Defence and marine procurement: Standing Committee on Government Operations and Estimates—November 16, 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.

Suggested response

• Canada’s defence policy: Strong, Secure, Engaged, reaffirms the government’s commitment to ensure that Canada has an agile, multi-purpose military and that members of the Canadian Armed Forces are well equipped. We are delivering on this commitment
• Over the last 18 months, significant progress has been achieved on major defence and marine procurement projects and activities

Most recently:

• on June 30 and July 3 2020, 2 new challengers were accepted in Montreal, Quebec
• on July 31, 2020, Canada received proposals from all 3 eligible suppliers for the Future Fighter Capability Project
• on July 31,2020 the second and third fixed-wing search and rescue (FWSAR) CC295 aircraft were accepted in Seville, Spain
• on July 31, 2020, the first Arctic and Offshore Patrol Ship, HMCS Harry DeWolf, was delivered and accepted by the Royal Canadian Navy
• on September 6, 2020, the seventh Royal Australian Air Force F/A-18 Hornet aircraft being acquired under the Interim Fighter Capability Project (IFCP) arrived at Mirabel, Quebec, to undergo the required Canadian upgrades for integration within the CF-18 fleet
• on September 10, 2020, we awarded a $155-million contract to purchase the Motor Vessel (MV) Villa de Teror as an interim measure to replace the MV Madeleine ferry
• on September 25, 2020 a ministerial event was held in Comox, British Columbia to celebrate the arrival of the first fixed-wing search and rescue (FWSAR) CC295 and to announce the official name, “Kingfisher”
• on October 9, 2020, the third and final offshore fisheries science vessel was delivered to the Canadian Coast Guard
• on October 30, 2020 we announced an advance contract award notice (ACAN) signalling our intention to enter into a contract with Chantier Davie for required vessel life extension work on the CCGS Louis S. St-Laurent, Canada’s largest icebreaker. The work is scheduled to begin spring 2022
• on November 6, 2020 we announced a $182-million contract award to General Dynamics Mission Systems—Canada, from Ottawa, Ontario, for in-service support on 6 Halifax-class combat systems (HCCS)

If pressed on delays in defence procurement projects (questions on defence procurement delays should be directed to the minister of National Defence):

• over two thirds of projects under Canada’s defence polity: Strong, Secure, Engaged are in the implementation phase, near completion, or completed
• for example, National Defence has provided the Canadian Army with medium support vehicle systems which are currently deployed in Latvia
• additionally, the Royal Canadian Navy’s Halifax-class frigates have been modernized and deployed overseas

