The National Shipbuilding Procurement Strategy (NSPS) is the federal government’s program to build fleets of combat and non-combat vessels in support of the Royal Canadian Navy (RCN) and the Canadian Coast Guard. Included in the combat vessel requirement of NSPS is the purchase of 15 Canadian Surface Combatant (CSC) frigates.
With a $26 billion budget, CSC is the centrepiece of NSPS; yet the buying power of this budget is shrinking with inflation and delays. Purchasing 15 frigates will become increasingly challenging for the government.
Last month’s report by the Parliamentary Budget Officer (PBO), Feasibility of Budget for Acquisition of Two Joint Support Ships, appeared to challenge current budgetary estimates for the cost of shipbuilding, specifically the cost of the Joint Support Ship (JSS) program. While the PBO report offers solid background to NSPS and JSS, the dollar figures provided clearly indicate that Canada’s ship purchasing power (whether adjusted for inflation or not) is significantly decreasing any time there is a delay.
As government stakeholders, including Public Works, the RCN, Industry Canada, and ADM(Mat) work to find common ground while recognizing the RCN’s operational requirements, only recently have the realities of Canada’s diminishing buying capacity for a new fleet come to the public’s attention.
This reality creates a problem for the current government with its strong desire to demonstrate commitment to the military, including starting shipbuilding as soon as possible to generate the expected economic impact.
The RCN’s role in the ship procurement process is to delineate the key capabilities and requirements of future fleets. The RCN must define its ships to be technologically agile and adaptable, with a mind to the future requirements of domestic surveillance and expeditionary deployments within the concept of a Naval Task group in increasingly hostile and “kinetic” littorals.
Some of the key design considerations for CSC are the adoption of reduced platform signatures, improved survivability, and the joint force constellation of intelligence, reconnaissance, surveillance, and strike assets. This is expected to allow Canada’s ships to participate in a wide range of tasks, from the ability to deliver lethal effects at sea as part of a network-centric battle group, to leveraging an extended radar range for the improved protection of the ship and the entire battle group.
These requirements are compelling for augmenting the RCN’s capabilities while better protecting Canada’s most valued assets: the sailors and the soldiers and airmen who often accompany them.
Yet, the only way to ensure that the Canadian Forces has both the quality and quantity of these stated capabilities is to leverage the RCN’s buying power as effectively as possible. With expectations so high, it is critical that Canada be able to acquire ships that are not only capable but also affordable, both at initial purchase and over the lifecycle of the fleet.
The initial stated target for 15 new ships has been met with scepticism from some in government and industry who take the view that 15 frigates are unaffordable within the budgetary envelope of $26 billion. With the cost of new design, testing, development, configuration, and the risk that comes from a green sheet approach, the concern regarding affordability must be taken seriously.
A custom design and one-of-a-kind model will increase costs substantially versus other options. The price difference is not just evident at the time of purchase, where an initial sticker shock is inevitable, but also with increased lifecycle costs. The fiscal and trade-off expenses of an orphan design without an established international supply chain for spare parts as well as institutional tested capabilities that come with lessons learned are intuitively higher, even to the most casual observer.
Canada’s naval requirements include unique considerations that do not easily enable an off-the-shelf (OTS) design. In addition to the aforementioned operational requirements, the need to regularly operate in a temperature range from -30 to +30°C, the ability to maintain a firm alliance with the United States Navy and allied partners, and the need for uniquely Canadian military communications all have an impact on cost.
The CSC program, with its extensive requirements and its shrinking budget, should benefit from modifying a proven ship. Such an approach would reduce the difficult decisions the RCN may be forced to make when it comes down to cost capability trade-offs.
The Canadian project-by-project approach to shipbuilding has shown itself to be inefficient. Politicians and flag officers alike recognized that the renewal of the RCN and Coast Guard fleets could not be accomplished unless a new procurement model was adopted, hence the hope of NSPS.
Certainly, new technology has to be incorporated into the fleet, but an OTS ship class can benefit from using existing technology in many areas. Modifying existing technology does not mean purchasing obsolete technology.
This approach could deliver a balanced, capable ship using proven ship design and proven equipment. R&D costs should be much lower, on a relative basis, and construction costs should be easily estimated with applied fiscal and programmatic discipline. In short, an OTS approach offers the possibility of a modern, useful, cost-efficient ship that could be built more quickly, thereby increasing the buying value of Canada’s budget.
The “built quickly” characteristic is central to developing naval ship classes that have in the past suffered from long lead times from concept to construction, cost overruns, and borderline obsolescence by the time they reach fleet service. These are the unavoidable consequences of designing, developing, testing and incorporating new and unproven technologies. In contrast, an OTS platform is already designed, developed and tested with proven technologies. Only new integration costs need to be considered for capabilities not yet integrated, but even those costs will remain significantly lower than if one were to design and construct a frigate from scratch.
This modified off-the-shelf approach could allow the RCN to drive its own selection of the sensors and weaponry systems independent of a ship design, although a design would have to demonstrate its flexibility to accommodate, with modifications, the weapon system selected.
Naval ship design is a complex process. The primary function for many ships is to serve as a platform for the weapons systems. Canada does not need to build cutting edge, futuristic ships from scratch – specially when the government’s budgetary envelope is increasingly constrained. The federal government’s objective must be to build an affordable, modern and capable warship that protects Canada’s sailors while providing Canadians with economic opportunities.
Brian Mersereau is vice chairman of Hill+Knowlton Strategies.
