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Procurement – Navy

National shipbuilding strategy

  • In Strong, Secure, Engaged, this Government reaffirmed its commitment to the National Shipbuilding Strategy.
  • Through this Strategy, we are investing tens of billions to renew and modernize the capabilities of the Royal Canadian Navy.
  • This includes recapitalizing the surface fleet by acquiring:
    • fifteen Canadian Surface Combatants
    • two Joint Support Ships
    • six Arctic and Offshore Patrol Ships
    • four Naval Large Tugs
  • The National Shipbuilding Strategy directly benefits the Canadian economy by contributing over $17 billion to Gross Domestic Product.
  • Shipbuilding contracts will also create or maintain over 15,500 Canadian jobs annually between 2012-2022.
  • These economic benefits will be all the more important as we face unprecedented challenges due to the ongoing COVID-19 pandemic.
  • While it is still too early to assess the full impacts of COVID-19, we will continue to closely monitor the situation.

Key Facts

  • Major project budgets (excluding taxes):
    • Arctic and Offshore Patrol Ships: $4.3B
    • Interim Supply Ships: $659M
    • Joint Supply Ships: $4.1B
    • Naval large tugs: $121.12M
    • Victoria-class submarines modernization: $1-4.99B
    • Canadian Surface Combatant: $56-60B
  • COVID-19: A full evaluation of any potential impact will be completed once the situation has stabilized.

Details

  • On June 3, 2010, the Government announced Canada’s National Shipbuilding Procurement Strategy (renamed the National Shipbuilding Strategy in March 2016).
  • In 2011, the Government selected Seaspan’s Vancouver Shipyards and Irving Shipbuilding Halifax Shipyard for the construction of large ships.
  • In February 2012, the Government of Canada signed long-term agreements, referred to as umbrella agreements, with the selected shipyards.
  • The National Shipbuilding Strategy Combat Package, which includes the Arctic and Offshore Patrol Ships and the Canadian Surface Combatants (replacements for the frigates and retired destroyers), will be built by Irving Shipbuilding.
  • The National Shipbuilding Strategy Non-Combat Package, which includes the Joint Support Ships for the Royal Canadian Navy, science research vessels, and Multi-Purpose Vessels for the Canadian Coast Guard will be built by Vancouver Shipyards.
  • In the context of the COVID-19 pandemic, there has been sustained media and Parliamentary interest in the potential for delays to the timelines for major shipbuilding projects under the National Shipbuilding Strategy.
  • During this time, we are working in close collaboration with our industry partners to keep our respective workforces safe, while still making progress on these important naval projects.

Version 1 – 2020-06-12 – Source: Supps (B) 2020-2021 note: National Shipbuilding Strategy

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Canadian surface combatant

  • Combat ships play a crucial role in naval operations.
  • This is why the Government is procuring 15 new multi-role Canadian Surface Combatant ships for the Royal Canadian Navy.
  • This represents the largest and the most complex investment in the Navy since the Second World War.
  • The project will also create 2,500 direct jobs in Halifax and thousands of jobs across Canada through supply chain and subcontracting.
  • Leveraging the selected BAE Systems’ Type-26 Global Combat Ship design as a reference point, work is now underway to complete the design to meet the Royal Canadian Navy’s requirements.
  • Progress on the design work has been maintained despite the current COVID-19 pandemic.
  • We continue to closely monitor any potential impacts of COVID-19 on project timelines, but still anticipate the start of construction in 2023.
  • Once complete, these modern ships will help the Navy meet Canada’s defence and security challenges in the coming decades.

Key Facts

  • Estimated Budget: $56-$60B
  • Construction of first vessel: early 2020s
  • Last ship delivery: 2040s
  • COVID-19: A full evaluation of any delays will be assessed once the situation has stabilized.
  • Main Estimates 2020-21 request: $579.6M to progress with the preliminary design work, receive engineering support, and fund the Project Management Office.

Details

Recent media interest in potential delays

  • In March 2020, media reported that Irving Shipyard was running at half capacity with around 650 people working at the shipyard and 300 remotely due to the COVID-19 pandemic. The article went on to speculate that any impacts on major shipbuilding projects, including the Canadian Surface Combatant, will ultimately depend on what stage the project is in, with less effect for those in design and requirement phases and more impact on projects in the midst of construction.

