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.
theremin therein
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.
Again, DND refused, claiming the information was “very sensitive” as a
competition for the ships was underway. DND once again stated it had
deemed such information to be outside of the PBO’s mandate. But
behind closed doors, DND was providing to lobbyists and defence industry
representatives some of the very information it was denying to the PBO,
according to internal documents.
[...]
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.
An important detail here is that the single largest and most important part of the NSS was the Canadian Surface Combatant (CSC). Initially, a conservative, low risk approach was taken.
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.
This was soon abandoned, once behind closed doors evidently the fed decided to pick the Type 26 Frigate, a new design not yet built. The reasons for this likely have to do with the desires of Irving, and its partners BAE and LockMart.
I should say that the Type 26 seems to be a good, capable design, and if gotten for the RCN in the numbers to replace both the destroyers and the Halifax class frigates (IE 15) it would represent a pretty impressive expansion in RCN capability.
That really depends on the design working, though.
quote: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
quote: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
quote: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.
quote: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"
quote:
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
quote: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.
