Government of Canada Announces Way Forward for National Shipbuilding Strategy

News Release

For Immediate Release

May 26, 2016 — Ottawa, Ontario — Government of Canada

The Government of Canada today announced a series of enhancements to strengthen the National Shipbuilding Strategy so that needed vessels are delivered to the Royal Canadian Navy and the Canadian Coast Guard as quickly as possible.

While addressing representatives from the defence and security industries at CANSEC 2016, the Honourable Judy M. Foote, Minister of Public Services and Procurement, reaffirmed the Government’s commitment to the Strategy and acknowledged that needed improvements are planned or underway in the following areas:

• Greater expertise and stronger oversight—Engaging an Expert Advisor and improving governance and communication with the shipyards.
• Increased internal capacity—Hiring additional shipbuilding staff and increasing training.
• More accurate planning—Introducing more accurate costing approaches.
• Detailed monitoring—Implementing measures to track the performance of the shipyards.
• Increased transparency and accountability—Regularly updating Canadians and parliamentarians with both annual and quarterly reports.

Quotes

Quick Facts

• The total value of contracts awarded to date for large vessels under the National Shipbuilding Strategy will contribute nearly $4.4 billion of gross domestic product and create or maintain up to 5,500 jobs per year between 2012 and 2022.
• The shipyards selected to build Canada’s large vessels modernized their respective facilities at no cost to Canada, to build the vessels efficiently. Seaspan’s Vancouver Shipyards invested $170 million in its modernization, while Irving Shipbuilding’s infrastructure upgrades are estimated at $350 million.
• Construction is underway at both shipyards. The first Arctic Offshore Patrol Vessel is being built at Irving Shipbuilding in Halifax, and the second one is scheduled for later this year. Construction has started on the first two of three Offshore Fisheries Science Vessels at Seaspan’s Vancouver Shipyards.

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Contacts

Annie Trépanier
Office of the Honourable Judy M. Foote
819-997-5421

Media Relations
Public Services and Procurement Canada
819-420-5501

Jordan Owens
Press Secretary
Office of the Minister of National Defence
613-996-3100

Media Relations
Department of National Defence
Phone: 613-996-2353
Toll-free: 1-866-377-0811
Email: mlo-blm@forces.gc.ca

Media Relations
Fisheries and Oceans Canada
613-990-7537

Patricia Bell
Press Secretary
Office of the Minister
Fisheries and Oceans Canada
613-992-3474

Media Relations
Innovation, Science and
Economic Development Canada
343-291-1777
ic.mediarelations-mediasrelations.ic@canada.ca

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Background

The National Shipbuilding Strategy Challenges and Way Forward

Under the National Shipbuilding Strategy (NSS), announced in 2010, the Government of Canada selected two shipyards through a competitive process to build Canada’s combat and non-combat vessels. The NSS is a complex initiative, and many lessons have been learned since the Strategy was launched. Without question, the Strategy is good for Canada, but it can be made better. Work is underway or planned in several areas to enhance the Strategy.

1 – Greater expertise and stronger oversight

Decision making has not been as effective as possible. After years of inactivity in the shipbuilding industry, expert advice needed to guide decision-makers was lacking within the Government, and, in fact, within the country. In addition, the involvement of multiple departments created complexities with respect to responsibilities and accountabilities.

In response, the Government is improving its governance processes. An Expert Advisor is assisting with the implementation and management of the Strategy. Steve Brunton, a retired Rear Admiral from the United Kingdom’s Royal Navy, will provide the Government with advice on multiple facets of the NSS, including risk and program management, construction benchmarking and competitiveness, as well as performance and operational improvements.

Furthermore, oversight and governance are now improving through a number of initiatives, such as:

• Establishing an ad-hoc Cabinet Committee on defence procurement;
• Holding regular meetings with the shipyards; and
• Clarifying departmental roles and responsibilities.

2 – Increased internal capacity

The number of Government employees dedicated to shipbuilding had been reduced since the last large vessels—Canada’s fleet of Halifax-class multi-role patrol frigates—were delivered in the mid-1990s. Not only were Government shipbuilding teams too small, they also lacked sufficient expertise to deliver on such a complex, long-term endeavour.

The Government plans to bolster its workforce. Shipbuilding is a complex and long-term endeavor that requires the involvement of dedicated and highly skilled individuals. As such, we are investing in building and developing teams, and increasing our capacity by adding and training staff within the public service to manage the various aspects of the shipbuilding Strategy such as building and maintaining relationships with industry and monitoring progress of the various projects.

3 – More accurate planning

In the past budgets were set using unstandardized approaches. In addition, figures were never updated to reflect inflation, significant changes in exchange rates, and material costs.

Economic conditions change, requirements and technologies evolve, and the Government must be agile enough to review its financial commitments. The Government is now working to develop new costing approaches to make sure the budgets are accurate and reliable for the duration of the Strategy.

4 – Detailed monitoring

Despite the multi-billion dollar value of the Strategy, no formalized comprehensive mechanisms were in place to measure progress and results. This gap meant that the Government could not be able to reliably determine if shipbuilding investments were achieving the Strategy’s objectives.

To ensure the NSS stays on track and meets its objectives, the Government is working closely with the shipyards to put in place a range of measures to assess performance. This approach includes assessments of the timeliness of project execution, delivery of vessels within approved budgets, shipyard productivity and economic benefits.

Both shipyards are expected to make improvements that will put them in the top 25 per cent of the world’s most productive shipyards in the world in terms of facilities, process and practices. Even after achieving that desired state, the Government intends to keep measuring shipyard productivity on an ongoing basis.

5 – Increased transparency and accountability

And finally, communications with Canadians were insufficient. Information on the cost and timelines of various builds was not regularly updated, and the inherent complexities of procurement, reinvigorating the marine sector and ship construction were left unexplained.

The Government is committed to open and transparent communications with Canadians on the NSS. To this end, the Government is ensuring Canadians and stakeholders are kept informed of its plans, costs and progress through new reporting mechanisms that provide regular updates to Canadians and parliamentarians on the progress of the NSS.

Together, these enhancements will allow the Government to be more effective in the implementation of the NSS and in fulfilling its commitment to revitalizing the fleets of the Royal Canadian Navy and the Canadian Coast Guard.

Hon. Judy M. Foote Government of Canada Military Economics and Industry