Background

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

• Canadian surface combatant for DND:
  • the Canadian surface combatant (CSC) project is the largest, most complex procurement undertaken by the Government of Canada, with a total estimated project budget of $56 billion to $60 billion
  • in February 2019, the Government of Canada and Irving Shipbuilding selected Lockheed Martin Canada for the design of 15 new CSCs that will be built at Irving Shipbuilding’s Halifax Shipyard. The CSC design will be based on BAE’s type 26 global combat ship
  • on February 7, 2019, the CSC design contract was awarded to Irving Shipbuilding
  • in early November 2019, Irving Shipbuilding and Lockheed Martin Canada were authorized to progress to the preliminary design phase of the design process; the second of the 4 design phases
  • in early November 2020, the United States Congress received notification of the proposed sale of 100 SM-2 surface-to-air missiles to Canada, at a cost not to exceed USD 500 million for the CSC
• acquisition of 360 light armoured vehicles:
  • on August 16, 2019, in support of Canada’s defence policy: Strong, Secure, Engaged, the Government of Canada announced its intention to acquire up to 360 armoured combat support vehicles (ACSVs) and that it was in the advanced stages of negotiating a contract, through a non-competitive process
  • on September 5, 2019, Public Services and Procurement Canada (PSPC), on behalf of National Defence, awarded a contract to General Dynamics Land Systems—Canada (GDLS-C) valued at approximately $2 billion for 360 ACSVs, initial spare parts, technical manuals, and training
  • in May 2020, production of the first armoured combat support vehicle began in London, Ontario at the General Dynamics Land-Systems Canada manufacturing facilities. These new vehicles will fulfill a variety of combat support roles such as that of troop/cargo vehicle, ambulance, command post, and mobile repair and recovery
• Future Fighter Capability Project eligible suppliers’ proposal receipt:
  • this procurement is a once in a generation opportunity to support the growth of Canada’s aerospace and defence industries for decades to come
  • the government has delivered on its promise to launch an open and transparent competition to replace Canada’s fighter fleet and continues to make progress on its purchase of 88 advanced jets
  • on July 23, 2019, PSPC released the formal request for proposals to eligible suppliers
  • on July 31, 2020, Canada received proposals from the 3 eligible suppliers and entered into the evaluation phase of the procurement process
  • a contract award is anticipated in 2022, and the first replacement aircraft delivered as early as 2025
• 2 Transport Canada ferries to be built at Chantier Davie:
  • on May 22, 2019, an advance contract award notice (ACAN) was issued, signalling the Government of Canada’s intention to enter into a contract with Chantier Davie for the construction of 2 new ferries for Transport Canada. Other interested suppliers had 15 calendar days to submit a statement of capabilities to show they met the requirements laid out in the ACAN. None were submitted
  • on June 19, 2019, the Government of Canada announced that it was entering into contract negotiations with Chantier Davie of Lévis, Quebec, for the construction of the vessels
  • on November 14, 2019, Lengkeek Vessel Engineering Inc. & Knud E. Hansen A/S Naval Architects (joint venture) were awarded a $3.1 million contract to provide expert advice and technical oversight to Transport Canada throughout the project leading to and including the construction
  • in November 2019, the Government of Canada awarded an initial ancillary contract to Chantier Davie to establish a project management office and initiate various studies to support design and construction of the new vessels. As of September 14, 2020 the contract is valued at $3.334 million (tax included)
• interim ferry:
  • on July 2, 2020, the Government of Canada issued an advance contract award notice (ACAN), signalling its intention to purchase the motor vessel (MV) Villa de Teror as an interim measure to replace the motor vessel Madeleine until the new vessel being built at Davie is ready for service. Recent inspections on the MV Madeleine showed substantial investments and repairs would be required to keep the vessel in service. The interim solution is required to ensure continued reliable, predictable, and safe ferry service to the residents of Îles-de-la-Madeleine
  • on July 20, 2020, the ACAN closed, and a contract was signed for the acquisition of the vessel on September 10, 2020
  • the vessel is expected to be delivered between January and March 2021 and enter into service in Summer 2021
• selection of a third Canadian Shipyard under the National Shipbuilding Strategy to build 6 program icebreakers for the Canadian Coast Guard (CCG):
  • to respond to evolving federal shipbuilding requirements, PSPC is carrying out a process to select a third strategic partner shipyard under the NSS. The selected shipyard will build 6 new program icebreakers for the CCG
  • in December 2019, Chantier Davie pre-qualified in the first stage of the process to become the third strategic partner under the NSS. Chantier Davie has moved on to the request for proposal (RFP) and evaluation stage. This 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
  • on July 29, 2020, the final RFP was sent to Chantier Davie
  • an umbrella agreement is expected to be in place with a third shipyard in mid- 2021
• 16 multi-purpose vessels for the CCG to be built at Vancouver Shipyards:
  • on May 22, 2019, the Government of Canada announced a $15.7 billion investment to renew the Canadian Coast Guard fleet, in order to ensure capacity to deliver important services for Canadians. This includes building up to 16 multi-purpose vessels (MPVs)
  • construction of the MPVs is expected to start in the mid-2020s, following the completion of the second joint support ship
  • a run of up to 16 vessels will provide an opportunity for Vancouver Shipyards to generate efficiencies and economies of scale, as well as ensure greater workforce stability and minimize gaps in production
  • in August 2020, the MPV ancillary contract was awarded, which will progress early design work on the vessels
• seventh and eight Arctic and offshore patrol ships for the CCG:
  • on May 22, 2019, the Government of Canada announced a $15.7 billion investment to renew the Canadian Coast Guard fleet, in order to ensure capacity to deliver important services for Canadians. This includes building 2 Arctic and offshore patrol ships (AOPS) for the CCG
  • the 2 new AOPS (7 and 8), to be built by Irving Shipbuilding, will be adapted for the CCG to perform a range of critical missions, including Northwest Atlantic Fisheries Organization patrols
