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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

  • Government of Canada awards contract for in-service support for Halifax-class combat systems

    November 9, 2020 | Local, Naval

    Government of Canada awards contract for in-service support for Halifax-class combat systems

    NEWS PROVIDED BY Public Services and Procurement Canada Nov 06, 2020, 11:46 ET GATINEAU, QC, Nov. 6, 2020 /CNW/ - The Government of Canada is committed to providing the members of the Royal Canadian Navy (RCN) with safe and effective vessels required to protect Canadian sovereignty, while creating jobs and generating significant economic benefits for communities across Canada. Following an open and competitive process, the Honourable Anita Anand, Minister of Public Services and Procurement, and the Honourable Harjit S. Sajjan, Minister of National Defence, announced that the Government of Canada has awarded a contract to General Dynamics Mission Systems–Canada, from Ottawa, Ontario, for in-service support on 6 Halifax-class combat systems (HCCS). The HCCS are an integral component of the entire fleet of Halifax-class ships and will require in-service support until the arrival of the Canadian Surface Combatants. This initial contract is valued at approximately $182 million (including taxes) over 6 years, and will maintain up to 106 jobs. The Halifax-class frigates monitor and control Canadian waters, defend Canada's sovereignty, facilitate large-scale search and rescue activities, and provide emergency assistance when needed. Introduced into service in the 1990s, the Canadian-built Halifax-class frigates were recently modernized to remain operationally effective and relevant until the Canadian Surface Combatants enter into service. The Canadian Surface Combatants will replace the Halifax-class frigates and the retired Iroquois-class destroyers. With them, the RCN will have modern and capable ships to monitor and defend Canada's waters, to continue to contribute to international naval operations for decades to come and to rapidly deploy credible naval forces worldwide, on short notice. Quotes "The Government of Canada remains firmly committed to continue delivering the modern equipment that the members of the Royal Canadian Navy need when performing their important duty on Canada's waterways. Moreover, this in-service support is another example of how the government helps tomaintain our existing Royal Canadian Navy fleet, while creating jobs, and generating good economic opportunities for businesses and Canadians." The Honourable Anita Anand Minister of Public Services and Procurement "These systems will provide our women and men in uniform with the equipment they need to do the important job we ask of them. The six systems that will be maintained under this contract will help our sailors detect, track, and identify threats to their ship, which will give them greater protection as they conduct their mission in the service of our nation's interests. I am proud to see Canadian companies contributing to our Canadian military excellence at home and abroad." The Honourable Harjit S. Sajjan Minister of National Defence "Through this procurement, our Government is supporting economic growth as we navigate through the COVID-19 pandemic. This contract will lead to opportunities for Canadian suppliers, investments in skills development, training and research, and will generate export opportunities for Canadian businesses." The Honourable Navdeep Bains Minister of Innovation, Science and Industry Quick facts Through the National Shipbuilding Strategy, the Government of Canada successfully modernized the RCN's fleet of 12 Halifax class frigates to ensure they continue to meet evolving operational needs. As part of this modernization project, various combat systems onboard the frigates were retrofitted through the Halifax-Class Modernization/Frigate Life Extension Combat System Integration Design and Build contract. These include, but are not limited to, detection and search radars, navigation radars, fire control systems (targeting radars), and target identification systems. The initial contract is valued at approximately $182 million. Its amount may increase over the next 6 years as work progresses, depending on whether more maintenance is required. The total value for up to 12 years will be determined if and when options to extend the contract are exercised. The Industrial and Technological Benefits Policy, including the Value Proposition, applies to this procurement. The frigates operate with and integrate into the United Nations, the North Atlantic Treaty Organization and coalitions of allied states in support of international peace and security operations. In July and August 2019, Irving Shipbuilding Inc., Seaspan Victoria Shipyards Limited, and Chantier Davie were each awarded a $500-million contract to carry out maintenance work on the first group of Canada's Halifax-class frigates. Associated links Link to Buy and sell Halifax-class Modernization/Frigate Life Extension Halifax-class frigates: Maintaining Canada's federal fleet of combat vessels Industrial and technological benefits Follow us on Twitter Follow us on Facebook SOURCE Public Services and Procurement Canada For further information: Cecely Roy, Press Secretary, Office of the Honourable Anita Anand, 343-549-7293, cecely.roy@canada.ca ; Media Relations, Public Services and Procurement Canada, 819-420-5501, media@pwgsc-tpsgc.gc.ca Related Links www.tpsgc-pwgsc.gc.ca https://www.newswire.ca/news-releases/government-of-canada-awards-contract-for-in-service-support-for-halifax-class-combat-systems-844143601.html

