Star ships start here

More CSC Cost Woes

Procrustes, 11 August 2020.

The recent confirmation that the Parliamentary Budget Officer (PBO) will conduct and deliver yet another report on the mounting costs of Ottawa’s preferred bid winner for the Canadian Surface Combatant (CSC) program in October 2020 could lead to a reversal of course on this slowly evolving program.[1]

The PBO has already issued two reports on CSC costs, and the latest one is unlikely to reassure those who think that Ottawa is backing the wrong horse. Why? Because the coming update will likely show that the CSC program will now cost in excess of $70 billion in current year funds. The initial June 2017 PBO study, “The Costs of Canada’s Surface Combatants,” estimated the total CSC costs to be $61.82 billion. In the same year, the Department of National Defence (DND) revised its original 2008 estimate of $26.2 billion to $56-60 billion. The PBO updated its initial report in June 2019 and pegged the revised CSC costs at $69.8 billion.[2]

Moreover, the fall report will also include costing of two other, more economical, warship options to be constructed by foreign shipbuilders. The British Type 31 frigate will be built for the Royal Navy as a lower cost complement to the Type 26 frigate. Italy’s Fincantieri Marine recently won the contract to build a variant of its FREMM frigate under the US Navy’s FFG(X) program. In December 2017, Ottawa rejected an offer from Fincantieri to build 15 frigates in Canada for a fixed price of $30 billion. The PBO will likely report that both the Type 31 and the FREMM are much cheaper options than the Lockheed Martin Canada Type 26 CSC currently under negotiation by Ottawa.

The new PBO report will come at a bad time for both the navy and the prime contractor, Irving Shipbuilding. Ottawa is currently looking for ways to pay for the massive relief programs launched to help Canadians weather the storm unleashed by the global Covid-19 pandemic and to help the national economy to recover. In this context, the prospect of paying for a bloated ship replacement program is unlikely to resonate positively with the federal cabinet. And concrete evidence from the PBO that there are cheaper options to the Type 26 available may be all that our politicians need to start a serious rethinking of the CSC program in its entirety.

Canada does not need the latest and greatest frigate available on the market, especially a design that will be pushing the technological envelope in some high-risk areas like an untested phased array radar system.

Canada is now facing the new reality of defence budgetary constraints and steadily rising costs of naval weapons systems. It is not alone in this respect as all major navies are now exploring ways to replace high-cost surface combatants with cheaper alternatives.

What Canada does require are greater numbers of sufficiently capable – and financially affordable – warships to protect Canadian interests at home and abroad. It does not need a floating Potemkin Village.

References

  1. David Pugliese, “PBO to examine $60 billion price tag of new warships and compare to other less expensive foreign programs”, Chronicle Herald, (8 August 2020).
  2. See, Canada, Parliamentary Budget Officer, “The Costs of Canada’s Surface Combatants”, (1 June 2017), and “The Costs of Canada’s Surface Combatants: 2019 Update”, (21 June 2019). The latter report attributed to cost increase to the inflation costs of a later construction start date (still to be determined in ongoing contract negotiations), and Ottawa’s selection of a larger ship design.
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