17 février 2021 | Local, Naval

DND unable to say exactly when delays in $70-billion warship program began

David Pugliese, Ottawa Citizen, Postmedia News (dpugliese@ottawacitizen.com)

Published: a day ago

Updated: a day ago

National defence says it doesn't know when it determined that a $70-billion project to buy new warships had fallen five years behind schedule, adding billions of dollars to the cost.

That lack of knowledge about a massive mega-project is unprecedented, according to the department's former top procurement official, and is further proof the Canadian Surface Combatant project has gone off the rails.

The Department of National Defence revealed Feb. 1 that the delivery of the first surface combatant ship would be delayed until 2030 or 2031. The first ship was to have been delivered in 2025, according to DND documents.

The five-year delay will cost taxpayers billions of dollars, but the specific amount has yet to be determined.

DND now acknowledges that while there were indications in early 2020 the project schedule was slipping, it doesn't actually know when it was determined the Canadian Surface Combatant program was facing significant delays. “There was no specific month/year,” DND spokesperson Jessica Lamirande wrote in an email to this newspaper. “It was an evolving schedule that continued to shift.”

But Alan Williams, the former assistant deputy minister in charge of procurement at DND, said that lack of insight by DND staff is dangerous. On major equipment procurements, every step should be documented, as bureaucrats could be called on to justify future spending decisions and overall management of a project, he said.

“It's totally absurd they can't even say when they first determined this project would be delayed by five years,” said Williams. “Is that not the definition of a total loss of accountability and control?”

The Canadian Surface Combatant (CSC) project would see the construction of 15 warships for the Royal Canadian Navy at Irving Shipbuilding on the east coast. The vessels will replace the current Halifax-class frigate fleet. However, the project has already faced delays and significant increases in cost, as the price tag climbed from an original $14-billion estimate to $26 billion and then to $70 billion.

The parliamentary budget officer is working on a new report on the CSC cost, to be finished by the end of February. Each year of delay could cost taxpayers more than $2 billion, the PBO warned previously.

Although the DND has a new delivery date for the initial ship in the fleet, that doesn't mean that the vessel will be ready for operations at that time. “We expect delivery of the first ship in 2030/2031, followed by an extensive sea trials period that will include weapons certification and the corresponding training of RCN sailors, leading to final acceptance,” Lamirande said. No dates, however, were provided on when that final acceptance of the first ship would happen.

Troy Crosby, the assistant deputy minister of materiel at the DND, denied the CSC project is in trouble. “I wouldn't call it trouble,” he said in an interview with this newspaper in November. “Is it hard? Is it challenging work? Absolutely. But I wouldn't say we're in trouble.”

Other defence analysts are arguing the CSC program is salvageable with better governance and oversight.

But Williams said the CSC is like a train rolling down a hill without brakes. “You're heading for disaster and people are talking about improving governance,” he said. “That won't save this project.”

Canada has yet to sign a contract to build the Type 26 ship proposed by the consortium of Lockheed Martin and BAE for the CSC. So far, taxpayers have spent $739 million preparing for the eventual construction, according to figures tabled with parliament.

Australia and the United Kingdom also plan to purchase the Type 26. But the first ship, destined for the U.K., has yet to be completed.

The Canadian government originally said it would only accept a winning bid based on a mature existing ship design or a ship already in service with other navies. That would eliminate technical risk, as the design would be a known and tested commodity.

The Type 26 carries extra risk as its design has not yet been proven.

Williams said Canada could build an initial three Type 26 ships and then purchase other warships based on a proven design at a much reduced cost.

Copyright Postmedia Network Inc., 2021


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