National Shipbuilding Procurement Strategy

The National Shipbuilding Strategy (NSS), formerly the National Shipbuilding Procurement Strategy (NSPS), is a Government of Canada program operated by the Department of Public Works and Government Services. The NSS was developed under the Stephen Harper Government in an effort to renew the fleets of the Royal Canadian Navy (RCN) and the Canadian Coast Guard (CCG). The strategy was broken into three sections; the combat package, the non-combat package and the smaller vessel package. The companies who won the bids for the larger ships were not permitted to bid on the smaller vessel package. ^[1] In 2019 the Trudeau Government decided to add a third shipyard to the NSS specializing in the construction of icebreakers for the Coast Guard.

The NSS was launched on 3 June 2010 and the results for the two larger packages were made public on 19 October 2011. ^[2] Contracts for smaller vessels under the NSS were announced as they were awarded. ^[3]

Work

The NSS program was charged with selecting Canadian shipyards capable of rebuilding the fleets of the RCN and the CCG through two large packages of work (a combat ship package and a non-combat ship package), originally valued at about $38 billion but with that level of envisaged spending now in excess of $100 billion. Another package of work for smaller vessels was separate but part of the overall strategy.

Combat Package (Irving Shipbuilding)

• originally c. $30 billion, subsequently increased to over $80 billion, ^[4] for 21 combatant (warships) vessels (plus 2 non-combatant variants from the Arctic Offshore Patrol Ship project) to be built by Irving Shipbuilding and (all but 2) to serve in the RCN ^[5]
  • 8 vessels (six for the RCN plus two for the Coast Guard) from the Arctic Patrol Ship Project. The lead ship of the class, HMCS Harry DeWolf, was commissioned into the RCN in June 2021. ^[6]
  • up to 15 vessels from the Single Class Surface Combatant Project

Non-Combat Package (Seaspan Shipbuilding and future third Shipyard)

• c. $26 billion+ ^{[7] [8] [9] [10] [11]} - originally for 7 non-combatant, but as of 2021 c. 30, vessels to serve in the CCG and RCN (23 (including one polar icebreaker) to be built by Seaspan and a second polar icebreaker, as well as the medium icebreakers, at the Davie shipyard - pending the successful conclusion of an umbrella agreement between Davie and the Government of Canada)
  • 2 vessels from the Joint Support Ship Project (built at Seaspan for the RCN)
  • 2 vessels, John G. Diefenbaker-class polar icebreakers (for the CCG, one to be built at the Seaspan yard and the other at Davie, "pending the successful completion of the ongoing selection process as the third strategic partner for large ships construction under the NSS"). ^[12]
  • 1 vessel from the Offshore Oceanographic Science Vessel Project (built at Seaspan for the CCG to replace CCGS Hudson)
  • 3 vessels from the Offshore Fisheries Science Vessels Project (built at Seaspan for the CCG to replace CCGS Alfred Needler, CCGS Teleost, CCGS W. E. Ricker, and CCGS Wilfred Templeman). The first vessel, CCGS Sir John Franklin, entered service in June 2019 followed by the second ship, CCGS Capt. Jacques Cartier, in December 2019. The final ship, CCGS John Cabot, was handed over to the Coast Guard in October 2020. ^[13]
  • up to 16 "Multi-purpose Vessels" (to be built at Seaspan for the CCG) ^[14]
  • 6 medium icebreakers (for the CCG, to be built at a future third shipyard) ^[15]

Proponents

The Department of Public Works and Government Services issued a "Solicitation of Interest and Qualification" on 20 September 2010 and closed it on 8 October 2010. Five Canadian shipyards were short-listed to build the large vessels:

• Kiewit Offshore Services (major yard in Marystown, Newfoundland and Labrador)
• Irving Shipbuilding (major yard in Halifax, Nova Scotia)
• Davie Yards Incorporated (major yard in Lévis, Quebec)
• Washington Marine Group (major yard in Vancouver, British Columbia)
• Seaway Marine and Industrial (major yard in St. Catharines, Ontario)

Between October 2010 and January 2011, the short-listed shipyards were consulted on the content of the "Request for Proposals" (RFP), the umbrella agreements, the proposed schedule, and the evaluation methodology.

The RFP was released on 7 February 2011, and closed on 21 July 2011. Five proposals were received from three bidders:

• Irving Shipbuilding Inc.
• Seaspan Marine Corp. (renamed from Washington Marine Group in 2011)
• Davie Yards Inc.

Two of the proposals received were for the combat work package and three were for the non-combat work package.

Evaluation

An evaluation organization composed of Canadian Forces and Canadian Coast Guard personnel, as well as public servants from the departments involved (Public Works and Government Services Canada, Industry Canada, National Defence, and Fisheries and Oceans Canada) evaluated the proposals. An independent fairness monitor oversaw the process. The shipyards were evaluated on a combination of mandatory and rated requirements.

