Naval Association of Canada, 5 March 2021
The Naval Association of Canada has written a response to the Parliamentary Budget Office’s recent report on the CSC project. Its aim in responding is to highlight both the broader strategic value and economic advantages of domestic shipbuilding and the challenges of comparing different warship designs. While noting the exemplary work the PBO has done, the NAC intent is to offer a holistic understanding of Canada’s approach to shipbuilding and the CSC project. Now that the PBO has released cost estimates and comparisons between the CSC and other warship designs, NAC is commenting on certain assumptions and conclusions within that report to emphasise the layers of complexity and uncertainty in shipbuilding and to provide context to assist readers in their evaluation of the report. See the NAC response at NAC-Response-to-the-PBO-Report-Mar-3.pdf (navalassoc.ca)
4 thoughts on “Naval Association of Canada Responds to PBO Report on CSCs”
Again, another excellent, thought provoking and in-depth viewpoint from the Naval Association of Canada WRT the latest PBO report of 24 Feb 2021 on the CSC Frigate cost increases. It gives everyone a down to earth perspective and counters the PBO report findings at every opportunity that makes a lot of sense and gives greater credence to leaving the CSC Type 26 build as is. Let’s just carry on with the build as soon as possible, BZ to NAC!
In its response to the recent PBO CSC Cost Update, the NAC commends the PBO for its “exemplary” work that is, in NAC’s view, simply wrong in every way imaginable. Instead, NAC suggests a more fruitful exercise would be to adopt “a more holistic understanding of Canada’s approach to shipbuilding and the CSC Project”. Sounds reasonable, especially if, in so doing, attention can be deflected away from the some 30 percent increase in CSC costs (since the last PBO estimate in June 2019), and the significant schedule delays that have been recently revealed about the project.
First, a proper accounting of what the CSC delays have cost Canadian taxpayers should include the added costs of operating and maintaining Canada’s ageing fleet of Halifax-class frigates well into the 2040s – and well past their ‘best by’ date. The Navy’s annual operations and maintenance budget plays an increasingly restrictive role on the Navy’s operational readiness, and questions remain about how the Navy will be able to find the funds necessary to operate its current frigates, especially when they are plagued by corrosion, structural cracking, mould, and various fires, smoke, and generator failure ‘incidents’.
Second, the NAC suggests we should focus on the advanced capabilities the Type-26 variant will bring to the Navy. So let us examine what exactly we might be getting for all these billions in tax dollars. Irving’s Kevin McCoy has acknowledged that the CSC will be more expensive than, say the newly authorized USN Constellation-class frigates, but will be more capable than that warship. He points out, correctly, that the new US frigates will have the benefit of being surrounded by far more capable destroyers, cruisers and other ships, and so do not require all the capabilities which the CSC requires. True, but one of the prime attributes of the CSC is that it is being designed to be fully integrated with the sophisticated systems of US warships and other key allies. But because the UK has rejected (for cost reasons) the advanced Cooperative Engagement Capability (CEC) sensors and data processing systems that are so central to the US concept of naval operations, in the near-term, other than with the US, Canada would only really need these expensive systems to operate with Japan and Australia – the latter not its normal naval partners. So the logic of working primarily in US-led maritime missions suggests that Canada’s CSC would also be surrounded by far more capable warships, so why the need for these expensive CEC and other combat systems in the first place? Canada’s CSC will not require these advanced systems in its more usual anti-fishing, counter-narcotics, anti-piracy, and humanitarian assistance roles.
