18 janvier 2019 | Local, Naval
by Jeffrey F. Collins
CGAI Fellow
Executive Summary
While both Canada and Australia share similar constitutional frameworks and imperial histories, they are also no stranger to procurement challenges. Cost overruns, delays, regionalism, and protracted intellectual property disputes have all been part of major defence acquisition projects in recent decades.
This Policy Paper analyzes the largest and most expensive procurement projects undertaken by either country, Canada's $73 billion (estimated) National Shipbuilding Strategy (NSS), launched in 2010, and Australia's A$90 billion Naval Shipbuilding Plan (NSP), launched in 2017. Each project represents an attempt to implement a rational, multi-decade approach to naval acquisition. Driven by a desire to overcome previous boom-and-bust cycles, the NSS and NSP aim to create a sustainable shipbuilding sector capable of meeting the immediate and future naval demands of Ottawa and Canberra. Neither country has attempted a shipbuilding plan on this scale before.
The NSS and NSP are still in their early stages but some common themes have emerged. On implementation challenges, old problems persist. For one, the rational approach to naval shipbuilding is not devoid of procurement politics and regionalism. Determining which province or state will be home to billions in contracts over many years remains a zero-sum game no matter how arms-length the process of yard selection.
Cost increases also remain a reality. Building domestically can carry a 30 per cent to 40 per cent premium. Project delays increase this premium, something Canada has already experienced when initial NSS acquisition costs, pegged at $37.7 billion nearly a decade ago, jumped to an estimated $73 billion today. Australia's delays in securing an agreement with France's Naval Group on its $A50 billion future submarine project could mean additional cost increases.
In this context, schedule is king and avoiding cost increases requires keeping to planned shipbuilding schedules. Failure to do so opens production gaps and necessitates going with alternative options including building overseas (Australia) or converting commercial vessels for naval and coast guard use (Canada).
Prolonged cost sensitivities raise the consideration of trade-offs on committing more money to continuous shipbuilding at the expense of acquiring other military capabilities. Canada, for instance, will need to make decisions at some point on whether to spend billions on replacing the North Warning System in the country's North. Australia will have to grapple with an Indo-Pacific region proliferating with relatively cheaper but lethal anti-ship missiles. In this context, money spent on surface combatants may be perhaps better spent on other capabilities.
None of this is to say that progress has not occurred in either the NSS or NSP. Ships are getting built, including Arctic Offshore Patrol Ships in Canada, and Offshore Patrol Vessels in Australia.
In 2018, both countries selected the British Type-26 as their preferred design for a new generation of surface combatants. It is very possible that these respective strategies will achieve their goals of bypassing the boom-and-bust eras, but ongoing challenges serve as a reminder that even with the best-laid plans, naval shipbuilding is a complicated affair. 1
17 décembre 2023 | Local, Naval
Media are invited to attend the homecoming ceremony of His Majesty’s Canadian Ships (HMC Ships) Vancouver and Ottawa, and Motor Vessel (MV) Asterix, as the ships return to Esquimalt, B.C. on December 18, 2023, after 126 days away from home while deployed to the Indo-Pacific region.
5 mars 2020 | Local, Aérospatial, Naval, Terrestre, C4ISR, Sécurité
CDR recently sent Ottawa Bureau Chief, James Careless, to interview Canada's newly re-appointed Minister of National Defence, and with a number of high profile capital projects, such as CSC and FFCP currently in play, there was a lot to talk about. Sajjan is now a veteran in this portfolio and he spoke candidly about international missions, defence policy, procurement, and Canada's role in NATO. There were some surprises too. Here is our in-depth conversation with the Minister. CDR: Minister, it's good to speak with you again for, what's become, our annual chat. Can we start by looking what progress is being made on major capital projects like Future Fighter, and as a corollary to that, what new procurements do you think we'll be seeing in 2020? Minister Sajjan: When it comes to procurement projects and our defence policy, one of the things that Canadian defence industry asked us to do is to provide predictability. We've done that. Even though the defence policy is a 20 year program, we have put out a 10 year defence investment plan to industry. This gives them an idea of where we're at – and we're updating that. Obviously, we've got major procurement projects that are ongoing, but within that there are multiple projects. I'm happy to say that the vast majority are in implementation. Some are already closed and, and there's only a few that still have to be started. The Canadian Surface Combatant ship has been selected, while the Future Fighter is obviously an extremely important one that is under way. But there's a lot of other projects happening that are just as important. STARTING LAV PROJECT SOONER CDR: What role has your ‘Strong, Secure, Engaged' defence policy played in speeding up defence procurement? Minister Sajjan: One of the things about our defence policy is that it gives us authorization to move money around. This allows us to do projects faster when opportunities make this possible. The LAV support projects that we just announced in the summertime was a great example of that. We're going to be getting those five years sooner, because we can start these projects five years sooner. So we were able to move money quicker and get that going. Because we're learning and creating a lot more efficiency in our procurement system, we're able to save money. When we save some of that money, we're able to use it in other projects. As you know, procurement is extremely complex; especially on larger projects. There's going to be times where you're going to have to make some changes. Because we have that flexibility, we're able to provide a lot more efficiency to the system. When we created the defence policy, it involved a thorough consultation where every part of the policy had to be approved by cabinet. Now when projects