  • on November 1, 2019, the first contract relating to these ships was awarded. This contract is to have Irving Shipbuilding make the changes required to modify the AOPS design to satisfy CCG’s unique requirements
• acquisition and conversion of 3 medium icebreakers for the CCG:
  • December 2018, the CCG accepted into service the first of the 3 medium icebreakers being refit by Chantier Davie, the CCGS Captain Molly Kool
  • the second and third vessels will be in service in fall 2020 and spring 2021 respectively
  • on April 30, 2019, the names of the second and third icebreakers were announced: the CCGS Jean Goodwill and the CCGS Vincent Massey
• invitation to qualify for the Future Aircrew Training Program:
  • through an open and transparent competition, the Government of Canada is taking the necessary steps to renew its existing aircrew training services
  • the Future Aircrew Training (FAcT) program has been put in place to develop and implement a new and cohesive training program that replaces the Canadian Armed Forces’ current pilot, air combat systems officer (ACSO), and airborne electronic sensor operator (AES Op) training systems
  • in December 2018, Canada established a list of qualified suppliers that demonstrated their ability to meet Canada’s needs, as defined in the invitation to qualify
  • in fall 2020, a draft RFP is expected to be released
  • in spring 2021, the formal RFP is expected to be released
  • industry engagement will continue until release of the final RFP
• invitation to qualify for the Victoria-class in-service support contract II:
  • through an open and transparent competition, the Government of Canada is renewing the in-service support contract for the Royal Canadian Navy’s Victoria class submarine fleet
  • Canada has a fleet of 4 submarines that were purchased, used, from the United Kingdom (UK) in the early 2000’s
  • an invitation to qualify (ITQ) closed January 8, 2020 and we are evaluating the responses received. Successful ITQ respondents will be part of the industry consultation group that will lead to the finalization of the RFP. First industry engagements with the prequalified bidders took place in September 2020 and will continue in November 2020
  • Babcock Canada Inc. is the current prime contractor and the current contract will remain in place until June 2023, if all option years are exercised. Victoria Shipyards Limited of Victoria, B.C. is one of the principal subcontractors to Babcock
• invitation to qualify for remotely piloted aircraft systems:
  • through an open and transparent competition, the Government of Canada is taking the necessary steps to procure an armed medium altitude long endurance remotely piloted aircraft system (RPAS)
  • this new capability will provide intelligence, surveillance, target acquisition, reconnaissance and precision strike capabilities to the Canadian Armed Forces in support of operations domestically and abroad
  • in May 2019, Canada established a list of qualified suppliers that demonstrated their ability to meet Canada’s needs, as defined in the invitation to qualify
  • industry engagement will continue until spring 2021 to refine the requirements
  • in fall 2020, a draft RFP is expected
  • In spring 2021, the formal RFP is expected
• invitation to qualify for logistics vehicle modernization project:
  • through an open and transparent competition, the Government of Canada is taking the necessary steps to revitalize and replace Canada’s light and heavy logistics vehicle capabilities 
  • in July 2019, Canada established a list of qualified suppliers that demonstrated their ability to meet Canada’s needs, as defined in the invitation to qualify
  • currently, the draft RFP is being released incrementally to qualified suppliers under the review and refine requirements (RRR) phase and industry engagement activities will continue up to the end of winter 2021
  • In summer 2021, the formal RFP is expected
• delivery of offshore fisheries science vessels:
  • the first 2 offshore fisheries science vessels, the CCGS Sir John Franklin and CCGS Capt. Jacques Cartier, were delivered to CCG in 2019. The final vessel, the CCGS John Cabot, was delivered in October 2020 marking the completion of the first class of large ships built under the National Shipbuilding Strategy
• Halifax-class frigates work period contracts awarded:
  • The Royal Canadian Navy currently operates 12 Halifax-class ships:
    • 7 ships are assigned to Maritime Forces Atlantic
    • 5 are assigned to Maritime Forces Pacific. The Navy intends to continue operating these ships for approximately another 2 decades, until the Canadian surface combatants are delivered
  • in 2016, extensive industry engagements, along with market survey processes, identified 3 Canadian shipyards capable of performing the level of maintenance services needed to support the frigates through to the end of life
  • In November 2018, advance contract award notices were issued to Irving Shipbuilding, Chantier Davie, and Seaspan’s Victoria Shipyards
  • In July 2019, 2 contracts totalling $1 billion were awarded to Victoria Shipyards and Chantier Davie. In August 2019, a $500-million contract was awarded to Irving Shipbuilding. The contracts are expected to rise in value to over $7.5 billion as additional work packages are added
  • In August 2020 at Chantier Davie commenced maintenance work on the HMCS St. John’s
• the Treasury Board Secretariat award of joint support ship build contract:
  • the JSS project will deliver 2 support vessels to the Royal Canadian Navy to supply other ships with fuel, ammunition, spare parts, food and water. These ships, which are being built by Seaspan’s Vancouver Shipyards, will also provide a home base for maintenance and operation of helicopters, a limited sealift capability, and support to forces deployed ashore
  • the JSS build contract was awarded in June 2020. This contract will allow the construction, testing, commissioning and delivery of the 2 JSS
  • construction of the first JSS is underway. Delivery of the first ship is expected in 2023. The second ship will begin construction after the offshore oceanographic science vessel, and delivery is expected in 2025
• Interim Fighter Capability Project (IFCP):
  • Canada is acquiring up to 25 F/A-18 Hornet aircraft (18 flyable and 7 non-flyable) from the Royal Australian Air Force (RAAF)
  • 7 aircraft have been delivered to Canada. The first 2 were flown to 4 Wing Cold Lake, Alberta, by RAAF aircrew
  • aircraft 3 to 7 were delivered to the CF18 3rd line depot at Mirabel, Quebec via RCAF CC177 Globemaster transport aircraft
  • end of September 2020 aircraft number 8 will be delivered to Mirabel via CC177
  • on August 25, 2020, a transportation contract was awarded to Momentum Decisive Solutions Canada Inc. to transport aircraft numbers 9 through 18 to Canada via commercial carrier.
  • by December 31, 2021, all IFCP aircraft are expected to be delivered

