Federal government opts for off-the-shelf design to cut costs of new warships

Liberal government scraps plans to design new naval warships from scratch.

OTTAWA — The Liberal government is abandoning plans to design new Canadian warships from scratch, and will instead modify an existing foreign design to eventually replace the navy’s destroyers and frigates.

The new direction is expected to shave two years off the time it will take for new naval vessels to get into the water, Public Procurement Minister Judy Foote said in Halifax Monday. It also means the Liberals have officially put their stamp on the largest military procurement program in Canadian history.

Government officials acknowledged the potential security risks of using a foreign design for Canada’s warships, as well as the fact even the slightest modifications can lead to spiralling cost increases and schedule delays. The cost of the ships and the number that will be built remain unknown

However, the officials added they were confident checks and balances introduced in recent years will protect against security threats and keep the program on track. They also predicted the same number of jobs will be created with an off-the-shelf design as with one made in Canada.

Launched in 2010 and initially projected to cost $26 billion, the warship program forms the backbone of Ottawa’s $35-billion national shipbuilding strategy, which is intended to revitalize Canada’s shipbuilding industry.

Reports this year, however, revealed the actual cost for the new vessels, which are to replace the navy’s 12 frigates and three destroyers, could be much higher. Delivery of the first warship has also been delayed to 2026, even though the last destroyer will retire next year.

The navy has been quietly working to identify what it really needs in the new warships in an attempt to control costs. Foote said the next step is to have firms propose their designs in the summer that the military can modify. The new warships will be built at Irving Shipyards in Halifax.

One industry source said there will likely be five or six designs that would meet the navy’s requirements, all from foreign companies.

However, officials in Ottawa admitted there are security concerns associated with using a foreign design. Patrick Finn, head of military procurement at National Defence, said these could limit which designs are allowed to compete.

Officials also said the project’s budget and the number of ships that will be built are still uncertain.

“There is no need to decide on the exact number of ships today,” Finn said. “The ultimate number of ships will be a factor of the design selected, equipment capability, roles, etc. We certainly want to bring it as close to 15 as we can, but we also don’t need to make that decision right now.”

There is precedent for using an off-the-shelf ship. The Conservative government picked a German design for replacements for the navy’s resupply ships three years ago.

However, retired commodore Eric Lerhe said the savings may not be great as expected. The senior fellow at Dalhousie University said the German design is not certified for use in ice. The German navy also uses smaller helicopters than Canada. This means the design will require costly modifications.

Finn acknowledged even minor changes can “cascade” into big costs and delays. However, while some modifications will be required, the government has ordered such changes to the resupply ships minimized, and will do the same with the warships.

The navy “has demonstrated a real understanding that the key here is to get on with building ships and delivering them,” he added.

The desire to reduce changes could make it harder for Canadian industry to benefit. However, officials said bidders will be required to build in economic benefits. The government will also take action if the winner doesn’t make good on its promises.

http://www.ottawacitizen.com/news/national/liberal+government+scraps+plans+made+canada+warship+design/11983253/story.html

Sunny days for our navy!

THE CANADIAN PRESS
Published Monday, June 13, 2016 7:26AM ADT
Last Updated Monday, June 13, 2016 11:36AM ADT
HALIFAX -- The federal government said Monday it will streamline its warship replacement program by purchasing an off-the-shelf design to save money and speed the process.
Public Services Minister Judy Foote made the announcement at Irving Shipbuilding's Halifax headquarters, saying a single competitive process will select an existing warship design along with the systems and equipment that will be integrated on the vessels.
"The new approach significantly reduces the design and technical integration time," she said as the sounds of industrial machinery chugged in the background. "Construction of the first surface combatant ship in Halifax can start up to two years sooner than originally planned."

The Halifax yard is one of two construction sites contracted in the government's bid to build new warships, with the surface combatant fleet to replace the Iroquois-class destroyers and the Halifax-class frigates.
She said the first of the Arctic offshore patrol ships should be finished in 2018 and carry on into the early 2020s, followed by the construction of the warships.
Kevin McCoy, president of Irving Shipbuilding, said purchasing a design will save about two years in producing the warships.
"Two years is a long time. You're essentially saving 10 per cent of the cost if you can knock two years off the time period," he said after the news conference.
Original projections put the cost of building 15 new vessels at $26 billion, but internal documents and reports published last fall suggest the bill could run as high $40 billion.
Last month, Foote indicated the government would stop making public cost projections to allow for wiggle room as the project evolves. She said the cost savings on using an existing design are yet to be determined.
She estimates that about 2,400 jobs will be created at the peak of construction for the surface combatants and Arctic offshore patrol vessels.

http://atlantic.ctvnews.ca/federal-government-opts-for-off-the-shelf-design-to-cut-costs-of-new-warships-1.2943002