VICTORIA, British Columbia — International companies see the potential for billions of dollars in service support contracts under Canada's fleet-rebuilding program.

Canada has launched a CAN $30 billion (US $28 billion) program to build new warships, supply vessels and icebreakers over the next 20twenty years. But company representatives say an equal amount, if not more, will be spent on long-term in-service support (ISS) contracts for the new ships. Those ISS contracts will see companies hired to maintain the vessels for 30 to 40 over periods ranging from 30 to 40 years.

The Canadian government is moving to establish put in place such contracts even before the ships are built, say industry representatives.

The first will be a combined ISS contract for both the Canadian Navy's fleet of new Arctic offshore patrol ships and its future supply vessels, known as joint support ships.

"This procurement is at a planning stage with industry consultation currently ongoing," said Annie Trepanier, a spokeswoman for Pubic Works and Government Services Canada, the department overseeing the procurement process. "Current plans are to release a request for proposal [to industry] later in 2015."

The contract, which will cover a 35-year period, is expected to be awarded in 2017.

Babcock Canada, Inc., a subsidiary of the UK's Babcock, in the United Kingdom, is interested in bidding.

Nicholas Avellaneda, a spokesman for Babcock Canada, said the firm hopes to use its ISS expertise, which it has already demonstrated to the Royal Canadian Navy on the service's existing Victoria-class submarines, to win into in-service support contracts for the future surface fleets.

"We can augment what we have here in Canada with an extensive reach-back to what we have in the United Kingdom," he explained.

"Over there we're one of the primary ISS providers for the [Royal] Navy. That's definitely a capability we can build upon, with a lot of knowledge transferred over to Canada and domestic industry here."

Garry Lea, BAE's head of Commercial and Business Development – Fleet Services, said that company is also carefully watching the ISS contract process for the Arctic offshore patrol ships and the joint support ships.

"We're evaluating, like most companies, what the opportunities might be, the timescales of them, and how we might want to approach it," he said.

The ISS work being contemplated by Canada is similar to what the company has done in the United Kingdom and Australia, he added.

Lockheed Martin is also another firm monitoring the upcoming ISS projects. The firm has a core capability in performance-based logistics and could find ways to contribute to the upcoming Canadian contracts, said Lockheed Martin Canada spokesman Mike Barton.

The company It is waiting for specific details on how the Canadian government will proceed, he said. Those are expected when the request for proposals is sent to industry.

Although the focus of industry is currently on the Arctic offshore patrol ships, the largest ISS contract in terms of scope and price will be for the Canadian surface combatant fleet. Industry representatives estimate that could run upwards of (CAN) $20 billion over the life of the 15 -fleet warships that are expected to be built starting around 2025.

The ISS plan, however, is meeting resistance from the Department of National Defence's civilian workers, who currently do much of the support work.

About 1,000 such government employees, mainly situated in bases on the country's west and east coasts, are involved in ship maintenance and support of radars, sonars and other onboard equipment. Other federal employees inspect conduct inspections of hulls and other ship components.

"I understand why industry wants these contracts because the amount of money is significant," said John MacLennan, national president of the Union of National Defence Employees. "But we're worried it will erode our existing workforce and in the long run increase costs for the Navy."

MacLennan also warned that having companies providing ISS could put too much power in the hands of specific firms.

Defence Canadian Department of National Defence officials had previously raised such concerns about having a single support contract, covering 35 years, for the Arctic offshore patrol ships and the joint support ships.

"A single ISS provider may assume a 'take it or leave it' attitude at the time of contract option renewal, forcing prices up," warned a the two-page April 2012 briefing note for the department's then-Deputy Minister Robert Fonberg.

A dispute with the contractor could also force the Royal Canadian Navy to resort to conducting maintenance and support for the ships on a piecemeal basis, a development that would affect its operations, the briefing added.

Royal Canadian Navy officers, however, insist that their ISS plan will save money in the long term.

Email: dpugliese@defensenews.com

David Pugliese is the Canada correspondent for Defense News.

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