One lesson Canada took from the Second World War was that their previous military procurement strategy didn't work. Up until that point, Canada had always relied on buying hardware, like aircraft and ships, from the UK and America. What Canada discovered after following the UK into war in 1939 was that when a major war happens, both those nations are suddenly too busy with their own needs to sell to Canada. This proved a particular issue when defending Canada; for several years, German U-boats could operate in the Gulf of St. Lawrence and off Canada's coast while resources to hunt them were so lacking that America and the UK had to assume aerial anti-submarine patrols until Canada could get its collective shit together.
So at the end of the Second World War, Canada followed a strategy of building some defense industry, and some purchasing from its allies, depending on what native industrial strengths it could utilize. One of these places was surface ships for the Royal Canadian Navy (RCN.) This strategy continued throughout the cold war, to some success. Canada had focused heavily on its navy in the Second World War, and had three oceans to defend, so building up native shipbuilding was industrial capacity that Canada could make good use of.
At the end of the cold war, the Liberal Government in the mid-1990s decided to end this policy. The last of the Halifax class frigates would be the end; after this, Canada would return to buying on the open market. The ability of Canada to build naval ships atrophied to nothing. You can debate the wisdom of this move, but it would save a fairly vast amount of money, and would ensure that the RCN was always sailing with good condition ships.
Then, the plan was caught by a fairly hilarious snag: nobody in the fed had the actual guts to buy overseas. The one time Canada did was the buying of some used Upholder class submarines, which was a national embarrassment. Being famous for not working, only recently has Canada's renamed Victoria class subs been fully operational - and are ending their useful life in the 2020s, unless yet another expensive refit is given for the four subs. The Harper government alone spent $8 billion dollars on refits to the submarines, an amount that could have been spent instead on four new U-212 class submarines from Germany, which would have been new and massively more capable.
So, in the 2000s, the Harper government tried to order replacement ships from the Canadian shipbuilding industry, only to receive bleak laughter in response. Naval quality facilities didn't exist anymore. So, a new idea was pitched: the national shipbuilding strategy, or NSS. Spending money on shipyards to rebuild their naval capabilities, and then spreading out ship orders so that the yards were always engaged. As a basic concept, I think it is pretty good.
Unfortunately, I think even assuming competence everywhere else, it faced one serious problem: that of tempo. The rust out in the RCN had gone on so long that rebuilding this native capacity and then starting construction would leave many ship types needing replacement years ago. As many have pointed out, Canada is going to have to crank out ships at a Second World War pace in the next decade if it wants to build all of its replacements here in Canada.
But assuming competence would be a hell of a thing, as it turns out. The Ottawa Citizen and its blog Defense Watch has been increasingly damning about the program. In a rerun of the F-35 fiasco, the fed has been stonewalling the Parliamentary Budget Office (PBO) about costs and delivery estimates. The PBO's report is due to drop at the end of February, and given the retirement of many defense related people involved with the program, as well as the Fed going full PR offensive on the subject, I suspect it is going to be bad.
Anyway, here is a series of quotes from Defense Watch on that subject, just to get a flavor.
dnd-unable-to-say-exactly-when-delays-in-70-billion-warship-program-began
quote:
"National defence says it doesn’t know when it determined that a $70-billion project to buy new warships had fallen five years behind schedule, adding billions of dollars to the cost.
That lack of knowledge about a massive mega-project is unprecedented, according to the department’s former top procurement official, and is further proof the Canadian Surface Combatant project has gone off the rails.
The Department of National Defence revealed Feb. 1 that the delivery of the first surface combatant ship would be delayed until 2030 or 2031. The first ship was to have been delivered in 2025, according to DND documents."
We expect delivery of the first ship in 2030/2031, followed by an extensive sea trials period that will include weapons certification and the corresponding training of RCN sailors, leading to final acceptance.
[...]
Troy Crosby, the assistant deputy minister of materiel at the DND, denied the CSC project is in trouble. 'I wouldn’t call it trouble,' he said in an interview with this newspaper in November. 'Is it hard? Is it challenging work? Absolutely. But I wouldn’t say we’re in trouble.'
