Preserving capacity, General Tom Lawson, Chief of the Defence Staff, Keys to Canadian SAR
Issue link: http://vanguardcanada.uberflip.com/i/533940
S Shipbuilding 28 JUNE/JULY 2015 www.vanguardcanada.com government intendeds to follow the same design-then-build ap- proach currently employed on the Arctic Offshore Patrol Ship (AOPS). The overall approach is not dissimilar to strategies adopted by allies such as the United Kingdom, France and Australia, where aspects of a shipbuilding project are competed but one supplier – BAE, DCNS and ASC, in these examples – has primary respon- sibility for the ship itself, he said. Reconciling the budget with the requirements, however, is crucial. "The key...for us it is to have dialogue around cost versus capa- bility so that we can get a sense of where that will take us. We may think we know what are the cost drivers; history would show that we may not be focusing on the right things." That would appear to leave room for course correction if it be- comes necessary. "With complexity comes uncertainty," said PWGSC's represen- tative. "Therefore, I am not telling you we have found all the answers and that the path forward is cast in stone. Rather, we rec- ognize that we will need to make adjustments as we progress. We will adjust as warranted and continue to engage with industry and the public. This is why we have developed a strategy that provides us with such flexibility and married it with a robust governance structure to ensure risks are well managed." A lOT OF JObS are at stake. The senior official for Industry Canada noted that analysts have estimated the CSC and other government shipbuilding projects could contribute 15,000 jobs and over $2 billion in annual economic benefits over the next 20-30 years. "Industry Canada has completed significant analysis of Canadian capabilities related to direct opportunities for Canadian suppliers on the CSC project and mapped these capabilities against inter- national market opportunities," she said. "The data highlighted areas where Canada has significant strengths and where there is significant opportunity for growth in international markets." As part of the Industrial Technological Benefits policy, the de- partment will be evaluating bids from the designer and systems integrator, as well as all subsystems manufacturers, to ensure they "undertake business activity in Canada equal to the value of the contracts they secure, [including] investment...in skills, technol- ogy and industrial development equal to one half of one percent of the contracts secured." The government's next step is to have a list of pre-qualified ship designers and combat systems integrators finalized by this fall, and then announce its winner by early 2017. dESpiTE budgET COnSTRAinTS, the RCN will receive two ship variants to replace the Iroquois-class destroy- ers and the Halifax-class frigates. According to the official from DND, both will have "the necessary combat capabilities to op- erate in air, surface, and subsurface threat environments [and] a small number of ships will have the ability to provide area air defence." Both will also be based on a proven design, albeit cus- tomized to Canadian specifications. He said the navy will continue to review its high level require- ments and specifications – "a complex undertaking to determine how to allocate capabilities across each of the two variants within the budget" – and consult with the government's new indepen- dent review panel as well as other potential third-parties and stakeholders. It will also recommend a revisit of capabilities if ap- propriate, he added. However, questions were immediately raised about a $26 bil- lion budget that even the Auditor General, in a 2013 report, sug- gested might be insufficient. PWGSC admitted that "the actual cost and number of ships to be built won't be known until the CSC definition phase is complete, which can take a few years giv- en the complexity of the project." DND noted that the build timeframe extends to almost 2040, so the current budget is an "indicative" cost rather than a ceiling cost. "We have to have a point of departure...We are sensitive to the risks in the budget, but frankly saying it is any other number is still at best a parametric estimate at this point, which is why we want to get down to the work at hand [and] really understand... what is the likely cost per ship. But we do have to constrain this." While he acknowledged that could mean fewer ships, he noted that the navy has experimented with new ways of deploying crews to reduce the cost of bringing a ship back to Canada, and will look at the "whole capability" of the CSC, which will likely be in service into 2070. "We need to focus on the long-term of trying to drive down through-life costs, because ultimately what we build, and the sup- ply chains that we create, we have to live with for 30-40 years. Getting that right is the real recipe for success." Officials with all three departments urged media to view the CSC and other projects under the National Shipbuilding Pro- curement Strategy with a long lens. Though criticism is mount- ing about the pace of progress – three and a half years after sign- ing overarching umbrella agreements with Vancouver Shipyards and Irving Shipbuilding, steel is only now being cut on the first of three major navy projects – the NSPS is in the early days of a 30-year program that began with the complete modernization of both shipyards. And behind the scenes, all three departments say they have been "setting the stage" for what comes next. The proposed CSC strategy won't satisfy all, but it does ensure the government has a well defined voice in a complex process. And that could be significant as risk mounts in the years ahead. "We may think we know what are the cost drivers; history would show that we may not be focusing on the right things."