In a report
written for the University of British Columbia Prof. Michael
Byers, who is a UBC international law professor and Canada Research Chair in
Global Politics and International Law, recommends that the government end its
current ship building process and relaunch an expedited procurement that would
save money by using only fixed-price competitions and off-the-shelf ship
designs.
Prof. Byers, whose common sense and expertise tend
to alienate observers at all
ends of the political spectrum, has made some startling recommendations in his
report entitled “Onto the Rocks: With disaster looming, National Shipbuilding
Strategy needs urgent change of course”. In the report he argues that The National Shipbuilding Procurement Strategy,
now apparently known as the National Shipbuilding Strategy, should
be restructured.
As it stands the goal of the National Shipbuilding
Strategy is to create a long-term project which will renew Canada's federal
fleet of combat and non-combat vessels. Partnerships have been formed with two
Canadian shipyards to deliver vessels to the Royal Canadian Navy and the
Canadian Coast Guard. It is fondly believed that this strategy will provide
economic benefits to Canadians and rebuild the country’s shipbuilding industry.
Prof. Byers makes four recommendations in his
report. He wants the government to:
- Open-up the non-contractually-binding umbrella agreements with Irving and Seaspan.
- Cancel the Canadian Surface Combatant design competition and re-launch the entire procurement as an expedited fixed-price competition involving completely off-the shelf designs.
- Cancel the Joint Support Ship design contract and re-launch an expedited fixed-price competition for the immediate conversion of a second container ship into a supply ship.
- Shelve the plan to build a heavy polar icebreaker in Vancouver and launch an expedited fixed-price competition for the conversion or construction of 4-5 medium icebreakers.
Needless to say, this is not a restructuring; this
is essentially throwing out the entire plan as it now stands. Byers sites mounting
costs, brought about by a lack of competition and rising inflation, along with
lengthening delays (for example the Joint Support Ship procurement began in
2006 but is still in the pre-construction phase, with Seaspan being awarded a
contract in February 2017 to “help develop and finalize the design.”) as some
of the reasons he advocates this radical shakeup.
Perhaps the most telling example of the failure of
the NSS as it currently exists is the proposal
by Fincantieri of Italy and Naval Group of France that,
under their direction, Canada’s chosen contractor, Halifax-based Irving
Shipbuilding, build 15 ships based on the consortium’s FREMM frigate design,
which is proven and is in operation with the French and Italian navies. They
are offering to guarantee the cost of the ships at a fixed $30 billion.
Essentially these companies don’t believe the
current $62-billion Canadian Surface Combatant program, with all its problems,
will be successful. It was their belief that the potential of $32 billion in savings for Canadian
taxpayers would put pressure on the Liberal government to seriously consider
the offer.
They were wrong.
In a statement dated December 5, 2017
the government through Public Services and Procurement Canada made it clear
that they would not even consider “any
proposals submitted outside of the established competitive process”.
Public Services and
Procurement Canada have declared that “Acceptance
of such a proposal would break faith with the bidders who invested time and
effort to participate in the competitive process, put at risk the Government’s
ability to properly equip the Royal Canadian Navy and would establish a harmful
precedent for future competitive procurements.” It is apparent to anyone reading the
statement that a lengthy round of counselling and therapy will probably be
needed by the public servants who were forced to deal with “Recent media coverage” which “referenced a proposal submitted outside of
the established competitive process alleging the ability to deliver CSC ships
at a reduced cost.”
Of course there is no
way, as the statement points out, of knowing if the companies making this
unsolicited offer do have the ability to deliver CSC ships at reduced costs as
the Department feels that “Without common
requirements and criteria, it is impossible to consistently and effectively
evaluate proposals” and that “any
prices cited without the context of applicable terms and conditions as
indicated in the RFP (such as scope of work, divisions of responsibilities,
intellectual property rights, warranties, limitations of liability,
indemnities, etc.) are effectively meaningless.”
In other words, they
are not willing to evaluate the proposal by the Naval-Fincantieri group because
they do not really know how much it would cost and they do not know how much it
would cost because they will not evaluate it. A compelling example of circular
thinking that cannot be argued with.
Those in charge of
procuring warships have made it patently obvious they believe that the process is more
important than the outcome. Prof. Byers perceptive report has missed an
important point. The National Shipbuilding Strategy is indeed headed for the rocks, but
those in charge don’t really care. It doesn’t matter to them if this ‘ship’ ever
arrives at its destination as long as those on the bridge never have to change the routine they have established.
It is clear that the
current program for renewing Canada’s navy is doomed to failure. What is not clear
is what the consequences will be for the nation’s security.
Onto the Rocks With disaster looming, National
Shipbuilding Strategy needs urgent change of course
Michael Byers
The left needs to oppose
Trudeau's military spending
Yves Engler
Canadian Defence Matters
subject NSPS
National Shipbuilding
Strategy
Consortium offers Canada a
deal on a new fleet of frigates that could save $32 billion
Proposals
submitted outside of the established competitive process will not be considered