Other defence analysts are arguing the CSC program is salvageable with better governance and oversight.
But Williams [former deputy head of DND procurement] said the CSC is like a train rolling down a hill without brakes. “You’re heading for disaster and people are talking about improving governance,” he said. “That won’t save this project.”
Cost of federal science ship jumps from $108 million to nearly $1 billion
quote:
The cost of building an offshore science vessel for the federal
government, originally set at $108 million, has jumped to almost $1
billion.
The price tag for the project had been steadily climbing from $108
million in 2008 to $144 million in 2011 and then to $331 million,
according to federal government figures.
[...]
South Africa is constructing a similar oceanographic vessel with an
ice-strengthened hull in a project with a budget of around $170 million.
[...]
Retired Liberal senator Colin Kenny, the former chairman of the senate
defence committee, said the significant jump in cost of the
Canadian-built oceanographic vessel is staggering. “Why isn’t anyone in
government saying that this type of expense is crazy and it’s time to
put an end to this level of expenditure for a single ship,” Kenny said.
But Barre Campbell, spokesman for Fisheries and Oceans Canada and the
Canadian Coast Guard, noted in an email, that the original budget was
set based on the best data and methods at the time. “As the project has
progressed and moved closer to construction, the estimated project cost
has been updated to reflect the value of negotiated contracts and actual
costs incurred,” he added.
The cost has been reviewed by independent experts, Campbell added.
[...]
But in December 2011, a team of auditors warned Fisheries and Oceans
and the Coast Guard that they had failed to put in place a strategy to
deal with construction delays for the vessel. “By not developing
adequate risk mitigation strategies for time delays, the Canadian Coast
Guard is vulnerable to higher-than-anticipated costs and ineffective
delivery of programs,” the independent auditors hired by the federal
government pointed out.
The auditors also noted the procurement staff overseeing the acquisition
of the OOSV had erroneously concluded the project was of “low risk.”
Legal measure often cited in terrorism cases used by feds to prevent release of shipbuilding records
quote:
With CSC under the microscope, the federal government has made a number of attempts to limit information. In the past, national defence claimed it couldn’t share records on the CSC with government oversight agencies, such as the parliamentary budget officer, because the documents were sensitive. Procurement Canada has also tried to use gag orders to prevent industry from discussing CSC with the news media.
In October, industry executives were told by Jody Thomas, the top national defence bureaucrat, to stop raising concerns about CSC. Company officials have been complaining to politicians and media outlets that the project has fallen far short on its promises of creating domestic employment. Other industry executives have been warning politicians the rising price tag for CSC will jeopardize funding for other equally important military equipment projects.
But Thomas told executives Oct. 5 they were hindering the project and she characterized their efforts as those of sore losers. “I think there’s still too much noise from unsuccessful bidders that makes my job and Bill’s job very difficult,” she said, referring to Bill Matthews, deputy minister at Public Services and Procurement Canada.
In addition, the Department of National Defence’s access to information branch has refused to release CSC records requested almost a year ago to this newspaper.
The federal government’s decision to use Section 38 to block release of the records is also a reversal of previous arrangements made to allow Navantia lawyers to examine the documents. As part of that process, the lawyers applied for and received clearance to view secret documents. In addition, they signed a confidentiality agreement that they would not provide information to Navantia about what they had seen in the documents. Plans were made to construct a special room with security features that allowed for viewing of documents classified by the Canadian government as secret.
But that deal was scuttled at the last minute.
It opens with the perfect summary of Canadian politics:
quote:
News media reports in 2012 that Conservative cabinet minister Bev Oda had stayed at a hotel in London, England that cost $665 a night and that she spent $16 for a glass of orange juice prompted a ferocious debate in the House of Commons and an eventual apology from Oda.
For the most part, however, MPs have been largely silent on the skyrocketing costs of the CSC, the largest outlay of taxpayer’s money in Canadian history for a single procurement project.
Nearly a decade worth of internal correspondence and planning documents reveal the secretive origins of the project and how, at times, bureaucrats were worried the public would find out the true cost of the CSC and balk at such an enormous price tag.
