National Shipbuilding Strategy: Standing Committee on Government Operations and Estimates—March 12, 2020

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National Shipbuilding Strategy: Yard by yard one pager

In this section

Large ship construction

For large ship construction, Canada established a strategic relationship with 2 Canadian shipyards, Irving Shipbuilding Inc. and Seaspan’s Vancouver Shipyards.

Since 2012, Irving Shipbuilding has been awarded approximately $3.45 billion in contracts under the large ship construction pillar:

Since 2012, Vancouver Shipyards has been awarded approximately $1.82 billion in contracts under the large ship construction pillar:

In 2019, approximately $0.8 billion worth of new construction contracts were announced or awarded to Vancouver Shipyards and Irving Shipbuilding Inc. in support of their various projects.

Small ship construction

For smaller ship construction, Canada sets aside these requirements for competitive procurement to shipyards other than those selected to build the large ships and their affiliated companies.

Since 2012, contracts totalling $403.9 million have been awarded under the small ship construction pillar.

In 2019, the government awarded approximately $120.2 million in new small ship construction contracts to Canadian shipyards. All of this work is being performed by small and medium-sized enterprises with fewer than 250 full-time employees.

Contracts awarded this past year include:

Ship repair, refit, and maintenance

These contracts are open for competition through normal procurement processes.

Since 2012, contracts totalling $7.485 billion have been awarded under the ship repair, maintenance, and refit pillar.

In 2019, the Government of Canada awarded approximately $2.3 billion in new or amended repair, refit and maintenance contracts to Canadian companies.

Contracts awarded this past year include:

National Shipbuilding Strategy contracts awarded

From 2012 to the end of 2019, the government signed approximately $13.78 billion in new National Shipbuilding Strategy (NSS) contracts throughout the country. These contracts are estimated to contribute over $17.04 billion ($1.54 billion annually) to gross domestic product (GDP), and create or maintain more than 15,521 jobs annually, through the marine industry and its Canadian suppliers between 2012 and 2022.

National Shipbuilding Strategy contracts awarded from 2012 to end of 2019
Contracts awarded to Value

Vancouver Shipyards

$1.84B>

Irving Shipbuilding

$4.74B>

Davie

$2.05B>

Other shipyards/companies

$5.14B>

Total

$13.78B>table 1 note 1

Table 1 Notes

Table 1 Note 1

1This total includes the value of contracts awarded under the 3 NSS pillars, as well as contracts awarded to address interim marine requirements (such as the $620M interim auxiliary oiler replenishment contract awarded to Davie to provide the Royal Canadian Navy with an at-sea oil replenishment capability on an urgent and interim basis until the delivery of the joint support ships).

Return to table 1 note 1 referrer

National Shipbuilding Strategy overview of strategy

In this section

Commitment: National Shipbuilding Strategy

In line with the mandate letter, the minister of Public Services and Procurement is mandated to work with other ministers to continue the full renewals of the Canadian Coast Guard fleet and the Royal Canadian Navy fleet, continuing the revitalization of the shipbuilding industry across Canada, creating middle class jobs and ensuring Canada’s marine services have the modern ships that they need.

Key messages

Background

On June 3, 2010, the National Shipbuilding Strategy, then named the National Shipbuilding Procurement Strategy, was announced.

The objectives of the strategy are to:

The strategy consists of 3 distinctive pillars:

Procurement strategy

For large ship construction, Canada established a strategic relationship with 2 Canadian shipyards, Irving Shipbuilding Inc. and Seaspan’s Vancouver Shipyards. The 2 shipyards, selected through an open and fair national competition, were designated as strategic sources of supply: Irving Shipbuilding Inc. for combat vessels and Seaspan’s Vancouver Shipyards for non-combat vessels. Canada has signed an umbrella agreement with each of the 2 shipyards.

In August 2019, a competitive process was launched to select a third Canadian shipyard as a strategic partner for large ships under the strategy. This new shipyard will first build program icebreakers for the Canadian Coast Guard. Chantier Davie has pre-qualified and moved on to the request for proposal and evaluation stage of the process.

Economic benefits

From 2012 to the end of 2019, the government signed approximately $13.78 billion in new National Shipbuilding Strategy contracts throughout the country. These contracts are estimated to contribute over $17.04 billion ($1.54 billion annually) to gross domestic product, and create or maintain more than 15,521 jobs annually, through the marine industry and its Canadian suppliers between 2012 and 2022.

The government’s Industrial and Regional Benefits Policy and the Industrial and Technological Benefits Policy ensure that Canadian industry benefits from Canada’s defence and security purchases. As of 2019, Irving Shipbuilding Inc. has an industrial and regional benefits obligation of nearly $4.3 billion, of which $2.6 billion has been completed to date and another $396 million is underway for the Arctic and offshore patrol ships project, modernizations to the Halifax-class frigates, and the Canadian surface combatant definition contract. On the West Coast, Vancouver Shipyards is making progress on its industrial and regional benefits obligations for the vessels under the National Shipbuilding Strategy’s non-combat package, including the offshore fisheries science vessel, the offshore oceanographic science vessel and the joint support ship. To date, Vancouver Shipyards has completed $1.0 billion in industrial and regional benefits, with $251 million in activities underway as part of its total industrial and regional benefits obligation of $1.7 billion across these 3 projects.

The National Shipbuilding Strategy value proposition is designed to benefit the greater Canadian marine industry and help ensure its long-term sustainability. Under the National Shipbuilding Strategy value proposition, shipyards are required to invest 0.5% of the value of strategy-awarded contracts into the Canadian marine industry to support human resources development, technology investment and industrial development. As of December 31, 2019, of the $20.56 million in obligations under the National Shipbuilding Strategy value proposition, over $17.7 million in investments—$12.6 million for Irving Shipbuilding, and $5.19 million for Vancouver Shipyards—have been identified. This total represents the sum of “completed/claimed” and “in-progress/upcoming” investments.

The strategy provides fair opportunities in the marine sector to businesses led by under-represented groups in the shipbuilding industry, including women, Indigenous Peoples and persons with disabilities. Partnerships are being forged with the 2 large vessel shipyards, federal departments, academic institutions, research organizations and other joint-ventures to increase participation of under-represented groups in the sector. For example, Toolcomm, an Aboriginal-owned small business based on the Capilano First Nations Reserve in Vancouver, British Columbia, has been working on shipbuilding projects since 2011. Their unique know-how in developing custom hardware, firmware, software, and electro-mechanical devices, has made it a valuable asset to the Arctic and offshore patrol ships project.

