Government of Canada announces long-term investment in the Royal Canadian Navy providing more than 2,000 jobs in Canada’s marine sector

News Release

For immediate release

Providing work for the Canadian marine industry for up to 35 years

August 17, 2017 – Gatineau, Quebec – Public Services and Procurement Canada

The Government of Canada is delivering on its commitment to renew the Royal Canadian Navy's fleet through the National Shipbuilding Strategy (NSS).  This investment will ensure that the Royal Canadian Navy can operate as a true blue-water force, creating and maintaining more than 2,000 middle-class jobs across Canada over a 35-year period, growing the Canadian economy.

Today, the Honourable Jim Carr, Acting Minister of Public Services and Procurement, announced the award of a contract to the joint venture of Thales Canada Inc. and Thales Australia Ltd. for in‑service support, including refit, repair and maintenance and training for the Arctic and Offshore Patrol Ships (AOPS) and Joint Support Ships (JSS).

The contract award follows an open and transparent procurement process that employed many modern approaches including regular and ongoing engagement with industry. Today’s announcement will ensure Canada is ready to support the vessels once they are delivered, while supporting the long-term growth of the marine sector in Canada.

The contract is for an initial service period of 8 years, estimated at $800 million (excluding taxes), with options to extend services for up to 35 years, for an estimated total of $5.2 billion (excluding taxes) for the life cycle of the vessels.

Under this contract, Thales is required to compete this work amongst subcontractors.  For ships delivered in the East, work will be conducted in the Atlantic provinces, Quebec or Ontario, resulting in regional economic benefits. For ships delivered in the West, work will be conducted in the Western provinces and Territories, resulting in regional economic benefits. It is anticipated that more than 2,000 jobs will be created or maintained across Canada over this 35-year period

The in-service support work required to support and maintain the AOPS and JSS under this contract is to be carried out in Canada, unless a ship requires work maintenance while overseas. Under the Industrial and Technological Benefits Policy, an amount equal to the amount of this contract will be invested in Canada.  

The AJISS contract will benefit Canadian workers and industry by offering job stability and investments in skills development and innovation, and benefit Canadians by reducing costs through economies of scale.  This best practice in shipbuilding and in-service support demonstrates the good planning that is in place under the NSS.


Quotes

“The government is revitalizing the shipbuilding industry, bringing middle-class jobs and prosperity to many communities across the country. We are giving our navy the ships it needs, and we are taking steps to make sure that we have solid, cost-effective support in place to keep our fleet in full operational readiness.”

The Honourable Jim Carr
Acting Minister of Public Services and Procurement

“This open and transparent competition utilized new procurement concepts and frequent industry engagement. This approach was extremely useful in ensuring Canada effectively procured tailored in‑service support solutions for both the Arctic and Offshore Patrol Ships and Joint Support Ships.”

Steven MacKinnon
Parliamentary Secretary to the Minister of Public Services and Procurement

“The Arctic and Offshore Patrol Ships and Joint Support Ships are essential to our fleet.  They will deliver the capabilities that the Navy needs to meet defence and security challenges we face, both at home and abroad, and carry out the tasks required of a modern navy.  This contract will help ensure that the women and men doing this important work will be provided with reliable, continually supported ship for years to come. ”

The Honourable Harjit S. Sajjan
Minister of National Defence

“The Government of Canada’s selection of the joint venture means that Canadian industry will benefit from a wealth of award-winning marine in-service support, further modernizing the marine industry in Canada. The government’s application of the Industrial and Technological Benefits Policy ensures that we invest an amount equal to the contract value in Canada, maximizing the socio-economic benefits for Canadians. This includes maintaining and creating more than 2,000 jobs in regions throughout Canada while diversifying the supply chain across the country.”

The Honourable Navdeep Bains
Minister of Innovation, Science and Economic Development

“Thales Canada’s best-in-class in-service support solution will drive Canadian innovation, create growth and ensure that ships are mission-ready, where and when they are needed. As the selected in-service support provider, Thales is committed to empowering Canadian industry to support the AJISS program for decades to come.”

Mark Halinaty
President and Chief Executive Officer, Thales Canada Inc.

Quick Facts

  • Up to 6 AOPS are being built by Irving Shipbuilding. The delivery of the first vessel to the Royal Canadian Navy is scheduled for 2018.

  • There will be 2 JSS built by Seaspan’s Vancouver Shipyards. The delivery of the first vessel to the Royal Canadian Navy is scheduled for 2021.

