The 2019 Parliamentary Budget Officer (PBO) report has indicated that the Canadian Surface Combatant (CSC) programme will now cost C$69.8bn ($52.7bn) over 26 years.
The previous report, 2017 PBO, estimated the programme would cost $61.8bn ($46.84bn).
Canada plans to acquire a fleet of 15 new naval warships that will serve as the country's major surface component of maritime combat power.
The revision in the total programme cost is a reflection of inflated costs due to construction delay and an increase in the size of the CSC.
The break-up of the cost structure includes C$5.3bn ($4.01bn) in pre-production costs, along with C$53.2bn ($40.32bn) for production, and C$11.4bn ($8.64bn) in project-wide expenses.
A major driver of costs is the increase in the displacement of the ship. The 2017 estimate was calculated on the basis of a 5,400t lightship weight, which was an estimate based on available designs for the CSC programme at the time.
Following selection of the BAE Systems Type 26 Global Combat Ship design, the weight increased to 6,790t. This increase has significantly contributed to the C$8bn ($6.06bn) difference in the two project cost estimates.
The updated plan cost includes project development, production, two years of spare parts and ammunition, training, government programme management, and upgrades to existing facilities.
Irving Shipbuilding is the prime contractor of the surface combatant project. The company awarded a subcontract to Lockheed Martin Canada to design the CSC vessels for the Royal Canadian Navy.
The Combat Ship Team responsible for design includes Lockheed Martin, BAE Systems, CAE, L3 Technologies, MDA, and Ultra Electronics Maritime Systems.
Construction of the first ship under the CSC project is scheduled to take place in the early 2020s.
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Saskatoon / 650 CKOM The Canadian Press June 14, 2020 10:28 am OTTAWA — The Department of National Defence has been called out for assigning less than three people to monitor the rollout of the Liberal government's plan to spend hundreds of billions of dollars in new military equipment, troops and training. The criticism is contained in an internal Defence Department audit and follows previous concerns that delays and other problems are slowing implementation of the plan, which was unveiled in 2017 and promised to spend $553 billion in the military over 20 years. The plan known as Strong, Secure, Engaged (SSE) is seen as critical for replacing much of the military's aging equipment and adding new capabilities such as armed drones and defences in cyber and space that are needed for 21st-century warfare. Yet the Defence Department earlier this year revealed that more than 100 of the roughly 300 capital projects associated with the plan were facing delays, with the delivery dates for some urgently needed equipment pushed several years into the future. The audit report dated last November but only recently published online underscores the importance of monitoring and oversight to ensure the plan is properly implemented over the next two decades. Auditors instead found "limited dedicated resources to co-ordinate and monitor implementation" of the plan, according to the report, with fewer than three full-time staff members specifically tasked with the job. By comparison, there were 32 staff members assigned to oversee a cost-cutting exercise launched by the previous Conservative government in 2013 that aimed to eliminate $1.2 billion in annual waste within the department. That effort met with limited success. "The capacity of the SSE implementation team is limited and as such, certain monitoring functions and independent validation of information are not being performed," according to the audit report. The auditors also flagged concerns that the lack of monitoring meant senior defence officials were not receiving clear and accurate information about the state of the plan, raising fears about bad decisions being made. Defence Department spokeswoman Jessica Lamirande said some of the issues identified by the auditors have been addressed while work on others is underway, though she did not say how many staff are now responsible for monitoring the plan. "We welcome reviews of this nature, which help us find where adjustments and improvements can be made to ensure the continued efficient progress and oversight of the policy," Lamirande said in an email. "All of these audit recommendations are being addressed, with several already completed and the others well underway. In fact, some recommendations validated work that was already in progress." Defence analyst David Perry of the Canadian Global Affairs Institute expressed surprise at the auditors' findings given senior officials had emphasized the importance of properly implementing the plan when it was released three years ago. That emphasis included monitoring progress, which Perry described as fundamental for identifying problems and areas that need attention — such as delayed procurement projects — to ensure the military gets what it has been promised and needs. The need to properly implement the plan and eliminate delays is even more important now, he added, given fears the federal government could start cutting defence spending as it seeks to find ways to pay for its COVID-19 emergency programs. "You've got a government whose wholesale attention is focused on the response to COVID," Perry said. "Any kind of delay in a program and the department basically not seizing the moment that it's got opens up potential vulnerability given the huge degree of economic and fiscal uncertainty that the department and government are facing right now." This report by The Canadian Press was first published June 14, 2020. Lee Berthiaume, The Canadian Press https://www.ckom.com/2020/06/14/auditors-target-defence-department-for-poor-oversight-of-military-spending-plan/