October 6, 2020 | Local, Naval

Shipbuilding industry pushes back as federal government shops for used icebreaker

Murray Brewster

The federal government is in the market for another used icebreaker that could be converted for use by the Canadian Coast Guard on the Great Lakes — much to the dismay of shipbuilders across the country.

A request for proposals to acquire an existing light icebreaker was posted on the government's procurement website in mid-September.

The timing is interesting. Federal decision-makers have known for five years that the coast guard needs such a vessel for the region.

The request for proposals — which closes at the end of October — was posted as U.S. lawmakers began to push bipartisan legislation through Congress to strengthen the U.S. Coast Guard's capacity to break ice and keep commerce flowing on the Great Lakes.

The plan for Canada to buy a used icebreaker follows a separate decision by Transport Canada to purchase a used ferry from Spain on an emergency basis.

Build them here, says industry

The Canadian Marine Industry and Shipbuilding Association (CMISA), which represents most of the marine suppliers and shipyards across the country, said both decisions represent a loss of domestic jobs and at least $250 million in federal spending that could have gone into a Canadian economy hard hit by the coronavirus.

"We're of the strong belief that vessels such as light icebreakers can and should be built in Canada," said Colin Cooke, president and chief executive officer of the shipbuilding association.

"We have the capacity. We have the skilled trades. We have the expertise, the technical expertise. We have the shipyards. And that was what the point of the National Shipbuilding Strategy was all about."

That shipbuilding strategy is supposed to direct government work to Canadian shipyards. Cooke said the plan to purchase an existing icebreaker and the deal to acquire a former Spanish ferry would both be unacceptable in normal times — but they're even less acceptable now.

"We are in a COVID time when we're looking for all sorts of ways to make sure that people are employed, that businesses are able to survive — I won't say thrive, I will say survive — through the lockdowns caused by this pandemic," he said.

Public Services and Procurement Canada was asked for comment last Thursday but did not respond.

The tender for the light icebreaker, posted online Sept. 18, describes the purchase as a necessary interim step for the coast guard to "bridge the gap while awaiting the delivery of dedicated new vessels."

Significantly, the request for proposals noted that the need for such a ship was identified five years ago — around the same time a comprehensive analysis warned that the coast guard icebreaking fleet was in dire straits and in need of immediate replacement.

"In 2015-16 the CCG identified a requirement for interim icebreaking capabilities to fill gaps in capacity resulting from ships being temporarily withdrawn from service" for refit and life extension, said the tender.

Two years ago, the Liberal government concluded a deal worth $827 million with Chantier Davie of Levis, Que., which operates the Davie shipyard, to refit three medium-sized commercial icebreakers for the coast guard.

Used icebreakers could be scarce

Tim Choi, a University of Calgary shipbuilding expert, said this recent tender suggests the federal government is operating on the flawed assumption that there is an abundance of used icebreakers on the market.

The deal with the Davie shipyard was an anomaly and federal officials "got lucky" last time because there happened to be three vessels available, he said.

Choi said he believes the federal government isn't likely to be so fortunate this time: his research suggests there may be only one light icebreaker out there that would fit in the bill — in Finland — and it's not clear the Finns are ready to part with it.

"There are very few requirements for a vessel like that outside of Canada and the United States in the Great Lakes, St. Lawrence region," said Choi. "It's not like there's a used car lot where you can just go out and buy these things."

The shipbuilding association said it can make a strong case for a fast-track build in Canada. Choi said he believes procurement services may be forced in that direction anyway because of market conditions.

In mid-September, three U.S. senators — Tammy Baldwin (D-WI), Todd Young (R-IN) and Gary Peters (D-MI) — introduced the Great Lakes Winter Commerce Act.

The bipartisan legislation is expected to codify the U.S. Coast Guard's icebreaking operations on the Great Lakes and, more importantly, increase the size of its fleet.