Irving Shipbuilding Inc.: Work package

Irving Shipbuilding’s original work package consisted of 6 Arctic and offshore patrol ships and 15 Canadian surface combatants for the Royal Canadian Navy. In May 2019, it was announced that Irving Shipbuilding will build an additional 2 Arctic and offshore patrol ships variants for the Canadian Coast Guard to conduct sea-borne surveillance such as fisheries patrols as well as other missions, including emergency response, buoy tending, icebreaking support and ocean science. The total budget for the Irving Shipbuilding work package is $61.8 billion to $65.8 billion. Footnote1

Work package: Arctic and offshore patrol ships

A total of 8 Arctic and offshore patrol ships are being built by Irving Shipbuilding Inc. under the National Shipbuilding Strategy. The Arctic and offshore patrol ships project will deliver 6 vessels to the Royal Canadian Navy to conduct sovereignty and surveillance operations in Canada's waters, including the Arctic, as well as a wide variety of operations abroad with a project budget of $4.3 billion. The project will also deliver 2 modified Arctic and offshore patrol ships to the Canadian Coast Guard to conduct sea-borne surveillance such as fisheries patrols as well as other missions, including emergency response, buoy tending, icebreaking support and ocean science with an estimated project budget of $1.5 billion.

Work package: Canadian surface combatants

Fifteen Canadian surface combatants will replace the Royal Canadian Navy’s existing fleet of frigates and retired destroyers. The new fleet of surface combatants will take approximately 25 years to design and build and will be the backbone of the Royal Canadian Navy for the next 50 to 60 years. The Canadian surface combatants project is the largest and the most complex procurement in Canadian history, with specifically the design and integration process of the technology-laden combat system posing the highest risk. Canada and Irving Shipbuilding Inc. aim to have a sufficiently mature design to enable construction of the first vessels in early 2020s. The project schedule is expected to mature as the design work progresses.

The estimated cost is $56 to $60 billion (excluding taxes), which includes designing and building 15 ships as well as other project costs such as initial spares, training, the project management office, infrastructure, ammunition and contingency. On February 8, 2019, following an open and transparent competition and a due diligence process, a contract was awarded to Lockheed Martin Canada to provide the Canadian surface combatants design and design team, along with the combat management system software support contract.

Current status

Since 2012, Irving Shipbuilding has been awarded approximately $4.74 billion in National Shipbuilding Strategy contracts.

Four Arctic and offshore patrol ships are under construction at Irving Shipbuilding with the first vessel expected to be delivered to the Royal Canadian Navy in spring 2020. To build Arctic and offshore patrol ships 7 and 8, the existing design will be modified to meet Canadian Coast Guard requirements while minimizing differences between the Royal Canadian Navy and Canadian Coast Guard fleets.

With respect to the Canadian surface combatants, the first design activity, requirements reconciliation, has been substantially completed. It involved more thoroughly examining the design, reviewing how all requirements are met and reconciling the requirements of the starting point ship design (the UK Government’s requirements for the type 26) with Canada’s requirements. This process produces a single, integrated set of requirements which will be used to evolve the design for the Canadian surface combatants ships. During this phase the build cost estimate will continue to be refined and, prior to the completion of the design phase, a build contract will be awarded to Irving Shipbuilding.

Seaspan’s Vancouver Shipyards: Work package

Vancouver Shipyards’ original work package consisted of 3 offshore fisheries science vessels, 1 offshore oceanographic science vessel and 1 polar icebreaker for the Canadian Coast Guard, as well as 2 joint support ships for the Royal Canadian Navy. In May 2019, Canada decided to remove the polar icebreaker from Vancouver Shipyards’ work package and add up to 16 multi-purpose vessels for the Canadian Coast Guard. The total budget of the Vancouver Shipyards work package is $18.6 billion. Footnote1

Work package: Offshore fisheries science vessels

The offshore fisheries science vessels project will deliver 3 vessels to the Canadian Coast Guard to replace 3 existing vessels, 1 of which was decommissioned in 2016, and has a project budget of $687 million. The vessels will continue critical scientific research and ecosystem-based management, as well as contribute to Canada’s stewardship of fishery and ocean resources. Equipped with wet labs, these vessels will have accommodation for up to 23 crew and 13 scientists.

There have been significant challenges in the construction of the vessels, including overly optimistic cost and schedule estimates.

Work package: Joint support ships

The joint support ships project will deliver 2 support vessels to the Royal Canadian Navy to supply other Royal Canadian Navy ships with fuel, ammunition, spare parts, food and water. These ships will also provide a home base for maintenance and operation of helicopters, a limited sealift capability, and support to forces deployed ashore. Vancouver Shipyards was selected as the prime contractor for both the development and implementation phases of the project. The project budget is under review, and negotiations for the joint support ship construction contract are underway.

Canada decided to advance preliminary construction of joint support ships in 2018. An early build construction contract worth $66.6 million was signed in May 2018, with a steel cutting ceremony held on June 15, 2018. Under the revised sequencing confirmed in early 2019, Vancouver Shipyards will complete construction on joint support ship 1, followed by the offshore oceanographic science vessel and then joint support ship 2. This will allow for uninterrupted transition from early block construction to full production on joint support ship 1. It will also allow time to incorporate lessons learned into joint support ship 2, and better optimizes Vancouver Shipyards’ engineering workforce.

Work package: Offshore oceanographic science vessel

The offshore oceanographic science vessel project will replace the Canadian Coast Guard’s largest science vessel, the Canadian Coast Guard Ship Hudson. The vessel will be capable of multi-tasking oceanographic, fishery, geological and hydrographic survey missions, and will contribute to Canada’s understanding of the oceans and the impacts of climate change. The budget for the offshore oceanographic science vessel was originally established in 2007, prior to the announcement of the National Shipbuilding Strategy and is under review.

The offshore oceanographic science vessel was initially sequenced second in the Vancouver Shipyards’ work package, following the construction of 3 offshore fisheries science vessels and prior to the construction of 2 joint support ships. However, delays resulted in a production gap between the 2 classes of science vessels, which is being addressed through the advancement of the first joint support ship.

Work package: Multi-purpose vessels

Sixteen multi-purpose vessels will replace the capabilities provided by a number of existing Canadian Coast Guard ships. Among their primary missions, the vessels will provide icebreaking services and support; conduct the deployment, recovery and maintenance of fixed and floating navigation aids; and conduct searches on the water, respond to marine distress calls, and provide assistance and towing to disabled vessels. The multi-purpose vessels will also perform a variety of secondary missions including conservation and protection, environmental response and support for scientific research.

In May 2019, Canada decided to remove the polar icebreaker from Vancouver Shipyards’ package of work and add up to 16 multi-purpose vessels, to be built after the second joint support ship. This substitution will break the cycle of short production runs in Vancouver Shipyards’ original work package—providing the yard with the ability to generate efficiencies and economies of scale, as well as ensure greater workforce stability and minimize gaps in production. The estimated project cost for 16 multi-purpose vessels is $14.2 billion.

Current status

Since 2012, Vancouver Shipyards has been awarded approximately $1.84 billion in National Shipbuilding Strategy contracts.