Status of defence procurement projects

Context

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

Suggested response

• Our government is taking strong action to protect our economy, jobs, and the health and safety of Canadians during the global COVID-19 outbreak
• Canada continues to monitor the situation, analyze potential impacts and explore all possible financial measures available to support the defence and marine industry and protect Canada’s long term national security interests
• We are currently assessing the impact of COVID-19 on the delivery of ongoing and future major procurement projects
• We urge all employers during this critical time to follow the recommendations of public health officials, so that workers are kept safe in this extraordinary situation

If pressed on the budget, delays and impact:

• given the uncertainties associated with the duration of COVID-19 and related strategies, the full schedule impact to projects is not yet fully understood
• that said, we recognize that COVID-19 has impacted the defence sector, and are working closely with industry to mitigate budgetary and schedule impacts of existing procurements

If pressed on the Future Fighter Capability Project:

• Canada received proposals from all 3 eligible suppliers on July 31, 2020 in response to the request for proposal released in 2019
• Canada is conducting the evaluation in the wake of COVID-19 restrictions and has put in place tools and processes to minimize the impact on the schedule
• contract award is still anticipated in 2022

If pressed on challengers (all questions related to challenger jets should be referred to the minister of National Defence) :

• on June 5, 2020, Public Services and Procurement Canada (PSPC) awarded a $75 million USD (plus applicable taxes) non-competitive contract to Bombardier Inc. for the acquisition of 2 new challenger 650 aircrafts including initial training, publications, maintenance equipment, spare parts to sustain 3 years of in-service support, and additional operational equipment. The contract does not include options to support the aircraft’s full life-cycle costs or any additional scope that would increase the value of the contract in the future
• these aircrafts will replace the Royal Canadian Air Force’s (RCAF’s) 2 oldest challenger jets, which are facing obsolescence. Procured in the early 1980s, they served multiple purposes for the Government of Canada, such as medical evacuation, and military transportation, and have assisted on multiple humanitarian relief and disaster assistance operations
• following changes to international airspace regulations that began in January 2020, these 2 older aircraft are no longer compliant with certain regulations. As such, operation of these aircraft outside of Canada requires additional efforts to seek exemptions or reroute flights

If pressed on the challenger contract:

• the challenger 650 aircrafts were acquired on a non-competitive basis. Factors considered in this decision included commonality with the existing fleet, timeliness in delivery and operational readiness of the challenger fleet
• 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

If pressed on the third yard:

