy to motivate defence contractors to invest in Key Industrial Capabilities (KIC). These are five areas of Canadian industrial strength in emerging technologies, which have the potential to grow quickly, and 11 established industrial capabilities where Canada is globally competitive or where domestic capacity is essential to national security: Emerging technologies Advanced materials Artificial intelligence Cyber resilience Remotely piloted systems and autonomous technologies Space systems Leading competencies and critical industrial services Aerospace systems and components Armour Defence systems integration Electro-optical and infrared systems Ground vehicle solutions In-service support Marine ship-borne mission and platform systems Munitions Shipbuilding, design and engineering services Sonar and acoustic systems Training and simulation Key Industrial Capabilities align with the government's Innovation and Skills Plan by supporting the development of skills and fostering innovation in Canada's defence sector. Quotes “Our defence industry asked for a list of Key Industrial Capabilities, and we delivered. As a result of promoting investment in areas with potential for rapid growth, our armed forces will be better equipped, we will have a stronger economy and we will create thousands of middle-class jobs.” – The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development “Canada's defence industry welcomes Key Industrial Capabilities as an important policy tool to strengthen our government-industry partnership. KICs will incentivize strategic investments in existing and emerging defence and security capability where Canada has leading-edge and globally competitive technologies. The capabilities identified today demonstrate the world-class, innovation-led nature of the defence and security industry here in Canada.” – Christyn Cianfarani, President and CEO, Canadian Association of Defence and Security Industries “By defining its Key Industrial Capabilities, the government has provided another significant instrument for leveraging public procurements to increase investment in areas of Canadian industrial strength and opportunity. The strong aerospace presence in the KICs identified by the government today illustrates the strength of our industry, as well as its potential to continue building its competitive advantage in the years ahead. We are very pleased that the government has identified its KICs, and congratulate Minister Bains on the successful launch of this important procurement tool.” – Jim Quick, President and CEO, Aerospace Industries Association of Canada Quick facts The list of Key Industrial Capabilities will evolve over time to reflect technological advances and changing defence requirements and will be reviewed and updated on a regular basis. Adoption of these Key Industrial Capabilities was first recommended in the 2013 report, Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities (also known as “The Jenkins Report”). The defence industry is both innovative, with an R&D intensity 4.5 times the Canadian manufacturing average, and export-oriented, with 60 percent of its sales in 2016 taking place in the global market. From 1986 to 2016, the overall portfolio of ITB obligations included 137 contracts valued at $41.5 billion, with $28.3 billion in business activities already completed, $9.4 billion of activities in progress and $3.8 billion in unidentified future work opportunities. Associated links Industrial and Technological Benefits Policy Key Industrial Capabilities Defence Acquisition Guide 2016 Strong Secure, Engaged Innovation and Skills Plan Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities Contacts Follow the department on Twitter: @ISED_CA Karl W. Sasseville Press Secretary Office of the Minister of Innovation, Science and Economic Development 343-291-2500 Media Relations Innovation, Science and Economic Development Canada 343-291-1777 ic.mediarelations-mediasrelations.ic@canada.ca https://www.canada.ca/en/innovation-science-economic-development/news/2018/04/driving-job-creation-and-innovation-in-canada-through-defence-spending.html

All news