Government to begin construction on new warships despite not knowing the final cost or design

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Work is starting on Canada’s newest warship fleet even though government officials acknowledge they don’t have a final cost for the multi-billion dollar project or a final design.

Defence Minister Bill Blair and Vice-Admiral Angus Topshee, the head of the Royal Canadian Navy, announced Friday that construction will begin for a test module for the first Canadian Surface Combatant or CSC. Eventually 15 such warships will be produced to replace the current fleet of Halifax-class frigates.

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The building of the test module, essentially a small section of a piece of the ship, allows for construction techniques to be further refined at Irving Shipbuilding on the east coast.

But at a technical briefing Thursday, senior government officials acknowledged they have yet to figure out a final cost for the CSC project, considered the most expensive and complicated government program since the Second World War. In addition, the design of the ships is still evolving, they acknowledged.

The project has already faced significant increases in cost from the original estimated price tag of $26 billion. Parliamentary Budget Officer Yves Giroux now estimates the cost of the ships to be around $84 billion.

National Defence had maintained the cost will be between $56 billion and $60 billion. The government will have more insight on the actual cost when it signs a contract with the builders later this year or in early 2025.

But a former procurement chief for National Defence said moving forward on such an expensive program without having a final design for the ship or actual cost is folly.

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“That’s a recipe for disaster,” said Alan Williams, former assistant deputy minister of materiel at National Defence. “After all these years they still don’t know how much this will cost or the actual design of the ship.”

The first completed CSC was originally to have been delivered in the early 2020s. In February 2021, National Defence admitted the delivery of the first vessel wouldn’t take place until 2030 or 2031.

But on Thursday, senior government officials, who can’t be named because of the rules governing the technical briefing, provided further details about delivery schedule. The first nine ships should be in the hands of the Royal Canadian Navy by 2040, with the final ship delivered by 2050.

Senior government officials at the technical briefing noted it is a high priority to get the ships delivered quickly because the current Halifax-fleet is aging and becoming costly to maintain.

But Williams said if that was indeed a priority, spreading the delivery of the warships out over a 25-year period doesn’t make sense. “That to me indicates something is dramatically wrong,” he added.

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Blair and Topshee also announced the new fleet of warships will be known as River-class destroyers, and the first three ships will be named His Majesty’s Canadian Ships Fraser, Saint-Laurent, and Mackenzie.

The CSC is based on BAE Systems’ Type 26 warship design being built by the United Kingdom and Australia. The ships will have enhanced underwater sensors, radar, and modern weapons.

The CSC program was pitched as a replacement for the Halifax class of warships with a high level of Canadian industrial content. But, over time, the navy has asked for changes that have frequently replaced Canadian-built content with U.S. technology, the net effect being the loss of hundreds of millions of dollars to Canadian industry and an increase in overall cost, Postmedia reported last year.

A Conservative government started the surface combatant project to replace the current fleet of Halifax-class frigates, but in 2015 the Conservatives acknowledged the cost was increasing and the program might have to be scaled back.

The Liberal government elected that year, however, reaffirmed the commitment to the CSC project and acquiring all 15 ships.

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Critics, however, have labelled the CSC project, as a bottomless money pit with little accountability or oversight. Since the construction contract has yet to be signed, they have called for the project to be halted or at least reviewed.

National Defence remains steadfast it will not alter course and that the project is a success so far.

In an April 8 appearance before the Senate defence committee, National Defence procurement chief Troy Crosby pointed to ongoing problems with the Arctic and Offshore Patrol Ships being built for the Royal Canadian Navy. He testified that National Defence’s handlings of those problems “gives me great confidence in our ability to take on the much more complex delivery of the Canadian Surface Combatant in the coming years.”

Conservative MP Kelly McCauley said he and other MPs believed the construction of the CSC alone would eventually cost more than $100 billion.

In a cost update released in October 2022, Giroux also outlined the life-cycle cost for the ships, putting that at $306 billion. That last figure is a significant leap; in 2013, the auditor general’s office noted that figure would be $64 billion over 30 years.

“Every time we look at this (project), the costs go up,” Giroux noted.

David Pugliese is an award-winning journalist covering Canadian Forces and military issues in Canada. To support his work, including exclusive content for subscribers only, sign up here: ottawacitizen.com/subscribe

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