Defence and Marine Procurement: Standing Committee on Government Operations and Estimates—June 2, 2021

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Defence and Marine Procurement: General accomplishments and project status


Suggested responses and background information is provided on defence and marine procurement accomplishments and status of projects.


Questions on defence procurement delays or the Department of National Defence (DND) questions should be directed to the Minister of National Defence.

Suggested response

Most recently:

If pressed on impacts of COVID-19 to budgets and schedules:

If pressed on ‘excusable delay’ requests:

If pressed on the status of Defence Procurement Canada:


Major progress on defence and marine procurements over the last 2 years:

Impact of COVID-19 on shipyard operations

Irving Shipbuilding

In response to COVID-19, Irving Shipbuilding Inc. (ISI) suspended most industrial operations as of March 20, 2020, with special measures for working from home or within ISI’s offices implemented where possible. Most of the workforce is now back in the shipyard while also ensuring physical distancing. COVID-19 safety measures have been implemented, including temperature screening for all individuals entering the site.

ISI is working at reduced levels of efficiency due to COVID-19. On July 31, 2020, the first AOPS was delivered and accepted by the Royal Canadian Navy, and maintenance of the HMCS Charlottetown was completed in March 2021. However, ISI has indicated a 6 to 9 month delay to future AOPS due to COVID-19 related disruptions and other slippage, with these timelines at least partly dependent on whether COVID-19 measures are continued or enhanced.

Vancouver Shipyards

Operations at Vancouver Shipyards (VSY) continue during COVID-19 but are being closely monitored. A number of non-production staff have returned to the office while others continue to work from home. Measures being taken include following self-isolation guidelines, additional social distancing measures, cancelling large gatherings and increased cleaning. VSY has been working closely with WorkSafeBC in implementing these practices, and has adjusted and escalated actions in response to new regulations and guidance.

This approach has allowed VSY to continue construction at a reduced rate of production for the first joint support ship and final offshore fisheries science vessel, the latter of which was delivered in October 2020.

VSY has experienced more significant COVID-19 impacts during the second and third waves of the pandemic and has reported impacts labourers and subcontractors which is lowering efficiency. VSY continues to experience supply chain challenges, with numerous delay notices received to date. The availability of engines, cabling, and steel are of particular concern and could impact the achievement of milestones.

Chantier Davie

On March 24, 2020, in response to COVID-19, the Quebec Government published a list of essential industrial sectors, under which Chantier Davie qualified. Chantier Davie has conducted on-site training for dealing with COVID-19, implemented a set of strict directives, and negotiated with their union to maintain intact squads instead of rotating employees through different teams. Nonetheless the workforce numbers and capacity have diminished to accommodate the social distancing measures implemented Chantier Davie remains functioning in the 80% to 85% capacity range due to COVID-19.

National Shipbuilding Strategy


The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy (RCN) and Canadian Coast Guard, create a sustainable marine sector, and generate economic benefits for Canadians.

Suggested response

Progress on current work

If pressed on OOSV increased budget (note: Questions on budget, requirements, timelines, international comparisons, project management should be directed to the Minister of Fisheries and Oceans and the CCG):

If pressed on CSC project delays (note: Questions on budget, requirements, estimated timelines, international comparisons, project management should be directed to the Minister of National Defence):

If pressed on the Navantia CSC court challenge:

If pressed on COVID-19 impact on shipbuilding:

If pressed on the report from the Office of the Auditor General (OAG) of Canada:

If pressed on Parliamentary Budget Officer (PBO) report on CSC (note: Questions on budget, requirements, estimated timelines, international comparisons, project management should be directed to the Minister of National Defence)

If pressed on the PBO report on JSS (note: Questions relating to vessel capabilities should be referred to the Minister of National Defence):

If pressed on Esquimalt Graving Dock:

Third yard

Opportunities for other yards and Chantier Davie

If pressed on the polar icebreakers:

If pressed on the Chantier Davie National Icebreaker Center:

If pressed on interim icebreaker capacity for CCG:

If pressed on emergency towing vessels:


Canadian surface combatant: Navantia Court Challenge

Navantia was an unsuccessful bidder for the competitive CSC request for proposals which was won by Lockheed Martin Canada. Navantia has applied to the Federal Court for a judicial review of the results of the bid evaluation.

Navantia contends the BAE type 26 ship selected for the Royal Canadian Navy's new fleet failed to meet Canada's requirements.

As part of the judicial process, the Attorney General of Canada received notice under section 38.01 of the Canada Evidence Act that sensitive or potentially injurious information was contained in the certified tribunal record. On January 20, 2021, the Attorney General of Canada filed a confidential section 38 Canada Evidence Act application in Federal Court. When filing this application the Attorney General of Canada expected that the application would be made public.

With respect to section 38 in the Navantia application for judicial review, this is a statutory obligation and not a discretionary decision by government officials.

