Defence and marine procurement: Standing Committee on Government Operations and Estimates—June 10, 2022

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National Shipbuilding Strategy

Key messages

Key data points

Background

Large ships and their status

Marine services and small vessels

Third Yard

Key messages

Key data points

Background

In May 2019, Canada identified the need to select a third Canadian shipyard under NSS. The selected yard will build 6 program icebreakers and 1 polar icebreaker for the CCG.

Following the invitation to qualify, Chantier Davie was the only shipyard that pre-qualified to the next stage of the selection process (request for proposal stage). Before Chantier Davie can be confirmed as the third shipyard, it must be successful in its response to the request for proposal, meeting all the evaluation criteria, including a financial due diligence process and technical requirements (plans) to achieve target state.

Chantier Davie will continue work under programs such as medium icebreakers conversions, Halifax class docking work period Contract and Transport Canada ferries, in parallel with the third yard selection process.

Polar icebreakers

Key messages

Key data point

Background

On February 28, 2020, the Government of Canada issued a request for information, open to all Canadian shipyards, seeking information on domestic shipyard capability and capacity to construct and deliver a polar-class icebreaker.

The request for information closed on March 13, 2020 and Public Services and Procurement Canada received 4 responses.

On May 6, 2021, the government announced its intention to move forward with the construction of 2 polar icebreakers.

This procurement approach is the best path for ensuring that at least 1 of the polar icebreakers is delivered by 2030 when the CCGS Louis S. St-Laurent needs to be retired from service.

As the Government of Canada progresses through the various contracting and design phases, a project budget that includes all costs associated will be determined and publicly disclosed.

Canadian surface combatant

Key messages

Key data point

Background

The Canadian surface combatant project will replace both the Iroquois-class destroyers and the Halifax-class multi-role patrol frigates with a single class of ship capable of meeting multiple threats on both the open ocean and the highly complex coastal environment. The CSC project is the largest and most complex shipbuilding initiative in Canada since World War II.

Navantia was an unsuccessful bidder for the competitive Canadian surface combatant request for proposals, which was won by Lockheed Martin Canada. Navantia has applied to the Federal Court for a judicial review challenging the award to Lockheed Martin Canada and the evaluation of its bid. Navantia contends that the design proposed by Lockheed Martin Canada, based on the BAE type 26 ship, failed to meet the requirements of the request for proposal such that its bid was improperly evaluated and awarded.

As part of the judicial review, Navantia sought disclosure of documents that contained sensitive or potentially injurious information. The attorney general of Canada filed a section 38 Canada Evidence Act application in Federal Court on January 20, 2021.

The attorney general of Canada had a statutory obligation to file the section 38 application, and it was not a discretionary decision made 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.

Background by shipyard

Seaspan’s Vancouver Shipyards Co. Ltd.

All 3 offshore fisheries science vessels have been delivered to the Canadian Coast Guard, marking the completion of the first class of large ships built under the NSS. In addition, work is ongoing on the first joint support ship, construction of the second joint support ship began in May 2022, and construction of one offshore oceanographic science vessel began in March 2021. Finally, early design work for the multi-purpose vessels and the polar icebreaker has commenced.

Irving Shipbuilding Inc.

Canada’s lead Arctic and offshore patrol ship, the HMCS Harry DeWolf, was delivered and accepted by Canada on July 31, 2020, and the ship was commissioned into the RCN on June 26, 2021. The second Arctic and offshore patrol ship, future HMCS Margaret Brooke, was delivered and accepted by the RCN on July 15, 2021. Three Arctic and offshore patrol ships for the RCN are currently under construction, including the third Arctic and offshore patrol ship, future HMCS Max Bernays, which was launched on October 23, 2021 and is expected to be delivered in summer 2022. Design work on Arctic and offshore patrol ships 7 and 8 for the Canadian Coast Guard is also advancing. Design work on the Canadian surface combatant is advancing as well.

Chantier Davie Canada Inc.

Chantier Davie is converting 3 medium icebreakers for the Canadian Coast Guard. The first vessel, CCGS Captain Molly Kool, began operations in December 2018, and the second vessel, CCGS Jean Goodwill, was delivered to the Canadian Coast Guard in November 2020. The third vessel, CCGS Vincent Massey, is expected to be in service in summer 2022.