The first offshore fisheries science vessel, the Sir John Franklin, was delivered to the Canadian Coast Guard in June 2019. The second vessel, the Captain Jacques Cartier, was delivered in November 2019. The third vessel is expected in summer 2020.

Preliminary construction work for the first joint support ship began in June 2018 and delivery is expected in 2023. The second joint support ship will begin construction after the offshore oceanographic science vessel and is expected for delivery in 2025.

Construction of the multi-purpose vessels is expected to begin in the mid-2020s, with the first vessel delivery in the late 2020s.

It is anticipated that construction of the offshore oceanographic science vessel will begin in winter 2021, with delivery scheduled for 2024.

Third National Shipbuilding Strategy shipyard selection

Current status

A competitive process was launched in August 2019 through an invitation to qualify to select a third Canadian shipyard as a strategic partner under the strategy to build 6 program icebreakers. Chantier Davie was announced as the only pre-qualified bidder in December 2019. The shipyard is currently in the request for proposal and evaluation stage of the process. This will include a third-party assessment of the shipyard’s infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure. The shipyard is currently undergoing a technical assessment by First Marine International. A financial assessment will follow. An umbrella agreement is expected to be in place with the third shipyard in 2020.

Third shipyard

Commitment

Public Services and Procurement Canada is delivering on its commitment to continue revitalizing the shipbuilding industry across Canada, creating middle class jobs and ensuring the government has the modern ships it needs.

A competitive process is under way to select a third Canadian shipyard as a strategic partner under the National Shipbuilding Strategy (NSS). This third yard will build 6 new program icebreakers for the Canadian Coast Guard (CCG).

Key messages

Current status

The results of the invitation to qualify were announced on December 19, 2019. Chantier Davie was announced as the only pre-qualified bidder. The next steps in the selection of the third shipyard are:

Background

In May 2019, major investments were announced to renew the CCG fleet in a timely manner, including the construction of 6 new program icebreakers to replace the CCG’s heavy and medium icebreakers that operate in Atlantic Canada and the St. Lawrence waterways during the winter and in the Arctic during the summer. These icebreakers are fundamental to the year-round safe and efficient movement of ships and goods in Canadian waters. In Atlantic Canada, the program icebreakers will help ensure year-long ferry service, escort ships through ice-covered waters and clear off ice from harbours and wharfs, which is essential to Canada’s commercial fisheries. In the Arctic, they will provide icebreaking support to ships with vulnerable cargoes, such as dangerous goods and perishable products, and support vessels transporting cargo that are a vital part of the northern communities’ sealift and resupply.

A competitive process was launched in August 2019 to add a third Canadian shipyard as a strategic source of supply for the construction of large vessels under the NSS.

Questions and answers

Question 1: Why have you decided to add a third shipyard?

Answer 1: The full renewal of the Coast Guard fleet will require additional ships, and the current work packages will keep both Irving Shipyard Inc. and Seaspan Vancouver shipyard working to capacity until the late 2030’s/2040’s. Therefore their facilities cannot concurrently begin other construction projects.

To help support future shipbuilding requirements, we have launched a competitive process process to add a third Canadian shipyard as a strategic source of supply to help ensure the timely delivery of additional vessels to the federal fleet.

Question 2: Does this mean the third shipyard would build the polar icebreaker?

Answer 2: We recognize that the Coast Guard fleet of icebreakers is aging and they must be provided with the vessels necessary to address their operational requirements.

As such, we are exploring all options for having the polar icebreaker built in a timely and efficient manner.

Question 3: How long will it take before we see the new vessels delivered?

Answer 3: The expected start of construction for Arctic offshore patrol ship 7 and 8 is 2021. The expected start of construction of the multi-purpose vehicles is in the mid-2020’s, following the completion of the second joint support ship.

Delivery dates for ships at all 3 yards will be identified as construction contracts are awarded.

Question 4: What is the value of the respective work packages?

Answer 4: The total funding for up to 18 large ships is $15.7 billion, which represents early estimates of project budgets including construction, logistics and support, contingency, project management and infrastructure costs. The exact value of the ships will be communicated following contract negotiations.

The estimated project budgets for the new vessels and associated project requirements are as follows:

Also, the Government of Canada launched a competitive process to add a third Canadian Shipyard under the NSS, through an invitation to qualify (ITQ), and included a work package comprising of 6 new program icebreakers for the Canadian Coast Guard.

On December 19, 2019, the Government of Canada announced Chantier Davie has pre-qualified. Chantier Davie will now move to the next stage in the selection process, the request for proposal and evaluation stage. We expect to have an umbrella agreement in place with a third shipyard in 2020.

The estimated budget for the 6 new program icebreakers will be determined following contract negotiations with the selected shipyard.

Question 5: Is this a complete restructuring of the National Shipbuilding Strategy?

Answer 5: No. The National Shipbuilding Strategy is designed to provide Canada the flexibility to adapt to evolving needs and ensure ships are produced in the most efficient manner.

Arctic offshore patrol ships

Commitment

The Arctic and offshore patrol ships (AOPS) procurement falls under the National Shipbuilding Strategy (NSS) and is part of the work package being built by Irving Shipbuilding Inc. (ISI).

Note

Questions related to the budget for the project and technical requirements (including the design requirements) should be referred to the minister of National Defence.

Key messages

Current status

There are currently 4 AOPS that are under construction for the RCN. The first AOPS, the Harry DeWolf, is expected to be delivered to the RCN in spring 2020. This represents a delay from the original delivery target of May 2018 and the most recent revised forecast of winter 2020. Delivery of the second AOPS is expected by the end of 2020, with deliveries continuing until all 8 ships are received by 2025.

Delivery schedule:

Background

A total of 6 AOPS will be built by ISI for the Royal Canadian Navy (RCN) to conduct sovereignty and surveillance operations in Canada's waters, including the Arctic, as well as to conduct a wide variety of operations abroad. Two modified AOPS will also be built by ISI for the Canadian Coast Guard (CCG) to conduct sea-borne surveillance such as fisheries patrols as well as other missions, including emergency response, buoy tending, icebreaking support, and ocean science. The existing ship design will be refined to meet CCG requirements, while minimizing differences with the RCN fleet.

The project budget for 6 RCN AOPS is $4.3 billion for all project costs, including ships and jetty infrastructure. The estimated project cost for 2 CCG AOPS is $1.5 billion, which includes modifications to adapt the ships to CCG roles and missions.

Questions and answers

Question 1: The government recently announced that it will build 2 more AOPS. What will these be used for?

Answer 1: The 2 new AOPS, which will be built at Irving Shipbuilding’s Halifax Shipyard, will be adapted for the Coast Guard to perform a range of critical missions, including Northwest Atlantic Fisheries Organization patrols.

Question 2: How long will it take before we see the new vessels delivered?

Answer 2: The expected start of construction for ISI of AOPS 7 and 8 is 2021.

Question 3: How much will these news vessels cost?

Answer 3: The current estimated project budget for 2 CCG AOPS is $1.5 billion.