• Chantier Davie has pre-qualified to become the third strategic partner under the National Shipbuilding Strategy
• Canada and Chantier Davie are now going through the steps of the selection process which 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
• subject to successful negotiations, Canada intends to enter into an umbrella agreement with the third yard in 2021
• the third yard will build 6 program icebreakers for the Canadian Coast Guard
• the entire invitation to qualify process was overseen by an independent fairness monitor

If pressed on ‘excusable delay’ requests:

• in order for Canada to consider excusable delays, certain conditions set out in the contracts must materialize, including a requirement for contractors to notify Canada and to submit a work around plan
• therefore, in the specific context of COVID-19, contractors wishing to submit an excusable delay claim to Canada should review their contracts and proceed in accordance with the provisions they contain

Background

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. Most of the workforce is now back in the shipyard while also ensuring physical distancing. COVID-19 safety measures have been implemented, including temperature screening for all individuals entering the site.

Construction of the Arctic and offshore patrol ships (AOPS) and maintenance of HMCS Charlottetown has gradually resumed since mid-April, though with reduced levels of efficiency. On July 31, 2020, the first AOPS was delivered and accepted by the Royal Canadian Navy. Due to COVID-19 related disruptions and other slippage, ISI has indicated a 6 to 9 month delay to future AOPS, with these timelines at least partly dependent on whether COVID-19 measures are continued or enhanced.

On October 27, 2020, 90 workers at Irving Shipbuilding’s Halifax Shipyard refused to work after the union alleged that a sub-contractor from Quebec arrived on October 19, and did not self-isolate. The shipyard has stated that the sub-contractor was granted an exemption from the provincial government to the 14-day self-isolation requirement for people entering the Atlantic bubble. Due to the number of personnel involved, the shipyard called the provincial Labour Department to investigate. Following recommendation by the Nova Scotia Labour Department, as of October 28, 2020, all workers have returned to work at the shipyard.

Vancouver Shipyards

Operations at Vancouver Shipyards (VSY) continue during COVID-19 but are being closely monitored. Staff not in direct support of production who had been working from home have begun returning to the office. In keeping with provincial regulations, only 50% occupancy is permitted. Approximately 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
• 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 at a reduced rate of production for the first joint support ship (JSS) and final offshore fisheries science vessel (OFSV), the latter of which was delivered in October 2020.

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.

As of October 29, 2020, there have been multiple COVID-19 cases reported by Chantier Davie and they have invoked, in accordance with local health authority protocols, measures to report on and control the situation. These measures have reduced the number of reported cases from 26 to now just one case and the full impact on the workforce and schedule is being assessed.

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 completed the first of 2 post-delivery retrofit periods in August 2020. Both aircraft are currently undergoing the second post-delivery retrofit in Wichita, Kansas, which is expected to be completed in early December 2020. The RCAF has been able to operate the aircraft since 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 Canada’s 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.

Suggested response

• The government is committed to ensuring that members of the Canadian Armed Forces have the equipment they need to do their jobs and protect Canadians, while maximizing economic benefits for the country
• The government delivered on its promise to launch an open and transparent competition to replace Canada's fighter fleet with 88 advanced jets, and we are making great progress
• On July 31, 2020, Canada received proposals from the 3 eligible suppliers, and this competitive procurement process has entered its proposal evaluation phase
• We continue to anticipate awarding a contract in 2022, with delivery of the first replacement aircraft as early as 2025

Background

In June 2017, Canada’s defence policy: Strong, Secure, Engaged 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, United Kingdom (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 completed the first security acceptability assessment on these offers and provided significant feedback to suppliers on January 31, 2020. The feedback helped suppliers understand the scope of information required in their proposals for Canada’s assessment of their security offer.

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.

Polar icebreaker

Context

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

Suggested response

• The Government of Canada is committed to the National Shipbuilding Strategy (NSS) and getting the women and men of the Royal Canadian Navy and the Canadian Coast Guard (CCG) the equipment they need to do their jobs protecting and serving Canadians
• The government is currently exploring options to ensure the polar icebreaker is built in the most timely and efficient manner
• On February 28, the Government of Canada issued a request for information (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 Public Services and Procurement Canada (PSPC) has received 4 responses
• No decision has been taken at this point

If pressed on the Davie National Icebreaker Center:

• the Government of Canada is not involved with the Chantier Davie National Icebreaker Center, and the center is not a part of the NSS

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.