Section 38.01 requires every participant in a proceeding to advise the Attorney General in writing where there is a possibility of disclosure of sensitive or potentially injurious information.

Beyond this explanation of the application of section 38, the government is not able to comment on the matter as it is before the courts.

Canadian surface combatant: Parliamentary Budget Officer Report

The CSC project represents the largest procurement under the NSS and is part of the work package to be built by Irving Shipbuilding Inc. The 15 CSC will replace the RCN’s existing fleet of frigates and retired destroyers at an estimated cost of $56 billion to $60 billion.

The PBO reported on the CSC projected costs in 2017 and 2019. In 2017, the PBO estimated the cost of 15 CSCs at $61.82 billion. In 2019, the PBO revised the cost to $69.8 billion. While the final design and build strategy is yet to be completed, the PBO observed that project delays would further increase the cost of the project.

The PBO published a report on February 24, 2021, entitled “The Cost of Canada's Surface Combatants: 2021 Update and Options Analysis” that now estimates the cost of the CSC project at $77.3 billion. The PBO also provides cost forecasts for alternative procurement scenarios that assume a 4-year delay to the overall project should a new design be selected to replace the type 26.

Esquimalt Graving Dock

Other Canada-owned graving docks were divested in the 1990s as part of the effort to divest of over 30 engineering assets and well over 100 marine assets as a result of the Nielsen Report (Government of Canada Program Review) in 1985.

Esquimalt Graving Dock was removed from the 1985 direction to divest in 2008 as it was recognized as a key strategic asset for federal fleet sustainment, as well as for support of the west coast industrial ship repair industry. Tenant ship repair companies at the dock repair and sustain not only RCN frigates, but cruise ships, domestic barges/tugs, BC Ferry vessels, and cargo tote ships among others.

The purpose of the planned expansion is to ensure the federal fleet can be sustained well into the future. With redevelopment, the facility would be able to accommodate existing and future federal fleet vessels. The redevelopment would also attract additional tenants and add hundreds of highly-paid, skilled trades jobs, and reduce ‘whole of government’ costs to sustain federal fleets.

In parallel with planning and decisions to be made regarding redevelopment, PSPC is again examining the fee structure—both leases and dock charges under the Esquimalt Gravig Dock (EGD) Regulations—which it reviews periodically, to ensure the rates are fair and contribute to a financially sustainable facility. An independent study will provide options for the revenue model to PSPC in early 2022. Once an option is selected, PSPC will launch a full consultation process, review rates and undergo the regulatory process. The review is expected to take 3 years to complete.

An amount of $3 billion for the redevelopment has been quoted in the media in winter 2021; however, this information is incorrect. The cost of the redevelopment is under assessment.

Contracts under the National Shipbuilding Strategy

From 2012 to the end of 2020, the government signed approximately $17.49 billion in new NSS contracts throughout the country. In terms of economic impacts of the NSS, since its inception, NSS contracts are estimated to contribute approximately $20 billion ($1.82 billion annually) to Canada’s gross domestic product, and create or maintain, more than 16,930 jobs, annually, through the marine industry its Canadian suppliers and consumer spending, between 2012 and 2022.

Table 1: National Shipbuilding Strategy contracts awarded from 2012 to the end of 2020
Irving Shipbuilding Vancouver Shipyards Chantier Davie Other shipyards/ companies
$5.11 billion $4.41 billion $2.19 billion ‎$5.78 billion
Table 2: National Shipbuilding Strategy contracts awarded by province to the end of 2020
Province Total contract value % of grand total contract value
Alberta $22,528,362 0.129%
British Columbia $5,708,632,291 32.633%
Manitoba $701,877 0.004%
Newfoundland and Labrador $216,917,382 1.240%
Northwest Territories $1,731,755 0.010%
Nova Scotia $5,418,361,632 30.974%
Ontario $3,618,548,097 20.685%
Quebec $2,505,914,515 14.325%
Grand total $17,493,335,911 100%
Table 3: Project budgets and delivery dates
Vessel Delivery date Budget
OFSV 1 June 27, 2019 OFSV 1 to 3 $788.5 million
OFSV 2 November 29, 2019 OFSV 1 to 3 $788.5 million
OFSV 3 October 9, 2020 OFSV 1 to 3 $788.5 million
JSS 1 2023 JSS 1 and 2 $4.1 billion
JSS 2 2025 JSS 1 and 2 $4.1 billion
OOSV 2024 $966.5 milliontable 3 note 2
AOPS 1 July 31, 2020 AOPS 1 to 6 $4.3 billion
AOPS 2 Summer 2021table 3 note 1 AOPS 1 to 6 $4.3 billion
AOPS 3 Spring 2022table 3 note 1 AOPS 1 to 6 $4.3 billion
AOPS 4 Winter 2023table 3 note 1 AOPS 1 to 6 $4.3 billion
AOPS 5 Winter 2024table 3 note 1 AOPS 1 to 6 $4.3 billion
AOPS 6 Fall 2024table 3 note 1 AOPS 1 to 6 $4.3 billion
AOPS 7 Summer 2025table 3 note 1 AOPS 7 and 8 $1.5 billion (estimate)
AOPS 8 Spring 2026table 3 note 1 AOPS 7 and 8 $1.5 billion (estimate)
CSC 15 CSCs beginning early 2030s $56 to 60 billion (estimate)
MPV Up to 16 MPVs starting in late 2020s $14.2 billion (estimate)