Canadian surface combatant project

  • Canada’s new class of warship – the Canadian Surface Combatant – will replace both the retired Iroquois-class destroyers and the Halifax-class frigates, one for one. This single class of ship will be capable of meeting multiple threats on the open ocean and the coastal environment.
  • The new warships will be able to conduct a broad range of tasks, including:
    • Delivering decisive combat power at sea;
    • Supporting Canadian Armed Forces, and Canada’s allies ashore;
    • Conducting counter-piracy, counter-terrorism, interdiction and embargo operations for medium intensity operations; and,
    • Delivering humanitarian aid, search and rescue, and law and sovereignty enforcement for regional engagements.
  • Irving Shipbuilding has been selected as the prime contractor for the construction of the warships.
  • In February 2019, the Government announced that Irving Shipbuilding had contracted Lockheed Martin Canada to provide the design and design team. The selected design for the future fleet is based on BAE Systems’ Type 26 Global Combat Ship.
  • Canada is now working with Irving Shipbuilding and Lockheed Martin Canada to evolve the selected ship design and systems integration in preparation for build.
  • Early in 2019, Alion and Navantia, the two non-selected bidders on the Canadian Surface Combatant Request for Proposals filed for judicial reviews asking the Federal Court to set aside the decision that Lockheed Martin Canada was the selected bidder. In November 2019, Alion discontinued its applications for judicial review. The Department of Justice has carriage of the ongoing matters, which should not be publicly discussed as they are before the courts.

Version 1 – 2020-06-10 – Source: Supps (B) 2020-2021 note: Canadian Surface Combattant

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Arctic and Offshore Patrol Ships

  • Through the National Shipbuilding Strategy, this Government is delivering six Arctic and Offshore Patrol Ships to the Royal Canadian Navy.
  • These versatile vessels will support surveillance of our Canadian waters, domestic and international operations, and humanitarian assistance.
  • Towards the end of last year, Irving Shipbuilding began conducting initial trials of the first ship at sea. 
  • Following some minor delays due to the COVID-19 pandemic, we anticipate the delivery of HMCS Harry Dewolf, the first Arctic and Offshore Patrol Ship, to occur over the summer.
  • The precise schedules for delivering each of the five remaining ships are currently under review.
  • We still anticipate that all of the vessels will be delivered by 2024 to help fulfill the Royal Canadian Navy’s important role at home and abroad.

Key Facts

  • Total estimated Budget: Up to $4.3B, excluding taxes.
  • Number of Arctic and Offshore Patrol Ships ordered: 6 for the Canadian Armed Forces. The government also announced its intention to procure 2 ships for the Canadian Coast Guard
  • Delivery timeline:
    • First vessel: 2020
    • Sixth vessel: 2024
  • COVID-19: A full evaluation of any delay will be assessed once the situation has stabilized.
  • Main Estimates 2020-21 request: $398.6M. Funds will go towards:
    • acquiring ships;
    • integrated logistics support products;
    • jetty infrastructure in Halifax and Esquimalt; and,
    • a berthing and fuelling facility in Nanisivik.

Details

Recent media interest in potential delays

  • In March 2019, media reported that Irving Shipyard was running at half capacity with around 650 people working at the shipyard and 300 remotely due to the COVID-19 pandemic. The article went on to speculate that any impacts on major shipbuilding projects, including the Arctic and Offshore Patrol Ships, will ultimately depend on what stage the project is in, with less effect for those in design and requirement phases and more impact on projects in the midst of construction.

Arctic and offshore patrol ships project

  • Strong, Secure, Engaged committed to the acquisition of five to six Arctic and Offshore Patrol Ships. In November 2018, the Government of Canada announced a decision to acquire a sixth vessel.
  • These vessels will be able to perform a wide variety of tasks, including:
    • Surveillance operations of Canadian waters;
    • Support of sovereignty operations;
    • International operations;
    • Humanitarian assistance, emergency response and disaster relief; and
    • Search and Rescue.
  • The Arctic and Offshore Patrol Ships will operate in the Arctic between June and October, providing a greater and longer Canadian Armed Forces presence in the north.

Current status

  • The Arctic and Offshore Patrol Ship is the first of its class. Production challenges, typically seen with a first-of-class vessel, delayed the delivery of the first ship from 2018 to 2020.
  • The shipbuilder has learned lessons from the build of the first ship that will help ensure efficiencies in the construction of the subsequent ships. The schedules for these following ships will therefore be easier to plan.
  • Out of the total of six ships, four are in various stages of production.

Version 1 – 2020-06-10 – Source: Supps (B) 2020-2021 note: Arctic and Offshore Patrol Ships

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Interim supply ships (iAOR)

  • Supply ships are a critical component to any “Blue Water” navy as they provide fuel and essential supplies to military vessels enabling them to sustain operations.
  • Two new supply ships will be delivered to the Royal Canadian Navy between 2023 and 2025 to fulfill this important role.
  • In the interim, the Asterix is providing support to the Royal Canadian Navy in non-high threat operations and exercises around the world.

If pressed on the Obelix:

  • There are currently no plans to pursue an additional interim replenishment ship and at-sea support services with Federal Fleet Services. 