Canadian Surface Combatants

Commitment

The Canadian Surface Combatants (CSC) procurement falls under the National Shipbuilding Strategy (NSS) and is part of the work package to be built by Irving Shipbuilding Inc. (ISI).

Through the ongoing CSC project, the government is delivering on its commitment to renew the Royal Canadian Navy’s (RCN) fleet, create jobs and opportunities for hard working middle-class Canadians and revitalize our marine industry.

Key messages

Note

Questions related to the budget for the project and technical requirements (including the design requirements) should be referred to the minister of National Defence.

Current status

The design team is working with ISI to develop its starting point design into a final design. Canada and ISI aim to have a sufficiently mature design to allow the start of construction of the first ship in the early 2020s, followed by delivery in the mid-2020s. However, the project schedule, including how long it will take to build and commission the ships, will become better understood as the design work progresses.

Background

The CSC project represents the largest procurement under the NSS and will deliver 15 surface combatants to the RCN at an estimated cost of $56 billion to $60 billion. This fleet will replace and upgrade the capabilities found in the RCN’s Halifax-class frigates and retired Iroquois-class destroyers.

The CSC fleet will be capable of meeting multiple threats on both the open ocean and the highly complex coastal environment. These ships will ensure that Canada can continue to monitor and defend its waters and make significant contributions to international naval operations.

Definition contract award

On February 8, 2019, following a rigorous bid evaluation and due diligence process, Canada and ISI announced Lockheed Martin Canada (LMC) as the subcontractor to provide the CSC design and design team. The selected design is based on BAE’s type 26 frigate.

Canada awarded the definition contract to ISI, who in turn awarded the definition subcontract to LMC. At contract award the estimated value of initial tasks in the definition contract was approximately $185 million. With subsequent amendments the contract now has an estimated value of $385M. It is anticipated that the total value of all tasks in the contract will exceed $1 billion.

Legal challenges

In March 2019, unsuccessful bidders Alion and Navantia filed applications for judicial review with the Federal Court, challenging the selection of LMC as subcontractor and the evaluation of their bids as non-compliant.

Alion has since discontinued its applications. Navantia’s applications are ongoing and ask the Federal Court to set aside the decision to select LMC, among other remedies. Navantia is also seeking an order setting aside the decision that its bid was non-compliant. The judicial review proceedings are in their preliminary phases and there are numerous procedural steps that must be completed before the parties will file submissions on the merits and seek to schedule a hearing. It is not expected that a hearing will be held in 2020.

Questions and answers

Question 1: What are the next steps now that the definition contract has been awarded?

Answer 1: With the selection of the design and the award of the definition contract, Canada, Irving Shipbuilding Inc. (ISI) and the selected subcontractor, Lockheed Martin Canada (LMC), have started the CSC design process. Once the design work has been completed, the government will award an implementation contract to Irving Shipbuilding Inc. to build the ships. Construction of the first CSC ship is targeted to begin in the early 2020s. 

Question 2: What is the scope of this definition contract with Irving Shipbuilding?

Answer 2: The definition contract has been awarded to ISI as Canada’s prime contractor and ISI has awarded the definition subcontract to the winning bidder, LMC. The objective of this contract is for ISI and LMC to complete the design work necessary to build CSCs that will incorporate Canadian systems and equipment and meet Canada’s requirements.

The definition subcontract is a task-based contract divided into tasks that will be authorized as the work progresses. With this contract, Irving Shipbuilding Inc., working with Lockheed Martin Canada, and Canada, will refine, detail and complete the Canadian surface combatant design to production-level prior to starting construction.

Question 3: What will be included in the definition contract?

Answer 3: The definition contract includes modifying the selected base design to meet Canada’s requirements, and to incorporate Canadian systems and equipment. This design team will perform the required systems engineering and develop the integrated data environment necessary to efficiently manage a project of this size and complexity.

The design phase includes requirements reconciliation, preliminary design, functional design and lastly, the detailed design for the CSC, including a complete 3D model of the combatants. At the end of the design process, ISI will submit their proposed implementation plan, which will detail the schedule and cost for the build contract.

Question 4: What is the value of the definition contract?

Answer 4: Work for the CSC definition contract, awarded to ISI by Canada, will be authorized and funded incrementally as the engineering work progresses through the 4 design phases. At contract award the estimated value of the definition contract was approximately $185 million. With subsequent amendments the contract now has an estimated value of $385M and it will be increased accordingly as the engineering work progresses.

Question 5: How did you ensure fairness throughout this process?

Answer 5: The CSC evaluation process was designed to identify the best valued bid while ensuring fairness, openness and transparency; the entire process was overseen by an independent fairness monitor.

The fairness monitor has submitted a series of reports on the CSC procurement process, and each of these reports have stated that it had “identified no fairness deficiencies.” All interim and final reports are published on the Public Services and Procurement Canada Fairness Monitor website.

These reports provide assurance that decisions have been made objectively, free from personal favouritism and political influence, and that they encompass the elements of fairness, openness and transparency.

Question 6: Can you comment on the Canadian International Trade Tribunal (CITT)’s ruling to dismiss Alion’s complaint?

Answer 6: Public Services and Procurement Canada is pleased with the CITT’s ruling to dismiss the complaint. We always maintained that we had full confidence in the fairness of our procurement process.

Question 7: What about Alion and Navantia’s subsequent applications for judicial review?

Answer 7: While Alion has discontinued its applications for judicial review, Navantia’s applications are ongoing. As this is still before the courts, we cannot comment on the matter at this time.

Question 8: An inquiry into the legal fees of the CSC project during the period of time that the request for proposals (RFP) was being amended was recently made by Mr. Liepert (Calgary Signal Hill). Are there any issues the public should be made aware of?

Answer 8: No. The government is committed to ensuring an open, fair and transparent procurement process that will provide the Royal Canadian Navy with the vessels it needs to do its work protecting Canadians.

Given the magnitude and importance of this project, the technical complexity of the RFP and the nature of the ships to be designed, we have engaged subject matter experts, including internal and external legal resources, necessary to ensure the success of the competitive procurement process.

We have spent a total of $11,792,338 on the project’s legal fees during the period of time that the request for proposals was being amended. This legal cost number is approximately 0.02 percent of the $60 billion approved project budget.

Question 9: The initial cost estimate for the CSC was at $26.2 billion in 2008. Why has there been such a large increase? Are you confident with this new estimate?

Answer 9: The original cost was very rough and not a comprehensive estimate, namely because it was based on limited analysis and did not include any adjustment for inflation.

Our costing methodology is now more detailed and robust as it was informed by expert external agencies. While the final cost will only be known once design work has commenced, we are confident in this current estimate.

The CSC project has now been costed and independently verified by 5 external accounting firms as part of the defence policy review. This has resulted in a robust set of validated requirements and cost estimates.