During the final evaluation period, one of the proponents, Davie Yards, underwent a corporate restructuring which was accepted by the NSS governance on 27 July 2011. Davie Yards Inc. was changed to 7731299 Canada Incorporated which was a consortium between Davie Yards Incorporated, Seaway Marine and Industrial and Daewoo Shipbuilding & Marine Engineering.

Result

On 19 October 2011 the Government of Canada selected Irving Shipbuilding Inc. for the $25 billion combat work package and Seaspan Marine Corp. for the $8 billion non-combat work package. ^{[16] [17]} In 2012, the two companies negotiated the contracts for the first projects of each package. ^[17]

On 16 January 2015, the Government of Canada finalized the contract for the construction of the Arctic Patrol Ship Project. Initially slated to cost $3.1 billion to build eight ships, the budget was increased to $3.5 billion for five ships, possibly six if no cost overruns on the first five. ^[18] Construction started on the first ship in September 2015. ^[19]

The search for the two main subcontractors on Irving's Surface Combatant package began in June 2015. In 2017, the Government of Canada will make its choice for two main subcontractors; one for combat systems integration (gun, missile, radar, sonar, communications) and the other for the design of the ship. ^[20] The list of those pre-qualified candidates which applied for the Surface Combatant subcontractor positions was released on 18 November 2015. ^[21]

In September 2015, reports emerged that climbing costs would lead to a reduction in the number of Surface Combatants the Canadian government would receive. ^[5] Problems were reported to have emerged from the Seaspan-apportioned part of the contract. In order to get the contract, Seaspan's yard had to be upgraded, which was only completed in November 2014. According to the agreement signed in 2012, the yard was to be ready to build by January 2015, but missed that date. ^[22] Construction only started on the first Coast Guard ships in June 2015, ^[23] leading to fears that the Joint Support Ships could be delayed. ^{[22] [23]}

In November 2015, reports of climbing costs associated with the NSS, reportedly up to 181%, has led to possible cancellations within the program. The newly elected Canadian government is set to review the entire program, after senior officials reported that the funding estimates outlined in the original plan were too low to meet operational requirements. ^{[24] [25]} However, the new government also simultaneously committed itself to retaining the NSS.

The first vessel constructed under the NSS, CCGS Sir John Franklin, was launched at Seaspan's shipyard in North Vancouver on 8 December 2017. ^[26] On 5 February 2019, the Canadian government changed the build order of ships at the Seaspan yard, placing the construction of one of the planned naval replenishment ships ahead of the Coast Guard's oceanographic science vessel. The second supply vessel will still be constructed after the oceanographic science vessel is completed. ^[27] In February 2021, a contract for the construction of Offshore Oceanographic Science Vessel was finally awarded. However, the total costs were reported to be nearly $1 billion, a figure attracting considerable criticism. ^[28]

On 8 February 2019, Canada signed an agreement with Lockheed Martin Canada, BAE Systems, Inc. and Irving Shipbuilding to design and construct the $60 billion Canadian Surface Combatant project. ^[29]

Addition of a third shipyard

In 2019, the Government of Canada decided to initiate a competition to add a third yard to the NSS. Widely rumored to end up being Davie Yards of Quebec, the yard appeared likely to specialize in medium, and possibly Polar, icebreakers for the Coast Guard. ^{[15] [30]}

In December 2019 it was announced that only Davie Yards had qualified for the icebreaker work. The next step was to negotiate an umbrella agreement between the federal government and Davie Yards by the end of 2020. The umbrella agreement would formally add Davie as a third yard under the NSS. ^[31] However, by the end of 2020 no progress had yet been reported.

In May 2021, the Government announced that the conclusion of the envisaged umbrella agreement was now "expected to be in place in late 2021". It was also announced that, pending the conclusion of that agreement, Davie would build one polar icebreaker for the Coast Guard while the Seaspan yard would build another one. ^[12] As of the end of 2021, further progress on the conclusion of the umbrella agreement had not yet been reported.

