Sunday, 29 June 2014


The National Shipbuilding Procurement Strategy (NSPS) is a $38.3 billion program designed to renew the aging fleets of the Royal Canadian Navy and Canadian Coast Guard. The NSPS will be the biggest defence program in Canadian history.

To ensure full value for taxpayer dollars, a “best value” procurement approach has been touted by the government as the preferred approach to this program. When Irving Shipbuilding won the combatant package they agreed that they would not only spend their own resources to upgrade their facilities, but also that they also committed to national “value propositions.” which included ensuring a sustainable marine industry.

Best value for Canada is a complex and balanced equation that includes capability, price, jobs, technology, regional distribution of benefits, and competitive fairness. At this stage in the process it seems unlikely that the NSPS can achieve all these goals.

Originally the goal of the program was to get “most bang for the buck” for the navy while leveraging as much economic impact as possible and developing a sustainable marine industry. What the NSPS has become, however, is an action plan for economic investment. Now the raison d'ĂȘtre is the creation of jobs and ‘brownie points’ for the government.

This is the wrong reason to build ships.

Building ships for the wrong reasons has a cost; the cost can be measured in the number of ships the navy will receive. Canada’s auditor general has warned in his Nov. 26 audit into the NSPS that there is not enough funding for the proposed national shipbuilding plan to construct 50 major vessels for the Royal Canadian Navy and Coast Guard. He noted that that unless the government provides more funding, it may have to acquire fewer and less capable warships. (He also raised concerns in the 36-page report that the NSPS does not include provisions for monitoring the productivity of Canadian shipyards.)

There is a reason that fewer and fewer federal websites or public engagements discuss the number of ships. Fifteen, the number that was once the cornerstone of the NSPS competition has been replaced by buzzwords about maximizing Canadian industrial participation, increased economic development, while the focus has shifted from developing a war-fighting navy to job creation programs.

The NSPS was actively designed to maximize benefits and ensure their distribution to the greatest extent possible. According to the government website “The National Shipbuilding Procurement Strategy (NSPS) will create jobs and generate significant economic benefits in shipbuilding and related industries across Canada.”

In response to criticism  surrounding the program government spokespersons have argued that their critics have failed to point that “industry analysts have estimated that over 15,000 jobs will be created and over $2 billion will be generated in annual economic benefits over the next 30 years." Needless to say, this argument does not address the issue of how many ships the navy will eventually get, it simply suggests that whatever number of ships are procured, at any price, it will be worth it in terms of jobs created.

Countries do not exist to support armed forces. The Royal Canadian Navy exists to support government policy. It is strange for a conservative party to believe that government can create employment, rather then nurture the conditions that make for more employment but government policy appears to be to create jobs. However the RCN and defence spending are an inappropriate way to achieve this goal

Nations can make better investments in the economy, investments that will do more for jobs, taxes, and industry than defence spending. It has been widely demonstrated that military spending, even though it may have some positive benefits, does not produce nearly as much of a multiplying effect as other investments, for example in infrastructure or education .

In a memo, which the Chair of the Standing Committee on National Defence requested, outlining the problematic benefits of making decisions about defence programs based on industrial benefits Steve Saideman, who holds the Paterson Chair in International Affairs at the Norman Paterson School of International Affairs and is a CDFAI Fellow, wrote that “if Canada does make decisions based on “industrial benefits,” I simply recommend understanding that this means Canada gets less and prepare for it by cutting personnel, bases, and whatever else that is premised on a larger military. Of course, these cuts may hurt the Canadian economy (and voters) more than industrial benefits help.”

In other words it is not just the RCN that suffers when ships are built for the wrong reasons, it is the entire economy. Canada doesn't need a navy to support the economy, which is a false premise. Canada needs a navy to support national policy and a strong economy to support the navy. Using defence spending for the explicit purpose of creating jobs will have the long term effect of leaving Canada with a smaller navy and a weaker economy.

What is best value for the Canadian Surface Combatant?

The National Shipbuilding Procurement Strategy

Budget caps were set early and could result in a reduced number of ships or capabilities

Canada Resists Building Navy Ships Offshore


Defence Procurement as Industrial Policy, Steve Saideman | May 6, 2014