Question 10: The Parliamentary Budget Office (PBO) provided an updated cost estimate for the Canadian Surface Combatant (CSC). In one year, their cost estimate is $8 billion more than last year. Why do the cost of the vessels keep rising even before construction even starts?

Answer 10: The PBO report on the CSC used similar tools to an analysis conducted by the Department of National Defence and represents a valuable and independent corroboration of their work. Since selecting a design for the CSC in early 2019, cost estimates have been recalculated based on certain weapons and support systems which are now known to be part of the CSC design.

The vast majority of the difference in the analyses comes from PBO’s decision to include taxes in their costing. DND’s practice is to not include taxes in budget or cost estimates because DND is not required to request funding for taxes from Parliament. Essentially taxes flow immediately back into federal coffers at no cost to Canadian taxpayers.

If you remove taxes from the PBO’s costing, the estimates are within 10% of each other. This variation is normal and expected when comparing independent cost estimates on a complex multi-decade project. Cost estimates from other allied navies building ships based on the type 26 design are also within a similar range.

As we work to finalize the CSC’s design, we remain focused on ensuring we provide the right ships to the Royal Canadian Navy at the right price for Canadian taxpayers.

Halifax class work

Commitment: Halifax class work

The Department of National Defence (DND) has a requirement to support and maintain the 12 Halifax-class frigates through to end of life, which extends beyond the end date of the existing maintenance contract.

Through this repair, refit and maintenance project, the government is delivering on its commitment to renew the Royal Canadian Navy’s fleet, create jobs and opportunities for hard working middle-class Canadians and revitalize our marine industry.

Key messages

Background and next steps

In 2010, the government announced the National Shipbuilding Strategy. Its third pillar stipulates that all Canadian companies can compete for ship repair, refit and maintenance requirements.

The Royal Canadian Navy (RCN) currently operates 12 Halifax-class ships: 7 ships are assigned to Maritime Forces Atlantic and 5 are assigned to Maritime Forces Pacific. The Navy intends to continue operating these ships for approximately another 2 decades, which extends beyond the end date of the existing maintenance contract. Three new contracts were required to ensure these vessels remain operationally available to the Navy until the Canadian surface combatant ships are fully delivered. The combined value of the contracts will be more than $7.5 billion (including taxes).

Requirement for 3 shipyards

Every 5 years, a Halifax-class frigate is required to undergo a deep maintenance cycle—referred to as a docking work period. Previously, 1 shipyard on the East Coast and 1 shipyard on the West Coast were sufficient to perform this maintenance work. However, the current volume and nature of the Halifax-class work is such that 2 East Coast shipyards are now necessary. As the frigates age, the work periods on the 7 frigates home-ported there are growing in scope and duration.

When the current contracts were initially signed in 2008, the individual docking work periods could be completed well within 52 weeks. Docking work periods conducted on the East Coast now regularly exceeds 52 weeks (currently between 65 and 78 weeks). As a result, it is no longer possible to execute all maintenance work required on the East Coast in one shipyard.

Industry consultations

In 2016, a request for information was issued to inform industry of the requirement for maintenance services for the existing Halifax-class frigates. Extensive industry engagements, along with market survey processes, identified 3 shipyards capable of performing the level of maintenance services needed to support the Halifax-class frigates through the end of life (estimated in 2043).

In November 2018, the government issued advance contract award notices to Irving Shipbuilding, Chantier Davie Canada Inc., and Seaspan’s Victoria Shipyards Limited.

Contract awards

In July 2019, contracts were awarded to Chantier Davie Canada Inc. and Seaspan’s Victoria Shipyards initially valued at $500M each and in August 2019 the government awarded a $500 million contract to Irving Shipbuilding to carry out maintenance work on the first group of Halifax-class frigates.

These initial 5-year contracts guarantee a minimum of 3 frigates for each shipyard. These contracts are expected to rise in value as additional work packages are added.

Next steps

The HMCS Ville de Québec is expected to arrive at Chantier Davie for the first docking work period in August 2020.

Questions and answers

Question 1: Why do we need new contracts?

Answer 1: The current contracts with Seaspan Victoria Shipyards Limited and Irving Shipbuilding expire in 2021. All ships require regular maintenance throughout their life, including an extended maintenance work period every 60 months. There exists a requirement to support and maintain the 12 Halifax-class frigates through to end of life, which extends beyond the existing contract end date. An assessment of the work required indicates that the services of the 3 shipyards are necessary to ensure sufficient refit and docking capacity exists to support Halifax-class frigate and the Royal Canadian Navy’s operational program.

Question 2: What sort of involvement or input has the Royal Canadian Navy had in the awarding of these contracts?

Answer 2: The Royal Canadian Navy’s role was to define the operational requirements and planned maintenance cycles that the frigates must meet in order to deliver required services to Canadians.

Question 3: Will the Industrial and Technological Benefits Policy, including value proposition, apply to these contracts?

Answer 3: Yes, the Industrial and Technological Benefits (ITB) Policy, including value proposition, was applied to this procurement. The ITB Policy requires prime contractors to make investments in Canada equal to the value of the contracts they are awarded. These investments will create and maintain jobs for Canadians and support the growth of a sustainable marine sector. The ITB commitments made by the 3 shipyards that will provide maintenance services for the Halifax-class frigates include a requirement to achieve high levels of work in Canada to be performed by Canadians. Other indirect benefits may come from investments in research and development with universities and colleges, the Canadian supply chain and skills development and training.

Question 4: What sort of engagement with industry experts has taken place?

Answer 4: A request for information was posted in December 2016 requesting required detailed information and feedback from industry suppliers. This request outlined specific requirements for the maintenance and modernization of the vessels and requested that suppliers describe their ability to satisfy those requirements. Industry days were also held in June 2017. Before the advance contract award notices were finalized and posted, industry briefings with the contractors who have indicated their interest in competing for the work period contract took place. These engagements, along with market survey processes, identified 3 shipyards (2 East and 1 West) capable of performing the level of maintenance services needed to support the Halifax-class through to the end of life. The demand requires 3 yards.

Question 5: Why is the work being spread out across the country? Are you not concerned about a lack of continuity and consistency in the work to be performed?

Answer 5: Maintenance work on these ships will grow in scope and duration as the frigates age, with heavy maintenance conducted on the East Coast now regularly exceeding 52 weeks per vessel. This trend is expected to increase as the ships continue beyond their mid-life, and is based upon current Royal Canadian Navy data and data from allied nations.

There are 7 Halifax-class frigates on the East Coast and 5 on the West Coast. The ships on the East Coast require greater corrective maintenance than those on the West Coast because the East Coast environment has harsher conditions. It is no longer possible to execute all required East Coast maintenance work in only one shipyard. As ships get older, more problems are found when things are taken apart to start maintenance work, they therefore require more time to complete all the additional repairs required. This then extends the period of time required to complete the work period for the ship, which is why it is not possible to complete 7 ships in a 5-year cycle.