  • Silicon Valley-style innovation clusters to include aviation companies

    February 23, 2018 | Local, Aerospace

    Silicon Valley-style innovation clusters to include aviation companies

    Canada's aviation and aerospace industries will play a key role in the creation of innovation superclusters similar to Silicon Valley. Air Canada and PAL Aerospace are among hundreds of companies involved in creating five superclusters across Canada, with a $950 million investment from the federal government that will be matched dollar-for-dollar by the private sector. “We think this is important for Canada,” said Catherine Dyer, chief information officer for Air Canada, in an interview with Skies. “We really view ourselves as a leader in this space, and to build capability in this part of the country, and more broadly for Canada, are two things that we think go very nicely together.” Air Canada will be part of the Quebec-based SCALE.AI supercluster, which aims to use artificial intelligence and robotics to build intelligent supply chains, making Canada a world-leading exporter. “Our hope around this is that it will help us become more efficient in how we deal in our operations excellence program, as well as in our cargo business,” said Dyer. “But from my perspective it has got probably further-reaching opportunities in terms of how we enable employees and customers in creating that Air Canada experience that we're all very focused on. “So most immediately it's going to be focused on the logistics components of our business. But we do believe that artificial intelligence, more generally, has got some fairly broad-reaching implications for our company.” Air Canada was a key player in creating the supercluster submission in late 2017 and sees its involvement as a step toward becoming a global leader in supply chain management. SCALE.AI includes 120 partners across Canada from a wide range of industries, including transportation, telecommunications, mining, food, and oil and gas. “We [Air Canada] would be looking at how we could use artificial intelligence to help us see things maybe we don't see when we're looking at it with human brains,” said Dyer. “That really is the purpose of artificial intelligence, is to take the collective wisdom of many people, and the computing power of machines, and apply it to the business problems that we have today.” Air Canada plans to use artificial intelligence to develop new tools that allow it to better manage cargo capacity, resulting in better customer service. “Timeliness is essential when shipping fresh products and employees will have better tools to forecast the need for space in temperature controlled facilities, facilitate tracking and ensure timely delivery,” said Isabelle Arthur, senior media relations manager for Air Canada, in a statement. “Air Canada already uses artificial intelligence in revenue management, to forecast aircraft maintenance, in marketing, in elevating customer experience and communications by partnering with government, universities in Toronto and Montreal to help Canada retake a leadership position.” PAL Aerospace will be part of the Ocean Supercluster in Atlantic Canada, which plans to use innovation to improve competitiveness in ocean-based industries like fisheries, oil and gas, and clean energy. The company will design and execute projects that encourage collaboration with other supercluster members, small and medium-sized enterprises (SMEs) and academic institutions, said Derek F. Scott, vice-president of program development for PAL Aerospace, in a statement to Skies. “We aim to use supercluster initiatives to advance our digitalization objectives in our modern ocean surveillance programs such as the ice management services we continue to provide the oil and gas industry today,” he said. “In addition, we intend to use the program to advance opportunities to strategically insert other entities such as SME companies into our solution and supply chain for our domestic and international customers.” He noted Canada has the longest coastline in the world, which spans some of the most challenging ocean environments, including the North Atlantic. “Innovation is a solution to challenge, and Canada has an ocean of opportunity to drive innovation into technologies and capabilities that contribute to Canada's economic growth, sustainability and export growth,” said Scott “PAL Aerospace is a leading example of how ocean innovation contributed to its success and the Ocean Supercluster initiative will now give us an opportunity to capitalize on that strength and create even more success for PAL Aerospace and for those companies and entities that work with us on the program.” Along with the SCALE.AI and Ocean superclusters, three others are planned: The Advanced Manufacturing Supercluster in Ontario, which aims to connect Canada's technology strengths to its manufacturing industry; The Protein Industries Supercluster, based in the Prairies, which intends to make Canada a leading source for plant proteins; and The Digital Technology Supercluster, based in British Columbia, which will use big data and digital technologies to unlock new potential in sectors like healthcare, forestry and manufacturing. More than 450 businesses, 60 post-secondary institutions and 180 other participants are involved in the five supercluster initiatives, according to a government news release. It's expected the superclusters will create 50,000 middle-class jobs and grow Canada's economy by $50 billion over the next 10 years. https://www.skiesmag.com/news/silicon-valley-style-innovation-clusters-include-aviation-companies/

