A new paper by MLI Senior Fellow Richard Shimooka navigates the lessons, missteps, and outcomes of the Canadian Surface Combatant program, and finds that proposals for cutting costs will only mean more spending and less capability down the road.

OTTAWA, ON (December 20, 2021): The Canadian Surface Combatant (CSC) program has been the subject of growing controversy over its cost, capability, and delivery dates. As it stands right now, the CSC shipbuilding program will cost at least $60 billion and become the largest public procurement project in Canada’s history if it goes ahead as planned.

In a new MLI paper titled, “No Other Option: Politics, policy and industrial considerations in the Canadian Surface Combatant Program,” Senior Fellow Richard Shimooka examines how the program emerged, what its progress has been to date and, despite some missteps, why the outcomes are reasonable considering the challenges it has faced.

The genesis of the Canadian Surface Combatant program was in the 1990s when the Royal Canadian Navy (RCN) began planning to replace four Iroquois-class destroyers and 12 Halifax-class frigates. Unfortunately, the federal government’s acquired knowledge and experience for complex project management had atrophied. The National Shipbuilding Procurement Strategy, later renamed the National Shipbuilding Strategy, was a response to this fleet-replacement requirement and project management shortfall.

“The strategy’s overriding objective was to ensure a sustained Canadian shipbuilding industry that would be capable of avoiding the boom-bust cycle that had exemplified military procurement since the 1960s,” writes Shimooka.

Canada held a competition to select a shipyard that would produce the vessels, which Irving Shipbuilding eventually won. It would later become the de facto prime contractor for the project. As Shimooka notes, this reflected both “the lack of project management capacity within the government and the preference to shift more risk onto contractors.”

The CSC then moved to the development, engineering, and production phase. The RCN decided to procure an existing naval design and then modify it to suit its requirements. Four bids were expected. And, in 2018, the BAE Systems–Lockheed Martin team was selected as the winner. As the prime contractor, Irving was responsible for negotiating with the BAE-LM team on the design.

While DND has stood by its $60 billion cost estimate for the CSC, some groups have suggested that the cost will be much higher. Many have made well-meaning suggestions to address perceived escalating cost estimates, including re-competing the design award, purchasing a less capable class of warship to complement a truncated purchase of the Global Combat Ship, or simply just purchasing fewer vessels.

“Unfortunately, none of these ideas are likely to decrease the cost of the ships to Canada in any meaningful way,” notes Shimooka. “Instead, implementing any of them would almost certainly lead to significant capability deficits. Canada would still need to build the vessels domestically, meaning that the cost of the vessels would likely be high even if we opt for less capable warships.”

For example, if the government abandoned the Global Combat Ship and selected a different design, or purchased a complementary class of less capable warships, it would still need to invest heavily to transform that design into a ship that would meet the needs of Canada’s Navy. Starting anew with a different design would still take a decade to implement, and cost additional billions to develop. Delay in obtaining replacements for the Halifax-class would also require costly life-extension refits to those vessels and subsequent higher operating costs.

All these factors would erode any potential cost savings while delaying the badly needed modernization of the Navy.

“The experience with the CSC provides lessons for other defence programs,” concludes Shimooka. “Understanding just how those circumstances emerged and how they affected not just the CSC program but how they will affect other, future programs – such as the replacement for the RCN’s Victoria-class submarines – is a worthwhile objective that can improve outcomes for Canada and the Canadian Armed Forces.”

To read the full paper, click on the button below.

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Richard Shimooka is a Senior Fellow at the Macdonald-Laurier Institute. He was a Senior Fellow at the Defence Management Studies Programme at Queen’s University from 2007–2012, and a Research Fellow at the Conference of Defence Associations Institute from 2012-2017. Richard’s work covers a diverse array of topics, including Canadian and American foreign and defence policy, modern airpower and defence procurement.

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