Our assessment has determined that Irving Shipyard Inc., Chantier Davie Canada Inc. and Seaspan Victoria Shipyards have the required infrastructure and workforce needed to ensure the Halifax-class is able to meet RCN fleet availability requirements through to the end of life.

Question 6: When will maintenance work actually begin at the shipyards?

Answer 6: The work is scheduled to begin in 2020, based upon the maintenance schedule of the fleet, with Chantier Davie receiving the first vessel under these contracts. These individual contracts include multiple maintenance work packages.

Question 7: Do shipyards get a guaranteed amount of work?

Answer 7: The 3 selected shipyards (Irving Shipyards Inc. in Halifax, Nova Scotia, Seaspan Victoria Shipyards Ltd. in Victoria, BC and Chantier Davie in Lévis, Quebec) will be guaranteed a minimum of 3 docking work periods. All 3 yards will be eligible to be awarded additional docking work periods based on performance.

Over the life of the Halifax-Class frigates, it is expected that over 40 docking work periods will be required.

Question 8: How will you measure the shipyards’ performance?

Answer 8: Performance will be measured through a number of elements, such as quality of work, efficiency, schedule adherence and work completion.

Question 9: Will there be any penalties if shipyards don’t complete the work in the defined schedule?

Answer 9: The contracts are performance-based and shipyards will be provided additional docking work periods based upon positive performance.

Question 10: How will we decide which yard gets what?

Answer 10: The Royal Canadian Navy has a program in place that will inform the schedule and yard allocation based on the maintenance cycle for the Halifax class and operational requirements. The work will be divided on a rotational basis to ensure the operational readiness of the fleet. The shipyards will be paid for the work performed for each ship based on individual docking work periods. All 3 yards will be eligible for additional work based on performance.

Question 11: What is the expected value of contracts for each shipyard over the life of these projects?

Answer 11: Each shipyard will have the opportunity to receive a minimum of $2 billion in maintenance contracts, until the Halifax-class frigates reached their end of the life cycle. There are currently 5 Halifax-class frigates on the West Coast and 7 on the East Coast divided on a rotational basis between Irving Shipbuilding and Chantier Davie to ensure the operational readiness of the fleet. The exact amount each shipyard receives will depend on several factors including ship condition, operational tempo and contractor performance. In terms of ship condition, the East Coast is a harsher environment for ships to operate than the West Coast, with more extreme weather conditions that have resulted in increased corrective maintenance requirements on the ship’s structure.

Joint Support Ships

Commitment

The government is delivering on its commitment to renew the Royal Canadian Navy’s (RCN) fleet, create jobs and opportunities for hard working middle-class Canadians and revitalize our marine industry.

Through the National Shipbuilding Strategy (NSS), 2 Joint Support Ships (JSS) built by Seaspan’s Vancouver Shipyards (VSY) are being built for the RCN.

Key messages

Note

Questions related to the budget and the capability/state of equipment of the RCN should be referred to the minister of National Defence.

Current status

Construction of early blocks for the first JSS is underway, with the full build contract to be awarded in early 2020. Delivery of the first JSS is expected in 2023. The second JSS will begin construction after the OOSV, and delivery is expected in 2025.

Background

The JSS project will deliver 2 support vessels to the RCN to supply other RCN ships with fuel, ammunition, spare parts, food and water. These ships will also provide a home base for maintenance and operation of helicopters, a limited sealift capability, and support to forces deployed ashore.

The project budget for the 2 JSS, $3.4 billion, is currently under review. It includes costs for ship design and construction, project management, and contingencies.

To mitigate a production gap between the offshore fisheries science vessels (OFSV) and the OOSV, in June 2018, Canada decided to advance preliminary construction of JSS. In February 2019, Canada decided to re-sequence construction of the first JSS and the OOSV; VSY will now complete construction on JSS 1, followed by the OOSV and then JSS 2. This will better optimize VSY’s workforce and help mitigate the risk of potential layoffs.

Questions and answers

Question 1: Can you explain the project sequence changes at Seaspan?

Answer 1: The Government of Canada has made a decision to re-sequence construction of the joint support ships and offshore oceanographic science vessel at Seaspan Shipyards, in an effort to build on the good momentum underway with the construction of JSS 1.

Under the revised sequencing, Seaspan will complete construction on JSS 1, followed by the offshore oceanographic science vessel and then JSS 2. This will allow for uninterrupted transition from early block construction to full production on joint support ship 1.

Question 2: Why the change in sequencing?

Answer 2: This change in sequencing will ensure focused engineering resources on each of the projects, while allowing for time between construction of the first and second joint support ship to incorporate lessons learned.

Moreover, this allows for uninterrupted work at the shipyard, mitigating the risk of potential layoffs and production gaps between builds.

Question 3: How will this impact production schedules?

Answer 3: The new estimated delivery dates are (previous public date):

Question 4: What are the budget implications related to the re-sequencing?

Answer 4: We are working diligently with VSY to manage and adhere to timelines, monitor costs, planning and scheduling of projects, and to minimize any potential work disruptions related to production gaps. The joint support ship project budget of $3.4 billion is currently under review.

The OOSV project budget is currently under review. While the delay in construction on this ship could result in increased costs related to inflation and supply chain requirements, it could also result in a more mature ship design prior to construction—which could, in turn, reduce costs in the long run. Details on the OOSV project budget will be provided once the review is complete.

Offshore Fisheries Science Vessel

Commitment

The government is delivering on its commitment to renew the Canadian Coast Guard (CCG) fleet and to rejuvenate our marine industry through the delivery of 3 new offshore fisheries science vessels (OFSV). The OFSV is under the National Shipbuilding Strategy (NSS) and part of the work package to be built by Seaspan’s Vancouver Shipyards (VSY).

Note

Questions related to the budget and the capability/state of equipment of the CCG should be referred to the minister of Fisheries, Oceans and the CCG.

Key messages

Note

Questions related to the budget and the capability/state of equipment of the CCG should be referred to the minister of Fisheries, Oceans and the CCG.

Current status

The first OFSV, the CCGS Sir John Franklin, has been delivered and is conducting mission-specific final training for science personnel and ship’s crew on the West Coast in advance of commencing missions in April 2020. The second vessel, the CCGS Captain Jacques Cartier, has been delivered and is in transit from Vancouver to Halifax, its eventual operating base. Delivery of the third vessel, the future CCGS John Cabot, is expected in summer 2020.

Background

The OFSV project will deliver 3 new vessels to the CCG to replace 3 existing ships. The vessels will continue critical scientific research and ecosystem-based management, as well as contribute to Canada’s stewardship of fishery and ocean resources.

The project budget is $687 million, which includes costs for ship design and construction, project management, spare parts, training and other costs to put the vessels into operation.

