Vanguard Magazine

8 JUNE/JULY 2017 www.vanguardcanada.com s sIt rEP CSC: Cost versus benefits to Canadians RFP deadline for the Canadian Surface Combatant pushed to August build the lead ship. The report excluded costs of administering the NSS, initial on-board spares and full lifecycle costs. The wider economic benefits were considered as well, like the contribution to the GDP of Canada from the shipyard, suppliers, and meeting offset obligations. Years of employ- ment of Canadians in the shipyard, supply chain, as well as tax contributions both on the federal and provincial levels were measured too. The report estimates that the total project eco- nomic benefit is greater for the Build in Canada scenario by some CAD $1.04 billion. The tax rev- enue benefit to Canada is calculated to be in the range of CAD $0.63-0.66 billion per every billion spent for Build in Canada and $0.24-0.50 billion for Build in Europe. When everything is added up, A recent report published by PricewaterhouseC- oopers LLP (PwC) measures the value that Cana- dians would derive from building 15 Surface Com- batant ships in Canada as compared to acquiring them from overseas. The report, Value for Canada: The cost versus benefit to Canadians of the National Shipbuilding Strategy, examines the benefits to Canada on an economic and fiscal level, and its impact on the creation of jobs, the GDP and public finances. The report also focuses on the cost of building these ships locally and overseas. The overseas compar- ator that PwC used in its analysis was based on a blend of Western European shipbuilders from France, Germany, Netherlands, Spain and the UK, or what the report termed as "Build in Europe." As part of the NSS program, Irving Shipbuild- ing Inc. was awarded the contract to build up to 15 new Canadian Surface Combatants (CSC) to replace existing ships that will bolster Canada's defence capabilities. "The CSC will be Canada's largest Naval pro- gram for a generation. Its successful delivery to performance, price and program are essential to the RCN, Canadian industry and Canadian tax- payers," said Professor P G Wrobel, University Col- lege London. Both the Build in Canada and Build in Europe scenarios were measured by the Benefit-Cost- Ratio (BCR) which is a cost-benefit analysis that gives the best way to assess the value for money to Canada, according to the report. The potential economic benefits of building the CSC fleet in Canada and the expected difference in cost to do so overseas were considered. The report also provided details on the costs that were measured like production, ship design, integration and modification, and extra costs to Build in Europe becomes 29-42 per cent more ex- pensive that being built locally. "These three factors – economic benefit, fis- cal benefit and cost competitiveness – make the choice evident," Pedro Antunes Deputy Chief Econ- omist, The Conference Board of Canada said. "The federal government is investing in combat ships on behalf of Canadians, and Canadians would benefit on all fronts from having the ships built at home." The average annual number of jobs that will be created is estimated to be over 290 per every bil- lion spent under the Build in Canada scenario. "The principal conclusion that it is cheaper to build these ships in Canada should come as no surprise in view of the size and duration of this program," Wrobel said. Irving Shipbuilding Inc. The deadline for Request for Proposals (RFP) for the Canadian Surface Combatant program has been extended once again. According to a release, the Government of Canada and Irving Shipbuilding Inc. are extending the submission deadline for this program so as to maximize value for Canadians, while the govern- ment continues to work in close partnership with industry to facilitate responding to all questions from bidders. The deadline for RFP was previously scheduled for June 22, but now that has been extended to be "no sooner than mid-August 2017," the release states. This is the second time that an extension is be- ing granted for this RFP; the first deadline was set for April 27, but in February, the deadline was ex- tended to June 22. "It is not unusual for bidding periods to be ex- tended, particularly for complex initiatives such as this one, which is the most complex procure- ment project undertaken by the Government of Canada in recent history," the release says. Due to the extension, the targeted comple- tion for the procurement process has also been moved from fall 2017 to 2018. The release high- lighted though that the start of ship construction remains as per schedule for the early 2020s.

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