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Defence procurement: Committee of the Whole—July 22, 2020

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Defence and Marine Procurement: General accomplishments

Context

Suggested responses and background information is provided on defence and marine procurement accomplishments.

Note

Questions on defence procurement delays or the Department of National Defence (DND) order paper questions should be directed to the minister of National Defence.

Suggested response

This includes:

If pressed on delays in defence procurement projects:

Background

Major progress on defence and marine procurements over the last 18-months include:

Status of defence procurement projects

Context

Due to COVID-19, several defence procurement projects have halted or slowed, including the construction and maintenance of ships.

Note

All questions related to the challenger jets will be referred to the minister of National Defence.

Suggested response

If pressed on the budget, delays and impact:

If pressed on challengers:

If pressed on the challenger contract:

If pressed on the sale of light armoured vehicles (LAVs) to Saudi Arabia:

If pressed on the sole-source of Armoured Combat Support Vehicles or LAVs to General Dynamics Land Systems Canada:

If pressed on the third yard:

If pressed on the Future Fighter Capability Program:

If pressed on ‘excusable delay’ requests:

Background

A number of Canadian defence suppliers have reached out to government officials identifying the need for urgent support, as they are experiencing serious cash flow difficulties resulting from reduced activities in light of the COVID-19 pandemic situation. In collaboration with other government organizations and central agencies, PSPC is currently exploring measures to support the defence industry.

Irving Shipbuilding

In response to COVID-19, Irving Shipbuilding Inc. (ISI) suspended most industrial operations as of March 20, 2020, with special measures for working from home or within ISI’s offices implemented where possible. ISI has since commenced a gradual return-to-work, with a large proportion of production employees now in the shipyard while also ensuring physical distancing. COVID-19 safety measures have been implemented, including temperature screening for all individuals entering the site.

Design work for the Canadian surface combatant continues to progress, along with limited but increasing work on the Arctic and offshore patrol ships (AOPS). Following on weeks of growth in the number of tradespeople in the yard, ISI expects to reach full capacity on AOPS later this month.

Vancouver Shipyards

Operations at Vancouver Shipyards (VSY) continue but are being closely monitored. Staff not in direct support of production are working from home, although return to work planning has begun, while around 95% of tradespeople are working in shifts at the shipyard. Measures being taken include following self-isolation guidelines, additional social distancing measures, cancelling large gatherings and increased cleaning. VSY has been working closely with WorkSafeBC in implementing these practices, and has adjusted and escalated actions in response to new regulations and guidance.

This approach has allowed VSY to continue construction of the first joint support ship (JSS) and final offshore fisheries science vessel (OFSV), albeit at a reduced rate of production.

Current status on joint support ships

The joint support ships build contract was awarded on June 10, 2020 and announced on June 15, 2020. It allows for the transition to full-rate construction of the first ship (the construction of the early block began in June 2018), and then the second ship.

The impact of COVID-19 on the JSS project has thus far been minimal. Construction of the first vessel has continued throughout the pandemic.

Chantier Davie

On March 24, 2020, in response to COVID-19, the Quebec Government published a list of essential industrial sectors, under which Chantier Davie qualified. Chantier Davie has conducted on-site training for dealing with COVID-19, implemented a set of strict directives, and negotiated with their union to maintain intact squads instead of rotating employees through different teams. Nonetheless the workforce numbers and capacity have diminished to accommodate the social distancing measures implemented.

Challengers

To ensure that Canada obtains value for money, PSPC conducted a thorough cost analysis using supporting information from Bombardier as well as a third party market analysis. The price was deemed to be fair and reasonable.

Acceptance and title transfer of the aircraft occurred on June 30, 2020, and July 3, 2020. Both aircraft will undergo 2 post-delivery retrofit period, the first in mid-July to mid-August 2020 and the second in December 2020 and January 2021. The RCAF will be able to operate the aircraft starting mid-August 2020.

Future Fighter Capability Project

Context

As part of the Government of Canada’s reaffirmed commitment to invest in Canada’s military, as announced in the 2017 defence policy: Strong, Secure, Engaged, the government launched an open and transparent competition in December 2017 to permanently replace Canada’s fighter fleet with 88 advanced jets—the Future Fighter Capability Project (FFCP).

Notes

  • All questions related to capability gap, security and interoperability requirements, costs, and Canada’s participation in the Joint Strike Fighter Program should be answered by the minister of National Defence
  • All questions related to the Industrial and Technological Benefits Policy and the assessment of bidders’ impact on Canada’s economic interests should be answered by the minister of Innovation, Science and Economic Development (ISED)
  • All questions related to trade issues should be answered by the minister of Foreign Affairs

Suggested response

If pressed on which supplier requested an extension and on how many proposals will be received:

Background

In June 2017, Canada’s defence policy confirmed a fleet size of 88 advanced fighter aircrafts to replace the current CF-18s. The government launched a procurement process for the future fighter aircraft in December 2017. Officials conducted extensive industry engagement with suppliers to maximize the likelihood that Canada receives competitive proposals, and with Canadian industry to ensure that they are well positioned to participate in the procurement. 

In November 2018, France-Dassault Aviation officially withdrew from the competitive process.

In July 2019, the request for proposal was shared with the eligible suppliers.

In August 2019, UK-Airbus also withdrew from the competition.

On October 4, 2019, Canada received preliminary security offers from the remaining 3 eligible suppliers, outlining how the suppliers intend to meet Canada’s security and interoperability requirements. Canada has completed the first security acceptability Assessment on the offers and provided significant feedback to suppliers on January 31, 2020. The feedback will help suppliers to understand the scope of information that is required in their proposals in order to submit an acceptable security offer to Canada.

Next steps

A dialogue phase may be conducted with 2 or more compliant bidders in 2021 so they can address, in revised proposals, any issues and risks that are identified during the evaluation phase. Canada will finalize the contract terms with the preferred bidder prior to contract award which is anticipated in 2022.

Officials are actively planning for proposal evaluation during the pandemic to minimize any impact to the project schedule.

Polar icebreaker

Context

The Government of Canada is exploring procurement options for construction of the polar icebreaker. No decision has been taken.

Suggested response

If pressed on procurement practices, this approach follows standard procurement practices and the information gathered through this RFI will help the government determine how best to proceed so that the polar icebreaker is delivered in the most timely and efficient manner.

Background

Vancouver Shipyards’ non-combat package is a challenging program of work, which was made even more challenging by the inclusion of the large, one-off polar icebreaker. In 2019, Canada made the decision to substitute the one polar icebreaker with a long run of 16 multi-purpose vessels (MPVs). Adding a long production run of up to 16 MPVs will provide Vancouver Shipyards with a longer program horizon than a one-off polar icebreaker, helping to break the cycle of short production runs and provide an opportunity to generate greater efficiencies.

On February 28, 2020, the Government of Canada issued a RFI, open to all Canadian shipyards, seeking information on domestic shipyard capability and capacity to construct and deliver a polar-class icebreaker. The RFI closed on March 13, 2020, and PSPC received 4 responses for evaluation.

On June 9, 2020, Seaspan’s Vancouver Shipyards and Ontario-based Heddle Shipyards announced they will work together if they are awarded the contract to build the polar icebreaker.

Another process is also underway to select a third shipyard under the National Shipbuilding Strategy to build 6 program icebreakers for the Canadian Coast Guard. Chantier Davie has pre-qualified as part of this process, which was overseen by an independent fairness monitor. The yard is now going through the next steps which will include a third-party assessment of the shipyard’s infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure.

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