  • How the U.S. election outcome could affect Canada's environment and energy future

    October 7, 2020 | Local, Aerospace, Naval, Land, C4ISR, Security, Other Defence

    How the U.S. election outcome could affect Canada's environment and energy future

    Alexander Panetta Biden, Trump have deep differences — and each could significantly impact Canada This story is part of a five-part series looking at how the policies of the two U.S. presidential candidates, Joe Biden and Donald Trump, differ when it comes to the major issues of interest to Canada, including energy, defence, trade and immigration. The old truism that elections have consequences is doubly apt for the United States, a country whose politics reach beyond its borders. It's certainly so for Canada. Specific policy issues in a U.S. election hold particular stakes for Canada, including energy and the environment, national defence, the border and migration and U.S. relations with China. In advance of the U.S. presidential election on Nov. 3, CBC will run stories on these five issues, and how they might play out if the winner is current President Donald Trump or his Democratic challenger, Joe Biden. Our first instalment examines one of the most striking differences between them: energy and the environment. If Biden wins Biden drew attention in Canada for promising to cancel the Keystone XL pipeline from Alberta, then doubling down on it. Rory Johnston, an energy analyst at Price Street in Toronto, said a president clearly has the legal power to revoke a permit. What's not clear to him is whether Biden would, in precarious economic times, actually cancel a big project, which would cost jobs and anger construction unions. The Democratic nominee has a sweeping environmental platform that goes far beyond that one pipeline pledge. For starters, he said he'd re-join the Paris climate accord on Day 1 of his presidency. Then he would convene, shame and potentially punish other countries that slack on their carbon emissions commitments. Within 100 days, Biden said he'd hold a global climate summit to push countries to join the U.S. in toughening their climate objectives. He said he would also demand a worldwide ban on government subsidies for fossil fuels. INTERACTIVE Will Biden or Trump be the U.S. president? These states will decide Biden also intends to grade countries on their performance. He promises a global climate change report, similar to the State Department's annual report on human rights and human trafficking. It would rank countries' performance in meeting their Paris commitments. If that doesn't work, he's threatening to wield the stick of trade tariffs. Biden said he wants to impose what he calls "carbon-adjustment fees," or perhaps quotas, on carbon-intensive products from countries that fail to meet climate and environmental obligations. It's not clear how many countries Biden would target. "We can no longer separate trade policy from our climate objectives," says Biden's platform. Canada is projecting a lowering of emissions but not nearly by enough to meet its Paris commitment. Implementing such a tariff could be tricky. To become embedded in U.S. law, it would have to get through Congress — and receiving the 51 to 60 per cent of votes required in the Senate would be a tall order. Some trade analysts believe such a tactic would also be illegal protectionism under international trade law unless the U.S. imposed a similar carbon tax domestically — also a tall order. However, other analysts say there's one tool Biden could use, which has become famous in the Trump era: declare carbon emissions a national security matter and apply the same trade weapon the current president used against foreign steel and aluminum. Any regulatory moves could face another hurdle in a more hostile Supreme Court. Speaking of the environment and trade, Biden is proposing a massive, $2 trillion green-infrastructure plan aimed at new transit, vehicles and a carbon-free power grid by 2035. Biden says the construction would be done by U.S. firms under Buy American rules. He would also re-establish policies from the Obama era that Canada