go through, they know that we've already had really good discussions on the capabilities that we want to bring in. So when we bring those projects to Treasury Board, the policy discussions have already been done. So then we just focus on, “do we have the right process in place?” The nice thing about it – just like the current LAV projects – is we're able to streamline things when a competitive process is extremely important and we can get the best equipment at the best price. But there are some times when going for a sole source is more efficient and better for the Canadian Armed Forces. CDR: Many ofCDR's readers are small and medium-sized defence contractors (SMEs), and they're always concerned about getting their fair share of procurement contracts. So what steps has the government taken to make sure that their share doesn't just go to the big players? Minister Sajjan: Depending on the size of the project, we've actually taken a lot of time to consult our defence industries; not just the big companies, but the small and medium size businesses as well. One thing we've done as we build the requirements, is to ask, “how does it benefit Canadian companies?” So now the bids that come in have much greater Canadian content to them. Just for example, when you look at the AOPS (Arctic and Offshore Patrol Ships) that are being built by Irving: The systems integration on the bridge is actually (being done by) a company that is working out of the Lower Mainland (B.C.). That's just one company; a lot of companies are able to benefit from this. So when we look at a project, I tell people, “don't just look at the hull or the plane, look at all the systems that need to go inside it. The LAV project has a massive impact on indirect jobs across the country as well. The final thing I say to this is the IDEaS (Innovation for Defence Excellence and Security) program. The IDEaS program is something very unique that is having a really good impact on small and medium-sized businesses; as well as universities and individuals who have great ideas. It allows us to throw challenges out to suppliers, where we get to compete the ideas. That's something that industry has been asking for, for a very long time. Imagine trying to guess where DND is going, and then having to spend all this money and time only to find out that's not the direction that we're going. So due to the defence investment plan that we lay out, or the challenges that we throw out, they know exactly what we're looking for. They get to compete early, and we get the benefits of their ingenuity. BATTLE GROUP IN LATVIA CDR: NATO recently celebrated its 70th anniversary, and President Trump used the occasion to once again pressure member countries to increase defence spending up to 2% of their GDP, as they have promised to in the past. Given that Canada's defence spending is only about 1.3% of GDP, where does the country stand in terms of meeting this 2% target? Because, I'm sure our readers in Canada's defence and aerospace industries would be more than happy to see Canada increase defence spending as much as it can. Minister Sajjan: I think we should go back to even before Trump. Many U.S. administrations have been asking NATO member nations to step up when it comes to their defence spending. When we formed the government in 2015, we looked at this. This is one of the reasons why the prime minister asked me to do a thorough defence policy review, because it's only then you're going to find out what is the appropriate defence investment that's actually needed -- not just for us, but for our allies. I think many people don't know that this is probably one of the first defence policies that's actually has come with all the money attached to it. That allows us to do a thorough analysis about which capabilities are important; not just a shopping list of things we need to buy. If you focus on the capabilities, you're able to evolve what's needed. What that has allowed us to do is look at how do we need to be Strong in Canada, Secure in North America, and Engaged in the world; investing in the right capabilities with a 70% increase in spending. That's the way it just turned out, based on our plan. But more importantly, it allows us to make appropriate contributions internationally. If you look at the number of operations our government has authorized, it's quite significant. Just for NATO alone, it includes a battle group in Latvia; plus a naval task force that, from one ship that was being consistently there, were actually taking rotation commanding the naval task force there. We have started air policing again in Europe. We're back in the AWACs program. We have increased our common funding to NATO for a second year. We're taking command of the NATO training mission in Iraq as well. So, when you look at that alone, that's just NATO Operation Artemis, which is this counter-terrorist interdiction in the Arabian Gulf. Plus, we're also doing Operation NEON, which is the sanctions monitoring against North Korea. Then there is the capacity building work that we're doing at different times of the year; including Africa. For the first time, we actually had our submarines deploy for training; one in the Pacific and the other in the Atlantic. So when you look at all the things that we're doing, defence spending has led to something. So that contribution piece is extremely important. Our increased spending is being driven by a national plan that's bringing unity into DND. This allows us to make those contributions in a very meaningful way; not just to NATO, but to coalition partners and the United Nations. CONTRIBUTIONS TO NATO CDR: Given this, do you think NATO should stop focussing on 2% of GDP and instead focus on tangible contribution to international security? Minister Sajjan: I would say that we shouldn't be having strictly a conversation about 2%. That's why the NATO Secretary General has always talked about the three Cs: Cash, capabilities and contributions; because if you need all three of them to be effective. The plan that we have proposed to NATO is something that they welcome. They know that we're going to be investing in types of capability, and what kind of impact that it actually can have. For example, when it comes to the ships that we provide, they know that our Cyclone helicopters are also very good at working with our aircraft when it comes to submarine detection. So it's not just about one ship, it's about what capability we're bringing in. And when