Further missteps in the ongoing CSC project could cost taxpayers hundreds of millions, if not billions of dollars. It is a project which federal officials started not knowing what the final cost would be. That is still the case.
Navy officers also tried to claim they had no cost estimates or budget for the CSC and because of that they couldn’t provide such information to the PBO. (That assertion was false as the CSC budget had already been established as $26.2 billion.)
June 25, 2013, DND deputy minister Richard Fadden informed L’Heureux that the CSC cost estimates and financial information were only for cabinet ministers. “You are not entitled to access this data,” Fadden wrote to the PBO, according to a letter obtained through access to information law.
As for the request for information about the basic requirements for the new ships, Fadden was equally dismissive in his refusal to provide data. “It is our view that this would constitute information that falls outside the scope of the mandate of the Parliamentary Budget Officer,” he wrote.
The Liberals, in opposition, were furious with DND’s actions and lambasted the government for excessive secrecy. Liberal MPs claimed the department had no right to withhold information from L’Heureux as the PBO worked on behalf of Parliament.
[...]
The Liberals also retreated on their previous concerns about secrecy surrounding the CSC project and its costs. In June 2016, procurement minister Judy Foote said the Liberal government would no longer be providing taxpayers any cost estimates on the CSC.
In December 2016, Frechette testified in front of the Senate defence committee outlining the roadblocks put in front of his attempts to gather information and about DND’s culture of secrecy. “National defence is a problematic case,” Frechette said. “There is a certain culture whereby this information suddenly becomes confidential or cabinet confidence.”
The Liberals, who had called out the Conservative government’s previous attempts to stonewall the PBO on CSC information, were silent.
In fact, the Liberal government took a number of new initiatives to crack down on what information was available. Gag orders were issued in 2016 and later in 2019 by Public Services and Procurement Canada, banning industry officials from firms interested in bidding on CSC from talking to journalists about the project. Officials at PSPC, DND, as well as those at Innovation, Science and Economic Development Canada, also would, at times, warn Irving representatives about reporters who were asking questions about shipbuilding.
quote:
As a selling point, various government officials involved with the CSC once pointed to a risk mitigation factor baked into the project’s plan: the winning bid had to be based on a mature existing ship design or a ship already in service with other navies.
That would eliminate technical risk, as the design would be a known and tested commodity. Untested ship designs had the potential of even more cost overruns and delays. By early fall of 2015, the CSC project team had already identified a number of existing warships that were in the water that “could be reasonably modified” to meet Canadian needs.
In October 2016, Fincantieri, the fourth largest shipyard in the world, warned the Liberal government the CSC procurement was flawed. The firm sent Foote a detailed outline of why the acquisition process was in trouble, warning that “Canada is exposed to unnecessary cost uncertainty.”
The Italian company proposed to Foote that instead of the current process, a fixed-price competition be held, with the winning shipyard building the first three warships, complete with Canadian systems, and deliver those to Irving. The ships would then be run through evaluations and after any technical issues were worked out, Irving would build the remaining 12 vessels. That way work on the new ships could get underway faster, the vessels would be fully tested, and the risk to the Canadian taxpayer significantly reduced, Fincantieri pointed out.
Foote, however, dismissed the firm’s recommendations. Canadian taxpayers weren’t being exposed to unnecessary risks, federal bureaucrats said.
A month later, Fincantieri, along with Naval Group of France, one of the largest shipbuilders in the world, tried a bold move. They sent the Canadian government an unsolicited offer: the consortium would build 15 surface combatants at a fixed cost of $30 billion. The vessels would all be constructed by Irving in Halifax, ensuring Canadian jobs were protected. The offer was for the consortium’s FREMM frigate design, which was proven and in service in multiple navies. The deal would also focus on using Canadian technology on board the warships and open the way for Canadian firms to be involved in future sales of the FREMM vessels on the international market.