has signed onto, from methane and auto regulations to an Arctic drilling ban. Gerald Butts, who was a former senior aide to Prime Minister Justin Trudeau and worked on some of those agreements with the U.S, said Biden's climate policies go far beyond Obama's and reflect a growing recognition of the environmental threat. "Biden's plan would have been unthinkable for a presidential nominee for a major party even one cycle ago," said Butts, now vice-chair of the political risk consultancy Eurasia Group. Bob Deans, a spokesman for the political action committee of the Washington-based Natural Resources Defence Council, called climate change a defining issue for this election. "The American people are facing a stark choice in this election. Two completely different energy futures," Deans said. "We need to be reducing our reliance on oil and gas, not locking future generations into this climate nightmare." If Trump wins In his 2016 platform, Trump promised more oil drilling, more pipelines — and less regulation. He delivered that on several fronts. Just last month he announced a border permit for a multi-purpose rail project that, if built, could eventually ship Canadian oil through Alaska. Trump ditched a number of Obama's climate rules, and left the Paris Accord. (His pullout from the Paris agreement officially goes into effect the day after this year's election.) Trump hasn't published a platform for the next four years. His campaign website simply lists things he's done to slash regulations and promote fossil-fuel development. He's promising no major policy changes. "We would continue what we're doing," Trump told The New York Times, when asked about his overall second-term plans. As far as Canada is concerned, that means a continued commitment to the still-unbuilt Keystone XL pipeline, which would carry nearly one-fifth of the oil Canada exports to the U.S. each day. Johnston said that pipeline isn't, on its own, a make-or-break issue for the Canadian oilpatch, but it would help, he said. He said the oilsands likely need two pipelines completed over the next few years out of the three major projects underway — Trans Mountain to the Pacific Coast, the Line 3 expansion to the Great Lakes and Keystone XL to the Gulf of Mexico — to avoid the type of transportation bottlenecks that have previously devastated Canadian oil prices. "It's never ideal to be just at the limit of your [transportation] capacity," Johnston said. Even with the current president's support, Keystone XL faces challenges. The ground has been cleared for only 100 kilometres of pipe to be laid inside Canada. A border-crossing segment has been built, and 17 pump stations out of an eventual 36 along the route are under construction. That leaves the project about two years, many hundreds of kilometres and some legal and regulatory fights shy of completion. A Supreme Court decision this summer allowed a Montana ruling to stand, which forced the pipeline company to get permits for crossing waterways. Permit hearings were scheduled for late September in Montana and North Dakota. It's an uncertain moment for oil — and the financial stakes for Canada are considerable. It's Canada's top export to the U.S., in dollar figures; Canadian oil accounts for about half of U.S. oil imports, following years of growth. But energy giant BP projects that global oil demand has peaked. The U.S. Energy Information Administration projects U.S. imports will flatten out and even decline a bit. That's happening as several automakers say they will keep building vehicles to the stricter emissions standards set in California — standards that are backed by Ottawa. California, the largest U.S. vehicle market, recently announced it planned to ban sales of gasoline-powered cars by 2035. Some of these changes in energy markets will proceed regardless of who's president. Johnston's own projection? Barring a sudden change in the market, Canadian oil production will grow a bit for two to five years, then plateau at similar levels for decades. https://www.cbc.ca/news/world/us-issues-canada-environment-1.5746288

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