Table 3 Notes

Table 3 Note 1

Incorporates current estimated delays due to COVID-19. For AOPS 2 to 6, there is also a 3-month risk window in addition to these targets due to continued uncertainty surrounding the pandemic.

Return to table 3 note 1 referrer

Table 3 Note 2

Includes $453.8 million for OOSV build contract, announced February 18, 2021.

Return to table 3 note 2 referrer

Polar icebreaker


The Government of Canada is committed to the renewal of the Canadian Coast Guard fleet and is making a significant investment in new vessels that will bring a modern, flexible approach to program delivery. This investment includes the construction of 2 new polar icebreakers to ensure continued delivery of the CCG’s Arctic Program.

Suggested response

If pressed on budget and delivery of the polar icebreakers:

If pressed on benefits to the Canadian economy:

If pressed on the Davie National Icebreaker Center:

If pressed on procurement practices:


Vancouver Shipyards’ non-combat package is a challenging program of work, which was made even more challenging by the inclusion of the large, one-off polar icebreaker. In 2019, Canada made the decision to substitute the 1 polar icebreaker with a long run of 16 multi-purpose vessels. Adding a long production run of up to 16 MPVs will provide Vancouver Shipyards with a longer program horizon than a one-off polar icebreaker, helping to break the cycle of short production runs and provide an opportunity to generate greater efficiencies.

On February 28, 2020, the Government of Canada issued a RFI, open to all Canadian shipyards, seeking information on domestic shipyard capability and capacity to construct and deliver a polar-class icebreaker. The RFI closed on March 13, 2020, and PSPC received 4 responses for evaluation.

On June 9, 2020, Seaspan’s Vancouver Shipyards and Ontario-based Heddle Shipyards announced they will work together if they are awarded the contract to build the polar icebreaker.

On September 16, 2020, Seaspan’s Vancouver Shipyards and Newfoundland-based Genoa Design International announced they will work together on 3D modeling and design services if they are awarded the contract to build the polar icebreaker.

In November 2020, Davie announced that they were partnering with Vard Marine Inc. and Serco Canada Marine in their bid to build the polar icebreaker, which they had launched earlier in August 2020 at the same time as their National Icebreaker Centre.

On February 2, 2021, Chantier Davie announced that it was welcoming General Electric (GE) as a strategic partner in its Polar Icebreaker Program.

On May 6, 2021, the Government of Canada announced that it will move forward with the construction of 2 new polar icebreakers as part of the NSS. The engineering and construction of 1 polar icebreaker will be directed to Seaspan’s Vancouver Shipyards, and engineering and construction of the other polar icebreaker will be directed to Chantier Davie, pending the successful completion of the ongoing selection process as the third strategic partner for large ships under the NSS.

Chantier Davie has pre-qualified as part of the process to select a third shipyard under the NSS to build 6 program icebreakers for the CCG. This process was overseen by an independent fairness monitor. The yard is now going through the next steps which 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.

Strategic tanker transport capability project


As part of the Government of Canada’s reaffirmed commitment to invest in Canada’s military, as announced in the 2017 Canada’s defence policy: Strong, Secure, Engaged, the government launched an open and transparent competition in December 2020 to replace Canada’s CC-150 Polaris fleet—the Strategic Tanker Transport Capability (STTC) Project.


Suggested response


In June 2017, the Government of Canada articulated within the strategic vision of Canada’s new defence policy: Strong, Secure, Engaged (SSE) that Canada needs an agile, multi-purpose, combat-ready military. In response to SSE Initiative #47, the STTC Project is the means to recapitalize the next generation strategic air-to-air tanker-transport capability, and replace the CC-150 Polaris fleet.

Aligning with the SSE requirement to enhance interoperability with Canada’s allies, the Minister of National Defence has a mandate to renew Canada’s strong commitment to the North American Aerospace Defence Command (NORAD) and the North Atlantic Treaty Organization (NATO), acting in multiple theatres simultaneously, while also bolstering disaster relief, search and rescue, contributing to peace operations and capacity building.

The STTC platform will be equipped to support and contribute to these renewed commitments through delivery of air-to-air refueling of Canadian, allied and coalition aircraft, strategic Government of Canada transport, aeromedical evacuation, personnel and equipment transport.

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