you have capabilities from different nations, you're able to look at what type of NATO work that we can do; especially when it comes to our readiness. It is not just us offering up things that we have. These are capabilities that are plugging into a much wider system at NATO that can have an impact and ultimately send a very strong message of deterrence to any adversary – which is why NATO is there. CDR: In last year's interview with CDR, you spoke about the importance of retaining Canadian armed forces members and trying to do better for them and their families. What have you been able to do in the last year and what are you hoping to do going forward? Minister Sajjan: The Number One priority has always been to look after our people and their families. We have made a lot of policy changes in how we support our people. The biggest one that we did right when we launched the defence policy was to make every authorized international operation tax-free for our members. This sends a very strong message to the families. People think that this is about CAF members but it's actually about their families. Now the family can have more flexibility on choices. If their family is younger, they can have more daycare opportunities; making sure a spouse can continue with their career. Relocation has been a significant challenge. A year and a half ago, we dealt with the 10 Biggest Dissatisfiers to relocation and there's a little bit more work needs to be done with that. We've also now been working on what's called Seamless Canada, working with the provinces and the territory to look at where families get posted. For reserve members, their base pay is now equivalent to the regular force. So there's all these things that are happening. One focus that I'm putting more emphasis on this year is infrastructure across Canada. Do we have the right infrastructure for our people; especially when it comes to military family resource centres, health care clinics and accommodations for people? And we have to look at it differently now than we did in the past, because things have significantly changed. We know that in Comox, there is a challenge for people to actually find housing because the vacancy rate is so low. So we're looking at a project to build apartment-style complexes there, and I'll be working with the deputy minister on this. In other places, we are looking at how PLD (Post Living Differential) changes need to be made. The study is almost complete with a much wider analysis. My thought going into this was instead of just looking at the immediate fixes which we have been doing to ease the burden on our members -- like, for example, in places like Cold Lake -- we need to do a thorough analysis done so that, when we make a much wider decision, it can actually last longer. The PLD decision that was made a long time ago is not as relevant today, because it is based on how people live here in Ottawa. Those are the aspects that we're putting a lot more focus into. I think because we're putting a lot of emphasis on looking after people and their families, it's having an impact on retention. How we move people around is also something that the Chief of Defence Staff has been looking at very closely. MORE EMPHASIS ON CYBER SECURITY CDR: You've been Minister of National Defence since 2015. You're now very well versed with the requirements of the job and long past getting to know the ropes and dealing with immediate crises. What do you want to achieve going forward? What do you want your legacy to be at DND? Minister Sajjan: It's not about legacy. We spent a lot of time and very extensive consultations with experts, key people, and more importantly, civilians at the department and the Canadian Armed Forces to come up with the plan for the Defence Policy. And because it comes with money attached, this plan has enough focus and flexibility to adjust to any situation that we have to deal with around the world. My goal is for us to be thinking long-term about how we look after people, how we look at threats and where we need to be to make sure that we have a very strong deterrence. This is one of the reasons why we're putting a lot of emphasis on cyber-security. I'm working very closely with CSE as well. One aspect that I'll be driving home a little bit stronger this time around is going to be innovation. We have such great ingenuity inside the Canadian Armed Forces, but we also have absolutely brilliant people across the country. I want to take a greater look at innovation in the long-term; how we look after people, how we do logistics, and how we keep a technological edge against adversaries. There's a lot of interesting work that's happening. Making sure that we're set up for the future is something that I'm going to be putting a lot more emphasis on. WORKING OUT TO TRANCE CDR: Finally, on a more personal note, we've heard that you do a mean workout to the beat of electronic music, is that correct? Minister Sajjan: Yes! I listened to a lot of a particular type of electronic music known as Euro Trance and I've evolved it a little bit. DJ Markus Schulz is somebody I listen to, and there's a number of other deejays there as well. (Editor's Note: DJ-mixed club music known as Euro Trance is often very uplifting, it is usually around 140 - 145 bpm and has a lot of big rifts. It emerged from the 1990s German techno and hardcore scenes. Leading proponents of this genre have included DJs Armin Van Buuren and Tiesto.) It drives my wife crazy. But I love working out and getting into a high energy pace; it just keeps me motivated. I know it sounds nuts, a 49 year-old listening to Trance. People think I should grow up, but I can't knock everything out of me from high school. CDR: How did you get into this music? Minister Sajjan: I've always liked the mixes and I went to a lot of clubs in my younger days. Then when I was in the UK, they had a really good Euro mix and I used to listen to that a lot. When I was in Germany, I realized that they have a lot of different ways of doing it as well. So, I would try to find that music, which wasn't that popular back then. But now it's everywhere. And, it's easy to download that music. My wife always says, “it's the same beat.” I say, “exactly!” CDR: Thank you very much, Minister. http://www.canadiandefencereview.com/Featured_content?blog/161
13 mai 2022 | Local, Aérospatial, Terrestre
OTTAWA - Defence Minister Anita Anand says the federal government is weighing whether Canada should join the U...