Canadian Coast Guard Fleet Renewal Announcement

Commitment

In line with the mandate, PSPC is working with the minister of Innovation, Science and Industry (ISED), as well as the minister of Fisheries and Oceans (DFO) and the Canadian Coast Guard (CCG) to continue the full renewal of the Canadian Coast Guard fleet, continuing the revitalization of the shipbuilding industry across Canada, creating middle class jobs and ensuring Canada’s marine services have the modern ships that they need.

Key messages

Background

On May 22, 2019, the government announced a major renewal of the CCG fleet, with up to 18 ships to be built in Canadian shipyards under NSS. Total funding for the 18 new large ships is $15.7 billion, which represents early estimates of project budgets including construction, logistics and support, contingency, project management and infrastructure costs. The costs of each ship will be announced following contract negotiations.

Up to 16 MPV have been added Seaspan’s Vancouver Shipyards (VSY) work package, with an estimated project cost of $14.2 billion. The MPV will replace capabilities provided by a number of existing CCG ships. Irving Shipbuilding Inc. (ISI) will build 2 AOPS that will be adapted to the CCG’s specific needs, such as offshore patrols, with an estimated project cost of $1.5 billion.

A competitive process will be launched to design a new class of smaller ships, the new mid-shore multi-mission ship, which would complement the work of the large fleet in shallow areas and deliver mid-shore science activities.

Repairs, refits and vessel life extension work will be carried out on the existing fleet until the new ships are delivered, with $2 billion to be invested on a competitive basis for this purpose.

Canada is also providing over $351 million to support ongoing CCG capacity enhancements such as strengthening management oversight and promoting innovation and greener practices.

The polar icebreaker needs to be delivered to CCG by 2030 when the existing CCGS Louis S. St. Laurent will be retired. This ship was previously part of VSY’s work package but was removed following the addition of the MPV. Canada will explore delivery options with domestic and foreign shipyards and make decision in 2020. On February 10, 2020, a request for information was issued to seek information on domestic shipyard capability and capacity to build and deliver a polar icebreaker before 2030.

Questions and answers

Question 1: What enhancements were made to the NSS?

Answer 1: The work packages of the partners for large ship construction under the NSS, Irving (ISI) and Seaspan’s Vancouver Shipyard (VSY) have been modified to add new vessels.

The enhancements to the NSS are as follows:

The revised work packages will keep both shipyards working to capacity until the late 2030s/2040s.

The Government of Canada launched a competitive process to add a third Canadian shipyard as a strategic source of supply. Chantier Davie has pre-qualified to become the third strategic partner and will now move to the next stage in the selection process, the request for proposal and evaluation stage. The third shipyard will be called to build 6 program icebreakers for the Canadian Coast Guard.

This process will look very similar to the process that was undertaken to select the original 2 partner shipyards under the NSS. We expect to have an umbrella agreement in place with a third shipyard in 2020.

Question 2: Why have you decided to add a third shipyard?

Answer 2: The full renewal of the Coast Guard fleet will require additional ships, beyond those already planned and the up to 18 new large ships announced. To support future shipbuilding needs, and attract more talent and good jobs to communities through the country, the Government of Canada intends to add a third Canadian shipyard as a partner under the NSS.

The current work packages will keep both ISI and Seaspan Vancouver shipyard working to capacity until the late 2030s/2040s and their facilities cannot concurrently begin other construction projects.

To help support future shipbuilding requirements, we launched a competitive process to add a third Canadian shipyard as a strategic source of supply to help ensure the timely delivery of additional vessels to the federal fleet, including the construction of 6 program icebreakers for the Canadian Coast Guard.

Question 3: Does adding a third shipyard to NSS work amount to the government breaking its contractual agreement with the other 2 shipyards?

Answer 3: No. The umbrella agreements with the 2 shipyards remain in place.

The full renewal of the Coast Guard fleet requires additional ships, beyond those already planned including 18 new large ships just announced. To support future shipbuilding needs, and attract more talent and good jobs to communities through the country, the Government of Canada intends to add a third Canadian shipyard as a partner under the National Shipbuilding Strategy.

The current work packages will keep both Irving Shipbuilding Inc. and Seaspan Vancouver Shipyards working to capacity until the late 2030s/2040s and their facilities cannot concurrently begin other construction projects. The government has pressing marine requirements and needs additional ships to be delivered in an earlier timeframe.

To help support future shipbuilding requirements, we launched a competitive process to add a third Canadian shipyard as a strategic source of supply to help ensure the timely delivery of additional vessels to the federal fleet, including the construction of 6 program icebreakers for the Canadian Coast Guard.

Question 4: How long will it take before we see the new vessels delivered?

Answer 4: The expected start of construction for AOPS 7 and 8 is 2021. The expected start of construction of the MPVs is in the mid-2020s, following the completion of the second JSS.

Delivery dates for ships at all 3 yards will continue to be identified as construction contracts are awarded. The first offshore fisheries science vessel (OFSV), the Canadian Coast Guard Ship (CCGS) Sir John Franklin, was delivered to the CCG in June 2019. The second OFSV, CCGS Captain Jacques Cartier, was delivered in November 2019. Construction continues on the third and final OFSV, a future CCGS, which is expected to be delivered in summer 2020. In November 2019, ISI conducted initial testing at sea for the first AOPS. It is expected to be delivered to the RCN in 2020.

Question 5: What is the value of the respective work packages?

Answer 5: The total funding for up to 18 large ships is $15.7 billion, which represents early estimates of project budgets including construction, logistics and support, contingency, project management and infrastructure costs. The exact value of the ships will be communicated following contract negotiations.

The estimated projects budgets for the new vessels and associated project requirements as follows:

Also, the Government of Canada launched a competitive process to add a third Canadian Shipyard under the NSS, through an ITQ, and included a work package comprising of 6 new program icebreakers for the Canadian Coast Guard.

On December 19, 2019, the Government of Canada announced Chantier Davie has pre-qualified. Chantier Davie will now move to the next stage in the selection process, the request for proposal and evaluation stage. We expect to have an umbrella agreement in place with a third shipyard in 2020.

The estimated budget for the 6 new program icebreakers will be determined following contract negotiations with the selected shipyard.

Question 6: Is this a complete restructuring of the National Shipbuilding Strategy?

Answer 6: No. The National Shipbuilding Strategy is designed to provide Canada the flexibility to adapt to evolving needs and ensure ships are produced in the most efficient manner.

Transport Canada ferries

Commitment

Public Services and Procurement Canada is committed to supporting Transport Canada in providing inter-provincial ferry services in Atlantic Canada and Eastern Quebec.

Key messages

Questions and answers

Question 1: Can you give me an update on the constructions of 2 new ferries for Transport Canada announced in Budget 2019?

Answer 1: On June 19, 2019, the Government of Canada announced that it had entered into contract negotiations with the shipyard to build 2 new ferries to replace the Motor Vessel (MV) Madeleine, which is currently used for service between Îles de-la-Madeleine, Quebec, and Souris, Prince Edward Island (PE), and the MV Holiday Island, one of 2 vessels used to provide service between Wood Islands, PEI, and Caribou, Nova Scotia.