On September 16, 2020, Seaspan’s Vancouver Shipyards and Newfoundland-based Genoa Design International announced they will work together on 3D modelling and design services if they are awarded the contract to build the polar icebreaker.

Another process is also underway to select a third shipyard under the NSS to build 6 program icebreakers for the CCG. 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. On July 29, 2020 the final request for proposal was sent to Chantier Davie.

National Shipbuilding Strategy

Context

The National Shipbuilding Strategy (NSS) is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy (RCN) and Canadian Coast Guard (CCG), create a sustainable marine sector, and generate economic benefits for Canadians.

Suggested response

• The government is delivering on its commitment to continue to renew the RCN and the CCG fleets, revitalize the shipbuilding industry across Canada, create middle-class jobs, and ensure Canada’s marine services have the modern ships that they need

Progress on current work

• At Seaspan’s Vancouver Shipyards, all 3 offshore fisheries science vessels have been delivered to the CCG, marking the completion of the first class of large ships built under the National Shipbuilding Strategy. Work is ongoing on the first joint support ship (JSS)
• At Irving Shipbuilding, the first Arctic and offshore patrol ship was delivered and accepted by the RCN on July 31, 2020. Three other vessels are currently under construction. Design work on the Canadian surface combatant is advancing

Third yard

• Chantier Davie has pre-qualified to become the third strategic partner under the NSS
• Canada and Chantier Davie are now going through the steps of the process which 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
• Subject to successful negotiations, Canada intends to enter into an umbrella agreement with the third yard in 2021
• The third yard will build 6 program icebreakers for the CCG
• The entire invitation to qualify process was overseen by an independent fairness monitor

Opportunities for other yards / Chantier Davie

• Across the country, opportunities exist for Canadian shipyards and businesses to win contracts for small vessel construction, repair, refit and maintenance
• On February 17, 2020, following and open and competitive process, we announced the award of a $12.1-million contract to Shelburne Ship Repair for a vessel life extension on the CCGS Edward Cornwallis, a high-endurance multi-tasked vessel and light icebreaker in the CCG fleet. This contract will help create or sustain approximately 100 jobs in Shelburne, Nova Scotia
• On July 21, 2020 the first Royal Canadian Navy frigate arrived at Chantier Davie for repair and maintenance. It is the first vessel to be re-furbished under 1 of the 3 Halifax class docking work period contracts awarded to Chantier Davie (one of the 3 shipyards selected for the work) in July 2019
• On August 26, 2020, following an open and competitive process, we announced the award of a $4-million contract to Heddle Shipyards for dry-docking work on the CCGS Griffon, a high-endurance multi-tasked vessel and light icebreaker in the CCG fleet. This contract will help create or sustain 80 jobs in Hamilton, Ontario
• On October 30, 2020 we announced an advance contract award notice signalling our intention to enter into a contract with Chantier Davie for required vessel life extension work on the CCGS Louis S. St-Laurent, Canada’s largest icebreaker. Chantier Davie has been identified as the only facility in Eastern Canada capable of performing this work during the specified time period. Other interested suppliers have 15 calendar days to submit a statement of capabilities to show they meet the requirements laid out in the ACAN. The work is scheduled to begin in spring 2022
• On November 6, 2020, we announced the award of a $182-million contract to General Dynamics Mission Systems–Canada, from Ottawa, Ontario, for in-service support on 6 Halifax-class combat systems. The initial contract amount may increase over the next 6 years as work progresses, and will maintain up to 106 jobs
• Since 2015, Chantier Davie has been awarded $2.1 billion in NSS contracts. They are presently converting 2 icebreakers for the CCG, and are undergoing a process to become the third shipyard under the NSS

If pressed on the polar icebreaker:

• the government is exploring procurement options for construction of the polar icebreaker. No decisions have been taken
• a request for information was issued on February 28, 2020 to obtain information on domestic shipyard capability and capacity to build a polar icebreaker which closed on March 13, 2020

If pressed on the Chantier Davie National Icebreaker Center:

• the Government of Canada is not involved with the Chantier Davie National Icebreaker Center, and the Center is not a part of the NSS

If pressed on interim icebreaker capacity for Canadian Coast Guard:

• the current value of the contract with Davie for the acquisition and conversion of the 3 medium icebreakers is $843 million
• the first vessel began operations in December 2018, with the second vessel CCGS Jean Goodwill and third vessel CCGS Vincent Massey to be available by fall 2020 and spring 2021 respectively