"Inadequate icebreaking capacity in the Great Lakes is costing us thousands of American jobs and millions in business revenue," said Baldwin in a statement. "We must boost our icebreaking capacity in the Great Lakes to keep our maritime commerce moving."

https://www-cbc-ca.cdn.ampproject.org/c/s/www.cbc.ca/amp/1.5751143

On the same subject

January 21, 2019 | Local, Land

Tens of millions paid out due to bungled Canadian Forces procurement, but government says details are secret
DAVID PUGLIESE, OTTAWA CITIZEN The case dates back to 2016 when the Canadian International Trade Tribunal ruled that the process which awarded a truck contact to Mack Defense of the U.S. was flawed Taxpayers are on the hook for potentially tens of millions of dollars after federal bureaucrats bungled the purchase of trucks for the Canadian Forces and now must make good on the lost profits for a U.S. firm. But Public Services and Procurement Canada, which oversaw the flawed defence procurement, has declined to provide details on just how much the penalties will cost the public. Defence industry representatives, however, say the penalty being paid to the U.S. company, Oshkosh, could be as high as $60 million as it has to account for lost profit on the $834-million contract as well as other expenses the firm incurred. The case dates back to 2016 when the Canadian International Trade Tribunal (CITT) ruled that the process, which awarded the truck contact to Mack Defense of the U.S., was flawed. The CITT supported the concerns of Mack's rival, Oshkosh, that there were significant issues with the evaluation of the vehicles. As a result, the tribunal called on Public Services and Procurement Canada to conduct a new evaluation of the trucks being purchased for the Canadian Forces. The CITT recommended that Oshkosh be compensated for its lost opportunity to profit But instead, the department continued with the process to buy the Mack trucks and went to federal court in 2017 to challenge the tribunal's ruling. It recently abandoned that appeal. It was revealed by the tribunal that Public Services and Procurement Canada had failed to keep many key records to support its claim that the Mack trucks met the requirements for the Canadian military. “The CITT recommended that Oshkosh be compensated for its lost opportunity to profit,” the department noted in a response to Postmedia about the settlement it reached with the firm. The department, however, declined to provide details, claiming that the payout is confidential. It did not explain why the penalties that taxpayers must shoulder should be considered secret. “This matter is now closed,” according to the department's statement. The Conservative government announced in 2015 that Mack Defense had won the $834-million contract to provide the 1,500 standard military pattern trucks as well as in-service support for the vehicles. “Truck deliveries are ongoing and expected to be completed during spring 2020,” Public Services and Procurement Canada noted. It stated that the Mack trucks meet the required standards. Oshkosh said in a statement to Postmedia that it was pleased with the financial settlement that resulted from its challenge heard by the trade tribunal. “Oshkosh cannot comment further on the details of this confidential settlement,” noted Alexandra Hittle of Oshkosh Defense. The program to purchase the trucks was originally announced in 2006 by the Conservatives but the acquisition was dogged by problems. The vehicles were supposed to be delivered in 2008 and the project was considered a priority because the vehicles they were to replace had become a safety hazard, with faulty brakes and excessive rust. But in 2012 the Conservative government temporarily shut down the project after learning that the Department of National Defence increased the cost of the project by $300 million but hadn't received permission from government to do that. The government had approved an original budget of $430 million but department and military officials began adding more capabilities to what they wanted in the vehicles, bumping the estimated cost up. DND officials continued on with the acquisition without going back to Treasury Board for approval for the extra money, angering the Conservative government. Delivery of the Mack trucks began last year and have continued to various bases throughout Canada. Earlier this month Defence Minister Harjit Sajjan highlighted the delivery of some of the trucks to a base in Quebec, noting that, “through our defence policy, Strong, Secure, Engaged, we are providing the women and men of our Canadian Armed Forces with the equipment they need to do their jobs.” Sajjan did not mention that the trucks were ordered under the Conservative government. dpugliese@postmedia.com https://ottawacitizen.com/news/canada/tens-of-millions-paid-out-due-to-bungled-canadian-forces-procurement-but-government-says-details-are-secret
November 5, 2019 | Local, Aerospace, Naval, Land, C4ISR, Security