The Liberal government dismissed the offer outright. A short time later, the Fincantieri-Naval Group dropped out of the CSC competition, citing serious flaws with the procurement process.
quote:
Alion [ed note: another corporation that put a bid into the CSC] responded by filing a number of legal and trade challenges, contending the Type 26 couldn’t meet the Canadian navy’s stated requirements, including speed. That in itself would have been enough to disqualify the Lockheed/BAE bid, the firm argued. The company also noted in its court application the requirements and other parameters of the CSC project were altered 88 times during the process and that the changes diluted the capabilities for a new warship. That, in turn, allowed the federal government to pick “an unproven design platform,” Alion argued.
Meanwhile, as Canada worked through its procurement, a similar program was unfolding in America. But concerned with the potential of cost overruns, the U.S. Navy took a different route. It would only accept bids from companies with proven warship designs that had already been built and demonstrated in full-scale operation at sea.Unproven designs were simply too risky and could carry significant extra costs, the U.S. Navy determined. Because of that stipulation, the Type 26 wasn’t even considered.
The U.S. competition to acquire a future frigate began in July 2017 and in April 2020 the U.S. Navy selected Fincantieri’s FREMM design, the same vessel rejected by Canada as part of the fixed-price proposal.
Ten FREEMs would be built in the U.S., with the first ship estimated to cost the equivalent of $1.7 billion Canadian. The other ships to follow are expected to be built at significantly less cost, according to the Pentagon.
So apparently the fed is displeased that people keep questioning their poorly laid plans, but the main complaint is that 'Too much noise' on Canadian Warship Program DND Deputy Minister admonishes industry executives to walk without rhythm
Defence industry executives have been told by a top bureaucrat to stop raising concerns about the controversial program to build a new fleet of warships that is now estimated to cost $70 billion and could go even higher.
Company officials have been complaining to politicians and media outlets that the Canadian Surface Combatant project has fallen far short on its promises of creating domestic employment. Another company is in the middle of a lawsuit over the Canadian Surface Combatant or CSC, alleging the procurement was bungled. Federal lawyers are trying to limit the amount of information that can be disclosed in court about the project, with the next hearing to be held Jan. 13. Other industry executives have been warning politicians the rising price tag for CSC will jeopardize funding for other equally important military equipment projects.
But Jody Thomas, deputy minister of the Department of National Defence, told executives Oct. 5 that they are hindering the project and she characterized their efforts as being those of sore losers. “I think there’s still too much noise from unsuccessful bidders that makes my job and Bill’s job very difficult,” she said, referring to Bill Matthews, deputy minister at Public Services and Procurement Canada.
Won't somebody please think of the poor poor ministers who have to hear about the implications of their decisions
But Thomas’s admonishment didn’t surprise industry representatives; although they won’t go on record with their names for fear of jeopardizing future military contracts, a number of executives point out that for years federal officials have tried to keep a lid on questions and concerns as well as information about the CSC.
[...]
In 2019, officials with Public Services and Procurement Canada issued a directive that firms interested in maintenance work on the Canadian Surface Combatant program could not talk to journalists and instead must refer all inquiries to the department. That was the fifth such gag order on military equipment projects issued by government over a year-long period.
In one case, Procurement Canada threatened to punish any firms who violated the gag order on the proposed purchase of a light icebreaker. That prompted one unnamed company to submit a question to the department on whether a government ban on talking to journalists was even legal, according to records.
Industry executives pointed out last year the secrecy was not based on security concerns, but on worries the news media would be able to use the information to keep close tabs on the problem-plagued military procurement system. After this newspaper reported on the gag orders, Procurement Canada claimed last year it would no longer use such bans.
Federal officials appear to be concerned specifically about journalists who might be reporting on two particular ship projects; the CSC and the Arctic and Offshore Patrol Ships or AOPS. Both projects involve Irving Shipbuilding.
But industry executives point out that strategy has already run aground, noting that in November 2019 the Lockheed Martin Canada executive responsible for delivering on the commitments admitted the system has major problems.
Walt Nolan said the policy the Canadian government developed has prompted defence firms to significantly over commit on the benefits they claim they can deliver on the Canadian Surface Combatant and other programs. “This monster has got out of the box and has stayed out of the box,” Nolan told executives about promises of industrial benefits.