If pressed on Chantier Davie workers being exposed to lead (questions on lead exposure should be directed to the minister of Fisheries, Oceans, and the Canadian Coast Guard):

• the Government of Canada takes the health and safety of all workers very seriously
• the 3 medium icebreakers were purchased through Chantier Davie and are under their care and custody from purchase until delivery to the Canadian Coast Guard. It is not uncommon for vessels of this age to have lead paint and Chantier Davie has extensive experience refitting and maintaining older ships
• we will continue to work with Chantier Davie to ensure the health and safety of personnel while delivering this important capability to the CCG

If pressed on Chantier Davie COVID-19 impact:

• the Government of Canada is committed to protecting the health and safety of Canadians and keeping our workforces safe, while ensuring a safe and sustainable economic recovery
• we are continually assessing the impact of COVID-19 on the delivery of ongoing and future major procurement projects, including those under the NSS
• we acknowledge the situation at Chantier Davie and are in direct contact with the yard to assess if there will be any impacts on current and future shipbuilding projects as the shipyard’s senior management takes measures to protect their employees

If pressed on Irving Shipbuilding Inc. COVID-19 impact:

• the Government of Canada takes the health and safety of all workers very seriously
• the union has alleged that a sub-contractor who arrived from Quebec did not self-isolate. Consequently a number of employees refused to work on October 27, 2020
• the shipyard has stated that the sub-contractor had been given a provincial government exemption to the 14-day self-isolation requirement for people entering the Atlantic bubble
• all workers returned to work the same day, following the recommendation of the Nova Scotia Labour Department
• we continue to monitor the situation closely

Background

Contracts under the National Shipbuilding Strategy

From 2012 to the end of June 2020, the government signed approximately $16.74 billion in new NSS contracts throughout the country. In terms of economic impacts of the NSS, contracts awarded in the period of 2012 to the end of 2019 are estimated to contribute over $17.04 billion ($1.54 billion annually) to gross domestic product (GDP), and create or maintain more than 15,521 jobs annually, through the marine industry and its Canadian suppliers between 2012 and 2022.

Table 1: National Shipbuilding Strategy contracts awarded from 2012 to the end of June 2020

Irving Shipbuilding	Vancouver Shipyards	Chantier Davie	Other shipyards/Companies
$4.96 billion	$4.30 billion	$2.10 billion	$5.38 billion

Table 2: National Shipbuilding Strategy contracts awarded by province

Province	Total contract value	percentage of total contract value
Alberta	$20,987,395	0.13%
British Columbia	$5,516,809,324	32.94%
Newfoundland and Labrador	$200,671,273	1.20%
Nova Scotia	$5,034,953,360	30.07%
Ontario	$3,549,277,306	21.19%
Quebec	$2,423,757,688	14.47%
Grand total	$16,746,456,346	100%

Table 3: Project budgets and delivery dates

Vessel	Delivery date	Budget
Offshore fisheries science vessel (OFSV) 1	June 27, 2019	$687 millions (under review)
OFSV 2	November 29, 2019	$687 millions (under review)
OFSV 3	October 9, 2020	$687 millions (under review)
Joint support ship (JSS) 1	2023	$4.1 billion
JSS 2	2025	$4.1 billion
Offshore oceanographic science vessel (OOSV)	2024	Under review
Arctic and offshore patrol ship (AOPS) 1	July 31, 2020	$4.3 billion
AOPS 2	Spring 2021table 3 note 1	$4.3 billion
AOPS 3	Spring 2022table 3 note 1	$4.3 billion
AOPS 4	Winter 2023table 3 note 1	$4.3 billion
AOPS 5	Winter 2024table 3 note 1	$4.3 billion
AOPS 6	Fall 2024table 3 note 1	$4.3 billion
AOPS 7	Summer 2025	$1.5 billion (estimate)
AOPS 8	Spring 2026	$1.5 billion (estimate)
Canadian surface combatant (CSC)	15 CSCs between 2020s to 2040s	$56 billion to $60 billion (estimate)
Multi-purpose vessel (MPV)	Up to 16 MPVs starting in late 2020s	$14.2 billion (estimate)
Table 3 Notes Table 3 Note 1 There is an additional 3-month risk due to uncertainty surrounding COVID-19 going forward. Return to table 3 note 1 referrer

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