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Canadian minister defends naval project after Fincantieri criticism

February 15, 2017 (Photo Credit: Sgt. Roxanne Clowe via Royal Canadian Navy)
VICTORIA, British Columbia — Canada says it's satisfied with the terms of its Canadian Surface Combatant project following criticism from Italian shipbuilder Fincantieri.

“We will always consult with industry, and that is why we were successful in terms of the CSC,” Public Services and Procurement Minister Judy Foote said. “The fact that some people are questioning it is something we’ll look at, but in reality, of the 12 primes, eight have not expressed any issue with respect to the deadline.”

Fincantieri had warned the Canadian government that it won’t bid on a new program to build a fleet of future surface combatants unless significant changes to the project are made and foreign firms are given more of a role.

Foote is facing pushback from a number of firms eligible to bid on the Canadian Surface Combatant, or CSC, a project worth more than CAN $26 billion (US $19 billion).

Four of the 12 companies preapproved for bidding by the government have requested that Canada delay bidding. At this point, the firms have a deadline of April 27 to provide their bids to Canada.

Foote never responded to Fincantieri, but she told journalists that she is not worried about the state of the CSC project or the fact that four companies have asked that bidding be delayed.

Public Services and Procurement Canada declined to release the names of the companies requesting a delay in bidding.

Other representatives from various companies have privately voiced concern about the viability of bidding on the CSC project.

Fincantieri put its concerns in writing to Foote: “The proposed contract structure severely discounts the value of the CSC project to WD (Warship Designer) Bidders, and in the case of Fincantieri, it makes taking a decision to bid very problematic."

The letter was written on Oct. 24, 2016, but recently obtained by Defense News.

Fincantieri declined to comment.

Under the program, Irving Shipbuilding of Halifax is the government’s prime contractor and will be responsible for building the ships. Foreign companies are expected to provide the design and combat systems.

Jean-François Létourneau, a spokesman for Public Services and Procurement Canada, said the requests for extensions are being considered but no decision has yet been made.

In its letter to Foote, Fincantieri stated that the current structure of the CSC procurement provides only a minor role for warship designers who are required to provide engineering and design services to Irving, which will then build the warships.

There is little financial incentive for that role.

“In return for this limited scope of work, the (Warship Designers) are being asked to provide valuable Intellectual Property, Technology Transfer, and access to established supply chains, all under excessively demanding terms and conditions,” Fincantieri told Foote.

In addition, the warship designers have to provide a warranty on the integration of technology into their designs, even though they are not responsible for buying those systems, Fincantieri stated.

Defence sources say while the Canadian government may delay bidding, it will likely not extensively change the structure of the procurement.

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