A new Defence Procurement Agency – Would it solve anything?
By Brian Mersereau Defence Watch Guest Writer During the recent federal election, the issue of considering a new Defence Procurement Agency or DPA surfaced again. The Liberals made such an organization part of their defence platform this time around as part of their plan to improve military procurement. While positive outcomes could result from a new organizational structure, simply installing one will not in and of itself create an efficient procurement model. It most certainly will not address in any substantive manner why taxpayers pay far too much to acquire the defence capabilities Canada needs to protect our sovereign interests in a world that has become increasingly unstable in recent years. It appears that, in many cases, Canada pays more per unit of capability to satisfy its defence needs than most of its allies. Unfortunately, though quite logically, this phenomenon has effectively shrunk the size of our armed forces as the number of platforms we can afford to acquire continues to dwindle due to high costs. While this approach can create short-term jobs, they are ultimately unsustainable since there is no international market for our higher-priced solutions. This is not the direction in which Canada should be headed. Before Canada decides to move ahead with a new procurement agency, it should assemble a “smart persons” panel or forum to thoroughly review the existing system and establish the mandate and objectives of whatever type of organization results from said review. Such a review group must be composed of people from the public and private sector with significant experience, not skewed with staff whose procurement experience primarily consists of exposure to the Canadian “way”. During this review, the panel must examine various issues which are currently perceived to be an impediment to the efficiency of Canada's procurement system. Based on my own years of experience on both the buy and sell sides of the procurement equation, the following areas merit some serious thought: Organizational Structure The fewer individuals, departments and oversight committees with their fingers in the “procurement pie”, the quicker and more coherently things will get done. Even at today's interest rates, time really is money for all involved in the process. Adding more time to a schedule for another management review quite often has a negative impact. While I understand governance and oversight committees have their place, their overinvolvement can produce negative outcomes if mandates are not absolutely clear and if individuals on these committees have limited experience with respect to the issue at hand. Risk Canada's ongoing method for defence procurement is that it will not assume any risk on their side of a contract. If Canada insists the private sector must accept all risk, the private sector will so oblige – but at a significant price and to the detriment of schedules and timelines. As contract prices necessarily increase, so do governments costs to manage the contract. In reality, the most efficient procurement solution for Canada would see some elements of risk managed by the buyer, rather than entirely borne by the seller. More consideration needs to go into balanced risk-sharing formulas. Process Canada has an extremely hands-on procurement process for major systems during the competitive phase, as well as during the implementation of the contract. Even in this digital age, Canada hamstrings its own progress with the sheer degree of detail and bureaucracy it requires; unbelievably, freight trucks are still required to deliver proposals. It seems as though, on occasion, the buyer thinks it knows more about designing and engineering the defence systems Canada needs than the actual designers and engineers for whom it is a primary occupation. Requirements of little or no consequence are painstakingly spelled out in the greatest of detail. Such an approach has a tremendous impact on the amount of time consumed by both the buyer and seller, again driving up costs and extending schedules. Less “hand holding” by the customer must be seriously considered. Sole Source In the procurement world, “sole source” is often viewed as a dirty phrase. Frequently, Canada attempts to run competitions in scenarios where the chances of achieving any meaningful savings or benefits related to competition are low at best. This takes years and drives costs higher at no measurable gain for the buyer. The parameters of when and under what circumstances Canada should move directly to a sole source should be thoroughly reviewed. Significant resources are being wasted managing nearly meaningless processes. Skills Canada's internal skill set for managing large, complex defence procurements does not appear to be adequate. As a result, it turns more and more often to the expertise of external third parties in order to keep up with large private sector firms at the negotiation table from a knowledge and experience standpoint. While there will always be a need for some third-party expertise, project managing many external suppliers in the negotiation phase – each of whom have their own agendas – only further complicates the already convoluted procurement process. Canada would be much better off with an enhanced internal core staff. If Canada takes the time to review the appropriateness of some form of DPA model, it must cast the net wider and review other critical aspects of the procurement process – or else any organizational changes will inevitably succumb to the systematic inertia of the overall process. A failure to do so means Canada will continue struggling mightily to stand-up the level of defence and security necessary to secure its citizens in an increasingly turbulent world. https://ottawacitizen.com/news/national/defence-watch/a-new-defence-procurement-agency-would-it-solve-anything
June 29, 2020 | Local, Aerospace

Boeing renews its public pitch to replace Canada's CF-18 fleet
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