canada, programs, marine, procurement

By Jon Elkin | October 19, 2018

Lockheed Martin Canada is the preferred bidder to design the Canadian Surface Combatant. Here's everything you need to know about this $60 billion program including timeline, cost break down, and Canada's greater procurement strategy.

October 19, 2018 - Today, the Government of Canada and Irving Shipbuilding identified the team from Lockheed Martin Canada as the preferred bidder for designing the Royal Canadian Navy’s future Canadian Surface Combatants (CSC).

Lockheed Martin Canada was one of 9 prequalified bidders first revealed in 2016.

The CSC project is the Government of Canada's largest and most complex procurement ever. Total acquisition costs for the 15 CSC ships have been estimated to cost between $56 - 60 billion.

Does this mean Lockheed Martin Canada has won the contract?

Lockheed Martin Canada is currently the preferred bidder. There will be a "due diligence process" before the contract is awarded. This includes:

  • negotiations with the company on intellectual property rights
  • an assessment of combat systems performance
  • an assessment of the company’s financial capability to deliver the project, together with the verification of various other administrative matters

If the preferred bidder is unable to demonstrate to the Government of Canada and Irving Shipbuilding that they can meet these conditions, then the next highest ranked bidder will become the preferred bidder. The new preferred bidder will then have to pass the due diligence process to be awarded the contract.

The contract award is currently expected this winter with construction starting in the early 2020s.

 

The largest and most complex shipbuilding initiative in Canada since World War II

In 2017, Canada unveiled a new defence policy: "Strong, Secure, Engaged" (SSE) and committed to one of the largest acquisitions in Canadian shipbuilding history: the Canadian Surface Combatant.

SSE provides full funding for 15 CSC ships, allowing Canada's maritime combat power to deploy anywhere in the world and for many months with a limited logistic footprint.

A core part of the National Shipbuilding Strategy (NSS), the next-generation CSC will replace both the Iroquois-class destroyers and the Halifax-class multi-role patrol frigates.

 

$56 - 60 billion - for acquisition alone

The acquisition for 15 CSC ships has an estimated cost of $56 - 60 billion. The actual complete cost for the project will be determined after the CSC Project Definition Phase is complete.

The first CSC ship is expected to be begin construction in the early-2020s with delivery around 2026. The remaining 14 ships will then follow construction and delivery.

Irving Shipbuiling Inc., the NSS's Combat package shipbuilder, was confirmed in November 2017 to be the prime contractor for the CSC project.

 

Breaking down the Canadian Surface Combatant

Last week, as reported in the May 2018 OMX Files, Pat Finn, the Assistant Deputy Minister for Materiel at the Department of National Defence, provided Ottawa Citizen's Defence Watch with a rough breakdown of the CSC's budget:

  • Construction of the ships
    $30 - 36 billion
  • Integrated logistics support
    (Includes spare parts, technical data package, training, ammunition)
    $12 - 15 billion
  • Infrastructure
    (Construction of jetties, upgrades to existing docks)
    $3 billion
  • Project office cost over the life of the program
    (Salaries for staff, travel, etc.)
    $3 billion
  • Contingency fund
    (Fluctuations in exchange rates, other unforeseen issues)
    $6 - 9 billion

 

$3.7 billion in unclaimed defence opportunities  Did you know that Canada's offset policy states that 100% of defence  investments must go back to Canadian businesses? That's$3,735,199,162 of  unclaimed opportunities.   Learn more

 

The new core operating concept of the Royal Canadian Navy

The CSC ships aren't alone but a part of the Naval Task Group.

The Naval Task Group will be the core operating concept of the Royal Canadian Navy. It will consist of up to four CSC ships, a joint support ship, and supplemented with a submarine as appropriate.

The Naval Task Group will have full combat capability, force enablers, specialized teams, maritime helicopters, and remotely piloted systems and will be configured and crewed to provide its own command and control.

In total, the Royal Canadian Navy will have 15 CSC ships, two Joint Support Ships, and four Victoria-class submarines for the necessary fleet mix and capacity to deploy.

 

Investments in the Royal Canadian Navy over 20 years

The SSE outlines the following investments in the Royal Canadian Navy:

  • Recapitalize the surface fleet through investments in 15 Canadian Surface Combatants and two Joint Support Ships.
  • Acquire five to six Arctic Offshore Patrol Ships.
  • Operate and modernize the four Victoria-class submarines.
  • Acquire new or enhanced naval intelligence, surveillance, and reconnaissance systems, upgraded armament, and additional systems for current and future platforms allowing for more effective offensive and defensive naval capabilities.
  • Upgrade lightweight torpedoes carried by surface ships, maritime helicopters and maritime patrol aircraft.

The Government will provide $17.5 billion to fund equipment projects for the Royal Canadian Navy over the next 20 years. Of this, $14.6 billion over the next 20 years will fund planned equipment projects - including sufficient funding to acquire the full complement of 15 Canadian Surface Combatants.

It is important to note that the Government has only revealed the 20-year view of the equipment investments committed to in SSE. As the first CSC ship is not scheduled to be delivered until 2026 and the fleet is expected to be in service for 30 years, there will be significant expenditures outside this timeframe.

Jon Elkin

Jon graduated from Queen's University with a degree in Political Studies and then went on to earn his Master's Degree in War Studies from the Royal Military College of Canada. He is an active member of the NATO Association of Canada, and outside of work enjoys skiing, running and mountain biking.

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