Bidders have committed to delivering to Canada more than 100 per cent of the contract value in those benefits. “Those (procurement) programs are in their infancy on the delivery of those obligations, and many of us are already beginning to struggle,” Nolan added.
quote:
Michael Byers, a University of British Columbia professor who authored a report analyzing the government’s shipbuilding strategy and the CSC, pointed out there is significant secrecy surrounding the industrial benefits for the program. In addition, he noted that there are no consequences for various companies if they do not meet job creation targets.
“Canadians will likely never know how many jobs were produced,” Byers explained. “Some jobs will obviously be created as workers will build the hulls in Halifax and install the foreign-made equipment, but we can’t be certain this will contribute actual value for the large amount of money taxpayers are spending.”
So, these promises were a major component of selecting who won bids, but the promises are just good PR, that's it, they are meaningless otherwise
Well, more meaningful that "is your design in service and meets Canada's needs"
In addition, there has already been questions about the value of some of the industrial benefits linked to the federal government’s shipbuilding strategy.
Under the government’s policy, the prime contractors on such procurements are required to do work in Canada equal to 100 per cent of the value of the contract they receive. The industrial benefits program is also supposed to promote innovative work and research in defence and aerospace fields.
But in May 2019, the Globe and Mail revealed that on the program to build new Arctic and Offshore Patrol Ships for the navy the federal government allowed Irving Shipbuilding to claim a $40-million industrial benefit credit for work on a french fry factory in Alberta.
Irving officials say one of the core components of the industrial benefits policy is to create “indirect” transactions. They have argued that they were creating jobs by using Canadian companies for high-value work to create one of the most modern french fry facilities of its kind.
In 2011, the Conservative government awarded a $274-million contract to Navistar to provide commercial trucks, modified for military use, to the Canadian Forces. Even as the government was awarding the contract to Navistar to build the trucks in Texas, the company was laying off employees at its Chatham, Ont., truck plant. Eventually 800 were laid off. Navistar closed the plant in 2011.
Then-defence minister Peter MacKay defended the awarding of the contract to the U.S. firm, saying there would be domestic work done on the military vehicles as Canadian mechanics would be involved in maintaining the trucks, and that gas and tires for the vehicles would also be bought in Canada.
OK now I'm slightly puzzled anybody is complaining about the whole industrial offset baksheeh, I guess the fed could always hold those cards and play them to get a hooked in contractor to do some 'economic offset' in a riding on the edge of turning not ruling party but it sounds like pointing and laughing as a response could be valid
and now top of the line Canadian made naval equipment shut out of the CSC
So TL;DR when BAE and LockMart won the bid for the CSC, they got the right to dictate what equipment was used by the Canadian Navy with it? And naturally they have their own suppliers for things, not partially taxpayer funded Canadian things
As a result, a radar built by Lockheed Martin in the U.S., which hasn’t yet been certified for naval operations, will be installed on the CSC. Passed over was a state-of-the art naval radar developed with the help of Thales Canada in Nepean. Canadian taxpayers contributed $54 million to the development of that radar, which is now being used on German, Danish and Dutch warships.
Also shut out of the CSC competition is SHINCOM, a naval communications system built by DRS Technologies of Ottawa and considered one of the top such systems in the world. SHINCOM is in service on other Royal Canadian Navy vessels as well as 150 warships of allied navies around the world, including Australia, the U.S., Japan, New Zealand and South Korea. It was originally developed for Canada’s Halifax-class frigates and taxpayers have poured millions of dollars into its development.
Top government officials and politicians were repeatedly warned key Canadian firms would be shut out of the CSC project.
Steve Zuber, vice president of DRS Technologies, wrote on Aug. 31, 2016 to alert innovation minister Navdeep Bains that the way the CSC procurement was designed would work against Canadian firms. “The CSC procurement approach may actually disadvantage Canadian companies,” Zuber warned. “The current evaluation approach puts our world-class Canadian solutions at serious risk of not being selected for Canada.”
At the heart of the matter was a procurement system that penalized bidders if they deviated too much from their original ship designs to accommodate Canadian equipment. In addition, no competitions were held for key components of the new warships, such as sonar, radar or communications systems.