An Advance Contract Award Notice (ACAN) signaling our intention to enter into a contract with Chantier Davie for required vessel life extension work on the CCGS Louis S. St-Laurent, Canada’s largest icebreaker, closed November 19, 2020. Chantier Davie has been identified as the only facility in Eastern Canada capable of performing this work during the specified time period. A contract was awarded in March 2022 and work began in April 2022. On July 21, 2020 the HMCS St. John’s arrived at Chantier Davie for repair and maintenance. It is the first vessel to be re-furbished under the Halifax class docking work period contract awarded to Chantier Davie in July 2019. Work on the HMCS St. John’s was completed in spring 2022. Another Halifax class frigate, HMCS Toronto, arrived at Chantier Davie for the same type of work on May 4, 2022.

Future fighter capability project

Key messages

Key data points

Background

In June 2017, Canada’s defence policy: Strong, Secure, Engaged confirmed a fleet size of 88 advanced fighter aircrafts to replace the current CF-18s. The government launched a procurement process for the future fighter aircraft in December 2017. Officials conducted extensive industry engagement with suppliers to maximize the likelihood that Canada received competitive proposals, and with Canadian industry to ensure that they were well positioned to participate in the procurement. 

An independent fairness monitor is overseeing the entire process, to ensure a level playing field for all bidders. An independent third-party reviewer was also engaged to assess the quality and effectiveness of the procurement approach.

In July 2019, the request for proposal was issued to the eligible suppliers.

On July 31, 2020, the bid solicitation phase closed; proposals were received from all 3 remaining eligible suppliers and the process entered the bid evaluation phase.

On December 1, 2021, Canada announced that, following evaluation of the proposals, 2 bidders—Swedish Government and SAAB AB; and the United States Government (Lockheed Martin Corporation)—remained eligible under the future fighter capability project competitive procurement process and that it would be finalizing its selection for the next step of the process, which could involve proceeding to negotiations with the top-ranked bidder or entering into a competitive dialogue with both remaining bidders.

On March 28, 2022, following a rigorous evaluation of the 2 remaining eligible proposals, Canada announced it would enter into the finalization phase of the procurement process with the top-ranked bidder United States Government (Lockheed Martin).

During the finalization phase, United States Government (Lockheed Martin) must successfully demonstrate that the resulting contracts would meet all of Canada’s requirements and outcomes, including value for money, flexibility, protection against risks, and performance and delivery assurances, as well as high value economic benefits for Canada’s aerospace and defence industry.

The Government of Canada continues to work towards a contract award in 2022, with delivery of aircraft as early as 2025.

Strategic tanker transport capability project

Key messages

Key data points

Background

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 strategic tanker transport capability (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.

Military pistol procurement

Key messages

Key data points

Background

The current Browning High-Power 9mm pistol has been in use across the Canadian Armed Forces for 70 years. Due to serviceability and reliability issues, the Browning pistol needs to be replaced.

A request for proposal was published on May 3, 2021 and 2 complaints were filed with the Canadian International Trade Tribunal by Rampart International Corporation, the Canadian distributor of a pistol made by Glock, an Austrian company.

On November 10, 2021, the Canadian International Trade Tribunal found the last complaint valid in part, and recommended, as a remedy, that Public Services and Procurement Canada (PSPC) cancel the pistol solicitation and issue a new solicitation.

In light of the tribunal’s recommendation and the reasons provided, PSPC has decided to cancel this solicitation and worked with the Department of National Defence to issue a follow-up solicitation that would address the tribunal’s concerns.

Remotely piloted aircraft systems

Key messages

Key data points

Background

In June 2017, Canada committed to acquiring remotely piloted aircraft systems as part of Canada’s defence policy: Strong, Secure, Engaged. These aircraft will be integrated into a network of intelligence, surveillance and reconnaissance systems to enable near real-time flow of information essential to the Canadian Armed Forces operations. The aircraft will be piloted by certified Canadian Armed Forces pilots from a remote location and will be capable of carrying and launching precision-guided munitions.