Key Facts

  • Total approved budget for iAOR is $659M, which includes funding for the Royal Canadian Navy related to the program. The total approved contract authority for iAOR is $587M.
  • MV Asterix is a commercial vessel, owned, operated and maintained by Federal Fleet Services. It is crewed by two alternating civilian teams of 36 personnel.
    • There are also up to 114 military personnel on board to perform activities like replenishment at-sea, military communications, and flight operations.
  • In 2018-19: MV Asterix deployed for 354 days, with 191 days at sea and 163 days alongside a foreign port.
  • To date in 2019-20: MV Asterix deployed for 170 days, with 131 days at sea and 39 days alongside a foreign port
  • Main Estimates 2020-21 request: $131M, excluding statutory costs for the provision of a service contract for 2020-21.

Details

  • In the context of the COVID-19 pandemic, there has been sustained media and Parliamentary interest in the potential for delays to the timelines for major shipbuilding projects under the National Shipbuilding Strategy.

The Asterix

  • The premature retirement of the Royal Canadian Navy’s remaining supply ship in 2016, combined with the operational delivery dates of the new Joint Support Ships in 2023-2025, has resulted in a capability gap.
  • To help bridge this gap, in 2015, the Government of Canada entered into a Provision of Service Contract with Project Resolve Inc. for the conversion of a commercial container ship into an interim supply vessel – the MV Asterix. The vessel commenced service in support of the Royal Canadian Navy on January 28, 2018.
  • The MV Asterix is operated by Federal Fleet Services and is crewed by Canadian civilian mariners. A limited number of Canadian Armed Forces personnel are deployed as mission specialists.
  • The MV Asterix is outfitted with much of the same at sea replenishment equipment that will be fitted on the Joint Support Ships (JSS). Working aboard this ship allows Royal Canadian Navy personnel to maintain competencies in replenishment at sea procedures that will be needed when operating the Joint Support Ships.
  • Since it became operational, the Asterix has supported numerous deployments and exercises at sea.

Request for the Obelix

  • Davie Shipbuilding has proposed the conversion of a second commercial vessel. The Bloc Québécois and the Conservative Party of Canada expressed support for the procurement of a second interim supply ship from Davie during the 2019 elections.
  • In 2019, the Parliamentary Budget Officer estimated the cost of a second interim supply ship as $607 million. The costing was requested by the Conservative Party of Canada as part of its larger election platform.

Version 1 – 2020-06-10 – Source: Supps (B) 2020-2021 note: Interim Supply Ships

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Modernization of Victoria class submarines

  • Victoria-class submarines are key strategic assets for conducting surveillance of Canadian and international waters.
  • This is in large part due to their intelligence-gathering, surveillance and reconnaissance capability, as well as their deterrence to potential adversaries.
  • Modernizing these vessels remains the most effective means of ensuring continued submarine operations for the Royal Canadian Navy into the 2030s.
  • Modernization will allow our submarines to continue to covertly monitor evolving situations at home and abroad, and will enable them to be able to conduct longer missions.
  • It will also allow them to serve as critical protection for our sea-based forces, providing an unmatched sovereign defence and security capability.

If pressed on submarine return to service:

  • Operating in unforgiving environments requires submarines to undergo maintenance to sustain capabilities and ensure safety.
  • Since 2019, all submarines have undergone planned maintenance, repairs, and upgrades, which are essential for a submarine’s operational cycle.
  • To ensure the health and safety of our personnel, maintenance work onboard submarines has been put on pause during the COVID-19 pandemic.
  • Our goal is to return the submarines to sea as soon as this maintenance work is completed.

Key Facts

  • Victoria-class submarines in the Royal Canadian Navy fleet: 4
  • Sustainment costs for the Victoria-class fleet of submarines: approximately $325M/year
  • Modernization program funding range: $1-4.99B
  • Project status: Options analysis phase

Details

  • The Victoria-class Modernization project will provide the capability enhancements required to keep the submarines operationally relevant against evolving threats and the future operating environment.
  • It will also enhance the ability of the submarines to operate in environmentally sensitive regions, such as the near Arctic.
  • This project is currently in the options analysis stage which will identify best ways to implement the project and achieve capabilities.
  • The Victoria-class Modernization project will focus primarily on enhancing three distinct capabilities:
    • Habitability – to improve habitability and deployment conditions onboard Victoria-Class submarines;
    • Joint Force Capability – position the Victoria-Class submarines to contribute meaningfully to joint operations ashore; and,
    • Survivability – to ensure the survivability of the Victoria-Class submarines against an evolving complex threat in an ever changing battle space.

Version 1 – 2020-06-10 – Source: Supps (B) 2020-2021 note: Canada’s Submarine Force

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