The Office of the Parliamentary Budget Officer (PBO) released a new report on February 24 about the escalating costs of the Canadian Surface Combatant (CSC) project. The program to build fifteen new Type 26 frigates in Halifax is behind schedule and billions over budget. Again..The original 2008 budget from the Department of National Defence (DND) and the Harper Government – a number that many defence experts suggested was an impossibly low estimate – was $26.2 billion. A 2017 PBO estimate put the cost at around $62 billion. DND then updated their own estimate to between $56 and $60 billion..In 2019, the PBO revisited the program, and again the budget increased; this time to $69.8 billion. The latest 2021 estimate is a staggering $77.3 billion if the ships are built on time, $79.7 billion if COVID causes only a single year delay, and $82.1 billion if the program is delayed by 2 years..The PBO attributes these increases to a combination of factors “including a significant increase in lightship weight (from 6,900 to 7,800 tonnes) and a shift in the start of construction.” .Much of this 13 per cent weight gain is attributed to the Navy requesting Canadian customization of the British Type 26 design. Lockheed Martin – the design team lead – will be responsible for managing the $4.4 billion development work budget. .It is quite lucrative to reinvent things for the Canadian military, but not nearly as lucrative as being the local provincial government. Nova Scotia charges the military a 10 per cent PST on these ships..In a Western Standard interview with the PBO’s Yves Giroux and the two lead analysts who wrote this report, I asked if Canadian taxpayers could save over $7 billion by building these ships in PST-free Alberta – hypothetically, of course – and their answer was a simple: “Yes.” .That PST bill is worth more than Nova Scotia’s last three years of equalization transfers combined..The only Navy procurement that currently seems to be going well is Canada’s new Saab CU-176 Gargoyle maritime helicopter drone program. The Navy’s new Swedish drones are being assembled in PST-free Medicine Hat, Alberta..An odd aspect of the PBO report was the cost comparison to alternate designs: the FREMM and Type 31e. A Navy expert interviewed off-the-record said that including the FREMM makes sense, but that the Type 31e should never have been considered..The United States Navy recently selected the French/Italian FREMM design to be the basis of its new Constellation-class frigate program. .The PBO estimated the cost of Irving building 15 Constellation-class frigates in Canada at $71.1 billion. The PBO clarified in the interview that this was based on the US Constellation-class estimates, not on the $30 billion bid the FREMM consortium submitted to the Canadian government in 2017 that was rejected for failing to meet industrial benefit requirements..The British Type 31e does not yet exist. It is a proposal for a much smaller, less capable, and more affordable frigate based on a Danish design. So why was it included? Because a politician ordered it at a committee. In my initial call, a PBO PR person said that they only looked at the FREMM and Type 31 because that is what the Government Operations and Estimates Committee motion ordered them to investigate..When I pointed out that the Bloc MP who made the motion – in French – requested that the PBO investigate the FREMM, Type 31, “et de tout navire de catégorie comparable” (and similar ships) but that the official English record of the motion was mistranslated; there was an awkward pause followed by an invitation to interview the PBO..Two hours later in said interview, the fluently bilingual PBO Yves Giroux explained that they fully understood the French motion but only investigated the FREMM and Type 31 due to time constraints. .He went on to say that the PBO would be happy to do a cost estimate for the F-105 and De Zeven Provinciën-class frigates (the two other bids that lost the 2017 design competition) should the Committee order a second report..Perhaps instead of forcing nationally regulated private businesses to provide bilingual service, the Trudeau Liberals should concentrate on getting Parliamentary Committee motions correctly translated into English..Alex McColl is the National Defence Columnist for the Western Standard
The Office of the Parliamentary Budget Officer (PBO) released a new report on February 24 about the escalating costs of the Canadian Surface Combatant (CSC) project. The program to build fifteen new Type 26 frigates in Halifax is behind schedule and billions over budget. Again..The original 2008 budget from the Department of National Defence (DND) and the Harper Government – a number that many defence experts suggested was an impossibly low estimate – was $26.2 billion. A 2017 PBO estimate put the cost at around $62 billion. DND then updated their own estimate to between $56 and $60 billion..In 2019, the PBO revisited the program, and again the budget increased; this time to $69.8 billion. The latest 2021 estimate is a staggering $77.3 billion if the ships are built on time, $79.7 billion if COVID causes only a single year delay, and $82.1 billion if the program is delayed by 2 years..The PBO attributes these increases to a combination of factors “including a significant increase in lightship weight (from 6,900 to 7,800 tonnes) and a shift in the start of construction.” .Much of this 13 per cent weight gain is attributed to the Navy requesting Canadian customization of the British Type 26 design. Lockheed Martin – the design team lead – will be responsible for managing the $4.4 billion development work budget. .It is quite lucrative to reinvent things for the Canadian military, but not nearly as lucrative as being the local provincial government. Nova Scotia charges the military a 10 per cent PST on these ships..In a Western Standard interview with the PBO’s Yves Giroux and the two lead analysts who wrote this report, I asked if Canadian taxpayers could save over $7 billion by building these ships in PST-free Alberta – hypothetically, of course – and their answer was a simple: “Yes.” .That PST bill is worth more than Nova Scotia’s last three years of equalization transfers combined..The only Navy procurement that currently seems to be going well is Canada’s new Saab CU-176 Gargoyle maritime helicopter drone program. The Navy’s new Swedish drones are being assembled in PST-free Medicine Hat, Alberta..An odd aspect of the PBO report was the cost comparison to alternate designs: the FREMM and Type 31e. A Navy expert interviewed off-the-record said that including the FREMM makes sense, but that the Type 31e should never have been considered..The United States Navy recently selected the French/Italian FREMM design to be the basis of its new Constellation-class frigate program. .The PBO estimated the cost of Irving building 15 Constellation-class frigates in Canada at $71.1 billion. The PBO clarified in the interview that this was based on the US Constellation-class estimates, not on the $30 billion bid the FREMM consortium submitted to the Canadian government in 2017 that was rejected for failing to meet industrial benefit requirements..The British Type 31e does not yet exist. It is a proposal for a much smaller, less capable, and more affordable frigate based on a Danish design. So why was it included? Because a politician ordered it at a committee. In my initial call, a PBO PR person said that they only looked at the FREMM and Type 31 because that is what the Government Operations and Estimates Committee motion ordered them to investigate..When I pointed out that the Bloc MP who made the motion – in French – requested that the PBO investigate the FREMM, Type 31, “et de tout navire de catégorie comparable” (and similar ships) but that the official English record of the motion was mistranslated; there was an awkward pause followed by an invitation to interview the PBO..Two hours later in said interview, the fluently bilingual PBO Yves Giroux explained that they fully understood the French motion but only investigated the FREMM and Type 31 due to time constraints. .He went on to say that the PBO would be happy to do a cost estimate for the F-105 and De Zeven Provinciën-class frigates (the two other bids that lost the 2017 design competition) should the Committee order a second report..Perhaps instead of forcing nationally regulated private businesses to provide bilingual service, the Trudeau Liberals should concentrate on getting Parliamentary Committee motions correctly translated into English..Alex McColl is the National Defence Columnist for the Western Standard
