Fleet Renewal: Canada's Preserver supply ship, foreground, is side-by-side with the Halifax. Canada's shipbuilding program includes acquiring two supply ships. (Canadian Defence Ministry)
VICTORIA, BRITISH COLUMBIA — Canada is open to working with foreign warship designers and other nations as it rebuilds its Navy, but it draws the line at having the vessels built in other countries, government and military officials said.
They were responding to a new report by Canada’s auditor general, who warns there is not enough funding for the proposed national shipbuilding plan to construct 50 major vessels for the Royal Canadian Navy and Coast Guard. The program’s estimated cost is about CAN $50 billion (US $46 billion).
Michael Ferguson noted in his Nov. 26 audit into the National Shipbuilding Procurement Strategy (NSPS) that unless the government provides more funding, it may have to acquire fewer and less capable warships. He also raised concerns in the 36-page report that the NSPS does not include provisions for monitoring the productivity of Canadian shipyards.
Ferguson’s audit doesn’t recommend offshore building, but it is fueling debate about whether there could be substantial cost savings if Canada built the warship hulls offshore and installed the onboard high-tech systems in Canada.
On Oct. 30, Jack Granatstein, a Canadian Defence and Foreign Affairs Institute senior fellow, issued a report questioning the high costs of Canadian ship construction under the NSPS. He noted Canada will acquire two supply ships for about CAN $3 billion, while Britain’s Royal Navy is buying four roughly similar vessels from South Korean builders for $750 million.
UK defense officials in Ottawa have been giving briefings to Canadian industry and government representatives about how Britain is proceeding with the construction of those MARS tankers, which will resupply Royal Navy vessels around the world. The UK Ministry of Defence awarded South Korea’s Daewoo Shipbuilding and Marine Engineering Co. the contract for four MARS tankers in March 2012.
In addition, a May 2 investigative report by the Canadian Broadcasting Corp. raised questions about why Canada is paying up to five times the price to build Arctic/Offshore Patrol Ships similar to those built by Denmark and Norway.
In response to Ferguson’s report, Public Works Minister Diane Finley said Canada remains committed to building the vessels at home.
“Building these ships here at home is good news for Canadian workers,” she said, adding that it is estimated NSPS will create more than 15,000 jobs.
Still, government officials say they are open to working on the NSPS with foreign countries and companies.
“We’re partial to all designs that meet our capabilities,” said a senior government official at a briefing in response to the auditor general’s report. “We’re speaking with many warship designers and users around the world.”
Irving Shipbuilding, Halifax, Nova Scotia, which has the contract to build combat ships under NSPS, is working closely with General Dynamics Bath Iron Works of Maine on some designs.
The German Navy’s Berlin-class design has been selected for Canada’s new fleet of Joint Support Ships. That design is from ThyssenKrupp Marine Systems.
French naval shipbuilder DCNS has also been trying to interest Canada in some of its designs for the proposed Canadian Surface Combatant to be built under NSPS. The French multimission frigate Aquitaine visited Halifax on April 20 as part of those efforts.
Retired Vice Adm. Gary Garnett, a consultant for Seaspan Shipyards of Vancouver, said it is in the country’s interest to build the vessels in Canada. Seaspan will build non-combat vessels under the NSPS such as a new icebreaker and the Joint Support Ships (JSS).
Provincial governments are spending on workforce skills programs for NSPS and the domestic shipyards are going to upgrade their facilities, Garnett noted.
“Thousands of long-term skilled jobs will be created in the wider shipbuilding, outfitting, supply chain and in service support occupations,” he said. “There is no logic in doing otherwise for a country with the longest coastline in the world bordering on three oceans and wishing to be a recognized participant in world affairs.”
Ferguson’s report is not the first time that a government watchdog has raised concerns about the NSPS program’s cost.
A Feb. 28 report from Kevin Page, the government’s parliamentary budget officer, warned that the actual cost of the JSS fleet will be significantly higher and could climb to as much as CAN $4 billion.
Without extra funding the JSS, seen as key to the Navy’s ability to maintain warships at sea, would be less capable than even the current 43-year-old supply ship fleet it is to replace, he warned.
Ferguson pointed to the problem of coming up with an initial budget for each class of ship years before construction will actually begin.
He said it was not realistic to expect budget estimates to remain the same from a project’s conception to completion.
“While budgets are a useful control, Canada may not get the military ships it needs if budgets are not subject to change,” Ferguson’s audit concluded.
The Royal Canadian Navy, he said, has already had to reduce the capabilities of its proposed Arctic/Offshore Patrol ships to stay within the stated budget.