Warship designers, federal government huddle in Halifax on frigate replacement

The future of the navy's multibillion-dollar Canadian Surface Combatant Program has been sketched out in broad strokes to competing warship designers at a closed-door meeting, CBC News has learned.

Liberals mapping out the way forward for multibillion-dollar frigate replacements

A member of the Royal Canadian Navy watches over the decommissioned supply ship HMCS Protecteur in CFB Esquimalt. Sources say the Liberals are pushing for an aggressive timeline for the frigate shipbuilding replacement project. (Chad Hipolito/Canadian Press)

The Trudeau government is expected to soon unveil "the way forward" on the navy's multibillion-dollar frigate replacement program following a high-level meeting with companies competing to design the warships.

Government sources tell CBC News that the groundwork for a proposal request has been laid and Procurement Minister Judy Foote is expected to outline the program's vision in a speech Thursday before the annual defence industry trade show in Ottawa.

She is also likely to announce that the National Shipbuilding Procurement Strategy will get a new name.

The sources said last week's meeting in Halifax allowed the navy to lay out its high-level requirements — both top secret and open source — to 12 international companies and the prime contractor, Irving Shipbuilding.

The Liberals are anxious to get the request for proposals on the street and have privately laid out an aggressive timeline, which could see responses delivered later this year — or early in 2017.

That would be lightning speed in the world of military procurement.

Part of the reason is political and meant to give Canadians the impression the Liberals are fixing a broken system, said one source with knowledge of the file.

Another reason is that neither Irving nor the federal government wants to see a gap between construction of the Arctic offshore patrol ships and the frigate replacements.

"The timelines need to be aggressive to get things moving," Irving president Kevin McCoy told CBC News in an interview.

'Canada needs these ships'

With each year of delay, inflation eats into the project budgets and McCoy estimates it costs the federal government hundreds of millions of dollars — or at least half the cost of a ship per year.

"There's certainly an economic reason, but also Canada needs these ships," he said.

The Halifax meeting was the first of its kind for the program, which is meant to replace the navy's patrol frigates with 15 modern warships. 

"This is getting things going, having industry see what are the requirements so they can start to figure out their strategy and changes they have to make to the ship they want to propose," said McCoy.

Irving is also worried a gap would result in a slowdown and layoffs at its Halifax yard, meaning experienced workers would look for jobs elsewhere.

"We're very concerned about it," he said, noting company officials meet with federal bureaucrats once a month.

Cost for program is staggering

Published reports in March, quoting internal government documents, suggest the total 30-year, lifetime cost of owning and operating the ships could reach $104 billion.

The figures kicked around by the Harper government focused only on the build cost, which was initially estimated at $26 billion, but last year CBC News revealed those numbers were outdated and construction could go as high as $40 billion.

But those estimates never included the cost of ownership, which The Canadian Press reported in March could be as much as an additional $60 billion. 

Since assuming office last fall, Justin Trudeau's government has been focused on beating down those numbers and has proposed a series of time and cost-saving fixes. They include the plan to buy an existing warship design and roll two phases of the construction — the building of the hull and the integration of the electronic combat systems — into one.

"There's always a concern with the public about sticker shock," McCoy said.

If design changes can be kept to a minimum, he said, Canada will pay no more than other like-minded nations for its warships.