On November 14, 2019, Lengkeek Vessel Engineering Inc. was awarded a $3.1 million contract for an expert technical advisor to provide expert advice and technical oversight to Transport Canada throughout the project leading to and including the construction of 2 new ferry vessels.

On November 28, 2019, PSPC awarded a contract to Chantier Davie estimated at $1 million, for initial project work related to the construction of 2 ferries for Transport Canada. This includes, but is not limited to, establishing a Project Management Office and initiating various engineering studies to support design and construction of the new vessels. Additional contracts will be awarded as work on this project progresses.

Background

The Marine Vessel Madeleine, operating between Quebec and Prince Edward Island, and the Marine Vessel Holiday Island, operating between Prince Edward Island and Nova Scotia, must be replaced as both ferries are at the end of their life cycles. Procuring 2 new vessels will ensure continued safe operations, improve long-term reliability of the ferry services and improve the experience for passengers.

In line with the Buy-in-Canada policy, these ferries are to be constructed in Canada. Thirdparty and government analyses identified Chantier Davie Canada Incorporated as the sole Canadian shipyard capable of delivering the ferries in the required timeframe: by 2024 to 2026.

On May 22, 2019, an advance contract award notice was issued signaling Canada’s intention to enter into a contract with Chantier Davie Canada Incorporated for the construction of the 2 ferries. Other interested suppliers had 15 calendar days to submit a statement of capabilities to show they met the requirements laid out in the advance contract award notice. None were submitted.

Multi-purpose vessels

Commitments

In line with the mandate, the minister of Public Services and Procurement is working with other departments and the Canadian Coast Guard (CCG) to continue the full renewal of the CCG fleet.

The multi-purpose vessels (MPV) project will deliver up to 16 vessels to replace capabilities provided by a number of existing CCG ships. The MPV procurement falls under the National Shipbuilding Strategy (NSS) and is part of the work package to be built by Seaspan’s Vancouver Shipyards (VSY).

Note

Questions related to the budget and the capability/state of equipment of the CCG should be referred to the minister of Fisheries, Oceans and the CCG.

Key messages

Current status

Construction is expected to begin in the mid-2020s, with the first delivery in the late 2020s.

Background

The MPV project will deliver up to 16 vessels to replace capabilities provided by a number of existing CCG ships. Among their primary missions, the vessels will provide icebreaking services and support; conduct the deployment, recovery and maintenance of fixed and floating navigation aids; and conduct searches on the water, respond to marine distress calls, and provide assistance and towing to disabled vessels. The vessels will also perform a variety of secondary missions including conservation and protection, environmental response, and support for scientific research.

In May 2019, the government announced the MPV would be added to VSY’s work package. This long production run will allow the shipyard to generate efficiencies and economies of scale, as well as ensure greater workforce stability and minimize gaps in production. The estimated project cost for the 16 vessels is $14.2 billion.

Offshore oceanographic science vessel

Commitment

Public Services and Procurement Canada is delivering on its commitment to ensure that Canada’s biggest and most complex National Defence and Canadian Coast Guard procurement projects are delivered on time and with greater transparency to Parliament.

The offshore oceanographic science vessel procurement falls under the National Shipbuilding Strategy and is part of the work package to be built by Seaspan’s Vancouver Shipyards. Overall, the project will allow for a better understanding of the oceans and the impacts of climate change.

Note

Questions related to the budget and the capability/state of equipment of the CCG should be referred to the minister of Fisheries, Oceans and the CCG.

Key messages

The NSS is a multi-decade program, and we are continually assessing progress and looking for opportunities for improvement. We work closely with our partners under the strategy to ensure the NSS is well-placed to meet evolving federal shipbuilding requirements while continuing to provide good jobs to Canadians and benefitting Canada’s economy.

Current status

Pre-construction work is underway. Construction is expected to begin in winter 2021, with delivery in 2024.

Background

The OOSV project will replace the CCG largest science vessel, the CCGS Hudson. The vessel will be capable of multi-tasking oceanographic, fishery, geological and hydrographic survey missions, and will contribute to Canada’s understanding of the oceans and the impacts of climate change.

The budget for the vessel was originally established in 2007, prior to the announcement of the NSS. It was subsequently revised in 2009 and 2016, and the current figure of $331 million is presently under review.

The OOSV was initially sequenced second in VSY’s work package, after the construction of 3 offshore fisheries science vessel (OFSV) and prior to the construction of 2 joint support ships (JSS). In February 2019, Canada made the decision to re-sequence construction; VSY will now complete construction on JSS 1, followed by the OOSV and then JSS 2. This will better optimize the shipyard’s engineering workforce and help mitigate the risk of potential layoffs.

Questions and answers

Question 1: Why were these changes made to the build sequence?

Answer 1: Changing the build sequence to “JSS 1—OOSV—JSS 2” capitalizes on JSS project progress, and provides Canada with value for money for ship capabilities, addresses workforce challenges and looks to strengthen the viability of our long term partnership for the NSS non-combat package. It also continues to secure a domestic shipbuilding capacity in Canada, all while still meeting the objectives of NSS.

The sequencing change also strengthens the earliest possible delivery schedule for the first JSS, allowing the Royal Canadian Navy (RCN) to integrate this renewed capability back into the fleet and in service. This should also allow for more time to incorporate lessons learned into follow on ships, while optimizing VSY’s workforce by eliminating the need to expend design engineering effort on both the OOSV and JSS projects concurrently.

Allowing for a core group of shipyard engineering resources to focus on fewer concurrent projects will contribute to a more mature design through learning and application of best practices. This in turn, should result in a reduced cost due to the elimination of some risk from the design.

Canada is seeing progress and applying lessons learned between the first builds at each yard. We are working diligently with VSY to manage and adhere to timelines, monitor costs, planning and scheduling of projects, and to minimize any potential work disruptions related to production gaps. 

Question 2: What are the CCG’s mitigation strategies to deal with the latest delay to the delivery of the OOSV? Are you able to cope with this new delivery schedule using existing resources?

Answer 2: Part of the CCG regular planning is to build in contingencies for unforeseen circumstances and to have a number of measures in place to ensure the continuity of services:

The CCG will continue to deliver services to Canadians who depend on them, such as escorting cargo ships for essential supplies, science missions, and providing mariners with support in the most challenging of environments

Question 3: Will the change in the OOSV’s build schedule affect the CCG’s ability to deliver on science programs?

Answer 3: Part of the CCG’s regular planning is to build in contingencies for unforeseen circumstances and to have a number of measures in place to ensure the continuity of services.

We are confident that the CCG can meet its core operational demands and service delivery until the new OOSV is completed at VSY.

Document navigation for "Standing Committee on Government Operations and Estimates: March 12, 2020"

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