  • The Industrial and Technological Benefits Policy, including the Value Proposition, applies to this contract. The policy requires companies that are awarded defence procurement contracts to undertake business activity in Canada equal to the value of the contract.

  • The in-service support of these vessels will be performed in Canada, and Thales will make investments in skills development and innovation, contributing to the long-term stability and growth of Canada’s marine industry.

  • A fairness monitor oversaw the competitive procurement process for the AOPS and JSS.

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Contacts

Mary-Rose Brown
Office of the Honourable Judy M. Foote
819-997-5421

Media Relations
Public Services and Procurement Canada
819-420-5501
media@pwgsc-tpsgc.gc.ca

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Backgrounder

Arctic and Offshore Patrol Ships and Joint Support Ships In-Service Support contract

The Royal Canadian Navy is in the midst of an extensive and comprehensive period of fleet modernization and renewal touching on all elements of the fleet.

On July 8, 2016, as part of the National Shipbuilding Strategy (NSS) and following extensive industry consultation, the Minister of Public Services and Procurement announced the launch of an open competition to provide in-service support, including refit, repair and maintenance and training, for both the Arctic and Offshore Patrol Ships (AOPS) and Joint Support Ships (JSS). This combined contract approach is referred to as AOPS and JSS In-Service Support (AJISS) and will provide the best value to Canadian taxpayers.

Any Canadian suppliers, including all shipyards that believed they were qualified to perform the services had the opportunity to compete in this procurement process. The evaluation requirements for the AJISS bid included technical and relational criteria, economic benefit commitments and a financial bid. All bids were evaluated against these criteria, and a fairness monitor oversaw the competitive procurement process. Bidders were notified of their ranking in mid-December, and negotiations with the highest-ranked bidder were successfully concluded in February. Debriefings were provided to all bidders in mid-February 2017.

The contract, awarded to the joint venture of Thales Canada Inc. and Thales Australia Ltd., is a long-term investment in the Royal Canadian Navy and Canada’s marine sector. The estimated value of this contract for the vessels’ full life cycle is $5.2 billion (excluding taxes) and will include an initial service period of 8 years, estimated at $800 million (excluding taxes), with options to extend services for up to 35 years.

The selection of the joint venture of Thales Canada Inc. and Thales Australia Ltd. will result in a wealth of award-winning marine in-service support experience being transferred to Canadian industry. This supports one of the key objectives of the NSS, namely the growth of the marine industry in Canada. Socio-economic benefits will come with this contract, and it is predicted that more than 2,000 jobs will be created or maintained in regions throughout Canada and will help to diversify the supply chain across the country.

The contract award follows an open and transparent procurement process. It provides best practices in shipbuilding and in-service support and employed many aspects of procurement modernization, including:

  • robust and on-going industry engagement throughout the development of the solicitation to ensure industry buy-in and help maximize the ability to submit strong bids
  • an integrated project team where members of Public Services and Procurement Canada, National Defence and Innovation, Science and Economic Development Canada worked in close and constant collaboration on the requirements in order to develop a Request for Proposal that would result in the correct balance of technical, financial and socio-economic requirements to deliver the best AJISS program for Canadians
  • built-in incentives that are based on performance measures, with incentives outlined in the terms of the contract and updated as work proceeds
  • identifying the desired outcome or performance expected from the vessels, ensuring the selected in-service support provider is then responsible for determining and performing the specific work needed to meet that outcome
  • the involvement of an independent fairness monitor throughout the entire solicitation
  • an innovative evaluation methodology where bids were assessed based on their relative merits against each of the other bids, setting apart the superior bid from the very good bids, and identifying the bid that was the best overall
  • the ability to maintain a rapid pace to contract award well in advance of the first ship delivery, maximizing Canada’s readiness to support the vessels

The in-service support work required to support and maintain the AOPS and JSS under this contract is to be carried out in Canada, unless a ship requires work maintenance while overseas.

Examples of the nature of in-service support work that could be conducted include:

  • program management of all work to be conducted to maintain the vessels through their lifecycle
  • establishing sparing requirements and ensuring spares are available to maintain ships
  • identifying and implementing engineering changes required to address ship deficiencies or obsolescence issues
  • developing and establishing an integrated/electronic data exchange environment to enable the flow of life cycle management, performance, and financial data between the contractor and Canada
  • plan and conduct training for maintenance of the ship
  • manage, develop and/or and keep current all data that is developed for or related to the ships
  • plan for, implement and manage the disposal of all ships at the end of their lifecycle

The Industrial and Technological Benefits Policy, including the Value Proposition, was applied to this project and will result in investments in Canada equal to the value of the contract.


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