See also

• Amphibious Assault Ship Project
• Canada-class submarine, a 1987 proposal for a class of nuclear-powered attack submarines that was cancelled in 1989
• General Purpose Frigate, a failed Canadian procurement project of the 1960s

References

1. "Construction of small vessels". Public Works and Government Services Canada. 14 July 2015. Archived from the original on 16 October 2015. Retrieved 29 November 2015.
2. "National Shipbuilding Procurement Strategy (NSPS)". Public Works and Government Services Canada. 18 November 2015. Archived from the original on 16 October 2015. Retrieved 29 November 2015.
3. "Harper Government Announces Two High-Value Contracts Under NSPS" (Press release). Public Works and Government Services Canada. 10 July 2015. Retrieved 29 November 2015.
4. Pugliese, David (9 March 2021). "PBO at a loss to explain why cost of new Canadian warship, currently at $77B, keeps rising". Ottawa Citizen. Retrieved 7 May 2021– via Saltwire.
5. "Canada's biggest-ever military procurement at 'very high risk,' documents suggest". CTV News. 20 September 2015. Retrieved 29 November 2015.
6. Cooke, Alex (26 June 2021). "HMCS Harry DeWolf welcomed into Royal Canadian Navy fleet" . Retrieved 26 June 2021.
7. "The Polar Icebreaker Project: A Fiscal Analysis".
8. Blenkey, Nick (22 May 2019). "Canada to build 18 more Coast Guard vessels". MarineLog. Retrieved 8 May 2021.
9. Middlemiss, Dan (17 November 2020). "PBO Releases Cost Comparisons for Canada's Two Supply Ships". Canadian Naval Review. Retrieved 8 May 2021.
10. "Cost of Coast Guard ship nears $1B as questions mount over federal shipbuilding plan". Lethbridge News Now. The Canadian Press. 21 February 2021. Retrieved 8 May 2021.
11. Withers, Paul (6 January 2020). "Rising costs drain contingency fund for Canada's new fisheries science ships". CBC News. Retrieved 8 May 2021.
12. "Government of Canada announces Polar Icebreakers to enhance Canada's Arctic presence and provide critical services to Canadians" (Press release). Government of Canada. 6 May 2021. Retrieved 7 May 2021.
13. Duffy, Andrew (9 October 2020). "Last of three new coast guard vessels handed over in Victoria". Times Colonist. Retrieved 7 May 2021.
14. "Multi-purpose vessels". Public Works and Procurement Canada. 13 November 2019. Retrieved 12 January 2020.
15. "Feds plan six new icebreakers for aging Canadian Coast Guard fleet". Nunatsiaq News. 14 August 2019. Retrieved 12 January 2020.
16. "National Shipbuilding Procurement Strategy". Government of Canada. Retrieved 29 November 2015.
17. Payton, Laura (19 October 2011). "Halifax, BC yards win shipbuilding work". CBC News. Retrieved 29 November 2015.
18. Cudmore, James (16 January 2015). "Canada's navy to get 5 or 6 Arctic ships, not 8". CBC News. Retrieved 29 January 2015.
19. Pugliese, David (3 September 2015). "Work has begun on Arctic Offshore Patrol Ships – first ship to be operational in four years". Ottawa Citizen. Retrieved 29 November 2015.
20. Withers, Paul (1 May 2015). "Ottawa says Irving Shipbuilding will build up to 15 combat ships". CBC News. Retrieved 29 November 2015.
21. "Results of pre-qualification process for Canadian Surface Combatant". Public Works and Government Services Canada. 18 November 2015. Retrieved 29 November 2015.^{[ permanent dead link ]}
22. Den Tandt, Michael (14 May 2015). "Conservatives' in dilemma over shipbuilding program as election approaches". National Post. Retrieved 29 November 2015.
23. Seyd, Jane (22 May 2015). "Shipyards on track, Seaspan says". North Shore News. Retrieved 29 November 2015.
24. Cudmore, James (25 November 2015). "Shipbuilding strategy needs work to get ballooning costs under control, ministers told". CBC News. Retrieved 29 November 2015.
25. Gunn, Andrea (26 November 2015). "Hints of shipbuilding shortfall". Chronicle Herald. Retrieved 29 November 2015.
26. Pawson, Chad (8 December 2017). "Ahoy! 1st vessel built under federal shipbuilding strategy unveiled in B.C." CBC News. Retrieved 9 December 2017.
27. Brewster, Murray (5 February 2019). "Ottawa pushes navy's planned supply ships to the front of the construction queue". CBC News. Retrieved 17 February 2019.
28. "Cost of Coast Guard ship nears $1B as questions mount over federal shipbuilding plan". Lethbridge News Now. The Canadian Press. 21 February 2021. Retrieved 22 February 2021.
29. Brewster, Murray (8 February 2019). "Ottawa makes its $60B frigate project official, even as rival's court challenge goes forward". CBC News. Retrieved 17 February 2019.
30. "Government of Canada announces construction of new icebreakers for Canadian Coast Guard" (Press release). Public Works and Procurement Canada. 2 August 2019. Retrieved 12 January 2020– via newswire.ca.
31. "Quebec's Chantier Davie only shipyard to qualify for icebreaker work: Feds". CTV News. The Canadian Press. 19 December 2019. Retrieved 12 January 2020.

External links

• National Shipbuilding Strategy - official website
• Results of the National Shipbuilding Procurement Strategy