This is a multi-phased procurement. As part of the initial phase, Canada established, in May 2019, a list of qualified suppliers that demonstrated their ability to meet Canada’s need, as defined in the invitation to qualify. The qualified suppliers are L3 Technologies MAS Inc., and the United States Government and General Atomics Aeronautical Systems, Inc. This group of qualified suppliers have been engaged to provide feedback to government, most recently through the release of a draft request for proposal in November 2020. Benefiting from that feedback, the formal request for proposal was released. On May 20, 2022, L3 technologies MAS Inc. has informed Canada of its decision to officially withdraw from the competition. Therefore, L3 Technologies MAS Inc is no longer an eligible supplier in the competitive process and will not be invited to submit a proposal.

To support Indigenous procurement objectives, the qualified suppliers will have to provide a draft Indigenous participation plan with their proposal. This plan will detail how the winning contractor will identify the affected Indigenous communities and consult/engage with them, in collaboration with Canada, to obtain long-term, meaningful and sustainable benefits. The winning contractor will also commit up to 5% of the contract value to support Indigenous benefits in Canada. The contractor will be required to finalize its plan no later than 6 months after contract award and will also be required to regularly report on progress in the area of Indigenous participation and deliverables set-out in their plan.

A fairness monitor is engaged to oversee and report on the openness and fairness of the entire procurement process. Once the procurement is completed the fairness monitor’s report will be published.

Kingfisher Search and Rescue Aircraft

Key messages

Note

All questions related to initial and full operational capabilities, capability gap, security, interoperability requirements and costs should be answered by the minister of National Defence

Key data point

Background

On December 1, 2016, the government awarded a contract to Airbus Defence and Space to procure new fixed-wing search and rescue aircraft and systems. This contract was awarded following a fair, open and transparent and competitive procurement process, to replace Canada’s Buffalo and Hercules aircraft.

Extensive industry consultations were conducted throughout this capability-based procurement. A value proposition for both the aircraft procurement and the maintenance contracts was used to foster business opportunities for companies in Canada, through the application of Canada’s Industrial and Technological Benefits Policy.

On December 18, 2019, the government accepted the first aircraft in Spain. On September 17, 2020, the first operational aircraft arrived in Comox, British Columbia.

On May 4, 2022, the Department of National Defence announced delays in the fixed-wing search and rescue project. The CC295 Kingfisher fleet of aircraft, that will eventually replace existing search and rescue aircraft, still require significant work, tests, and trials before entering into Royal Canadian Air Force service. As a result, initial operational capability has been delayed from 2022 to 2025 to 2026.

The new fleet of modern aircraft is equipped with technologically advanced systems and will be able to perform in Canada’s harsh search and rescue environment; one of the most challenging and diverse landscapes in the world.

Cormorant mid-life upgrade contract

Key messages

Key data point

Background

The Cormorant mid-life upgrade project is a Strong, Secure, Engaged priority, and part of initiative 55—sustaining domestic search and rescue capability, and contributing to one of the Royal Canadian Air Force’s core missions.

The Department of National Defence has a requirement to sustain an all-weather rotary wing search and rescue capability at 4 main operating bases located in:

The Cormorant mid-life upgrade project will address obsolescence, regulatory and training requirements until at least 2042.

Fifteen helicopters were purchased following a competitive procurement process. The final helicopter was delivered to Canada in 2003. Since then, the helicopter fleet size has been reduced to 14 due to attrition.

The fleet has been outstanding in covering the required range and providing the cabin capacity necessary to successfully deliver search and rescue in a country the size of Canada, often flying in very harsh environments which include demanding icing conditions.

IMP Group Limited is the contractor for in-service support and the contract is currently being extended until July 31, 2024.

On May 24, 2018, a letter of notification was published on the buyandsell.gc.ca website detailing Canada’s intent to proceed with a sole source contract with Leonardo for the helicopter upgrade and a flight simulator.

Negotiations with Leonardo are currently in progress with the intent of issuing a contract by the end of the 2022.

Note

Document navigation for "Standing Committee on Government Operations and Estimates: June 10, 2022"

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