No plans to change warships despite cost warning, top official says

Canada's top military procurement official says there are no plans to change directions on the construction of a fleet of new Navy warships despite a recent warning about escalating costs from Parliament's budget watchdog.

PBO predicted another multibillion-dollar cost increase for the project in February 

The Liberal government is basing Canada's new warships on the design of the British-built Type 26 frigate, an artist's rendering of which is pictured here. (BAE Systems Inc./Lockheed Martin Canada)

Canada's top military procurement official says there are no plans to change directions on the construction of a fleet of new Navy warships despite a recent warning about escalating costs from Parliament's budget watchdog.

In an exclusive interview with The Canadian Press, Troy Crosby, the assistant deputy minister of materiel at the Department of National Defence, said he remains confident in Ottawa's estimated price tag for the 15 vessels.

And he suggested switching things up now to save money would only lead to delays and undercut the Navy's ability to protect Canada.

"The solution that we have will deliver the equipment that the Navy and Canada require for its surface combatants for the long term," Crosby said. "We're going to do the best we can to deliver that in as timely a fashion as possible so the Navy gets the ships it needs."

Crosby's comments come about a month after parliamentary budget officer Yves Giroux released a report predicting another multibillion-dollar cost increase in what is already the largest military procurement in Canada's history.

Vessels to cost $26B a decade ago

While the government says the warships will cost up to $60 billion, Giroux put the figure at more than $77.3 billion.

The vessels were supposed to cost $26 billion when the project to replace the Navy's frigates and destroyers was launched in earnest a decade ago.

Despite the parliamentary budget office's demonstrated track record of predicting such costs over the years, Crosby was adamant about the accuracy of the government's current figure, which was set in June 2017.

"They use a different model than we do, which is okay, it does provide a comparison," he said. "But we're confident in the estimates that we wrote."

Carla Qualtrough, then-minister of public services and procurement and accessibility, announces Lockheed Martin Canada as the designer of 15 new Canadian Surface Combatants to be built at Irving Shipbuilding's Halifax shipyard in 2019. (Darren Calabrese/The Canadian Press)

Crosby also stands by the government's estimates despite recent revelations that the first of the warships, which will be based on the British-designed Type-26 model that has yet to be built by any country, won't arrive until at least 2030. That is years later than expected.

Officials previously questioned Giroux's figure, suggesting he put too much emphasis on the ship's weight in his calculations and included tax, which they say the government doesn't have to pay.

Crosby also noted the $60-billion figure includes contingency funds, adding his confidence in that number is based on having more understanding about the project as it has moved from an abstract idea over the years to a real design.

"We've got far more facts to be able to bring to the cost estimating," he said. "Information brought to us by the contractors, and the experience they've got internationally on the Type-26 program, for example, that can all be brought into our own estimating work now."

PBO considered construction of hybrid fleet

Giroux and his team also looked at the idea of a hybrid fleet, in which Canada builds three Type-26 ships and supplements them with 12 other vessels. That would mimic how the Navy was previously built, with three destroyers and 12 frigates.

To that end, the PBO found that the government could save $40 billion if it built only three Type-26 frigates and supplemented them with 12 smaller, less capable Type-31s, which is similar to what Britain has decided to do.

Canada could also save $50 billion if it scrapped plans to build any Type-26s and went with an entire fleet of Type-31s, according to the report, though the PBO noted the Type-31 was "designed to operate alongside the `higher-end' Type-26."

It also found that launching a competition to select a new design could delay delivery of the first ship by four years.

The government has previously said it has no plans to restart the project, while Crosby said a hybrid approach "would not meet the needs, would not meet the requirements" of the Navy.

Staffing concerns

One area where Crosby would concede concern was around whether the Halifax shipyard and its counterpart in Vancouver, which is building two Navy support ships alongside several vessels for the Canadian Coast Guard, have enough staff to get the job done.

Potential staffing shortages, as well as the need for more government officials to oversee the shipbuilding projects, were highlighted in a recent report by the federal auditor general.

"There isn't sufficient workforce to do all of the work that needs to be done, but that's okay because the work doesn't need to be done today," Crosby said. "It's certainly something that we keep an eye on for ourselves as well."

He also suggested some of the projects already underway, most of which are behind schedule, could face further delays as shipyards have been forced to scale back work and otherwise adapt to COVID-19.

"COVID has caused a challenge in the yards," he said. "The full consequences of COVID will be clearer over time."

Add some “good” to your morning and evening.

A variety of newsletters you'll love, delivered straight to you.

Sign up now


To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Account Holder

Join the conversation  Create account

Already have an account?