Third, credible naval experts (Vice-Admiral Mark Norman, and Ian Mack to name a couple), have recently speculated that, in order to reduce CSC costs to a more politically palatable levels, Ottawa might approve a first batch of CSC frigates which are fitted for, but not with, many of these very expensive technologies. So, if the key redeeming feature of the CSC is to be its sophisticated capabilities, what will Canada really be left with for its first 4-5 CSCs which will take the project to 2040 or so, in the best-case delivery schedule (the last ship is currently scheduled for delivery in 2047)? The US Constellation-class frigates will begin construction later in 2021 and the first ship is scheduled to be delivered in the summer of 2026. Others will follow on a regular basis, with the fourth ship beginning construction in the first quarter of 2024. To be sure, it is not unknown for slippages to develop in US Navy warship programs, but as Kevin McCoy testified before Parliament a few years ago, unlike Canada’s practice, in the United States, as soon as a ship is placed under contract, it is also assigned a battle group with a set date for deployment. Therefore, if Ottawa could negotiate a contract for a Constellation-class frigate similar to the one for its CC-177 strategic airlift aircraft, it might be inserted into an ongoing US warship production line and have ships ready for delivery long before its first CSC is accepted for service around 2034-35. The same could be true if Canada ordered the UK’s Type-31 frigate, which has an in-service date of 2027. The essential point is; yes, these would be less capable warships, but they could be available much sooner than Canada’s current CSC, and, because a first batch of the latter might have significantly reduced capabilities, would a holistic view suggest that it is better for our Navy to acquire badly needed surface combatants sooner rather than later, especially if the first batch of CSCs will not be significantly more capable than the US or UK frigates in any case?
Fourth, all of the reports referenced here accept the premise that any warship options to the current CSC design would have to be built in Canada. I am not convinced that Ottawa must stick with Irving and the Lockheed Martin Canada-BAE design no matter what. Say, for the sake of argument, that during the current contract negotiations Ottawa is confronted with a CSC cost of $120 billion. Would the government have no option but to accept this price tag and pay up? I don’t think so. So I am not sure what litigation costs Ottawa might have to bear before a final contract is signed. Furthermore, I think a real service to Canadians would be provided by a substantial and truly independent analysis of the real costs and benefits of procuring its warship ‘as is’ and offshore as opposed to having it built in Canada. Perhaps the PBO could be charged with this task right away.
As a final point, it is worth noting that, contrary to the praise of Canada’s open and transparent naval procurement process, it is almost certain that the Canadian public would have received no official information whatsoever about the steeply risings costs and lengthening schedule delays concerning the CSC project had it not been for the prospect of credible information being revealed by independent agencies such as the PBO and the Auditor General.
Hello Dan. In response to your comments on the NAC Article, I’ll have to agree with some, but disagree with most others. I don’t agree that the NAC article was created somehow to “deflect” criticism of CSC inflation costs but rather give the Canadian people a more ‘realistic” understanding of Canada’s approach to shipbuilding and the CSC program and indicate how vital it will be for all Canadians and the security of our country. The “Forwarding Remarks” by the President of the Naval Association of Canada, Bill Conconi bears this out.
First, we all know what CSC delays in terms of costs have done to the CSC Frigate program and any further delays will have a negative impact in terms of costs with respect to the Halifax class maintenance. Some Halifax class frigates may well have to be retired sooner before the first CSC Frigate hits the water to maintain the safety of our sailors.
Second, the RCN is building an entirely new Navy, by building a class of ship to replace both the Iroquois and Halifax classes with one ship. This new ship build has never been attempted before anywhere in the world. Canada is forced to do this, not because the USN doesn’t have to, but because in order for Canada to re-acquire an AAW capability we have already lost, we have no choice. And that will be expensive. You may not know that the British already have a Cooperative Engagement Capability (CEC) with the Daring class Type 45 Destroyers and so they decided not to equip their Type 26 Frigates with this capability for their fleet Task Groups.There are may other allied Navies other than the US, Japan and Australia that have this CEC capability other than Britain including South Korea, France, Denmark, Italy and Spain. Other navies are strongly considering this Baseline 9 option as well.
Third, cutting CSC costs by “fitting for but not with” for these sophisticated technologies, is not only unwise, but could be dangerous when protecting the rest of the Canadian Task Groups. If you think that Ottawa could negotiate a Constellation class “deal” of 15 Canadian ships and easily “insert” them into the USN Frigate program, then think again. The US will finish their class design well before any consideration is given to building our class design and…… all the ships would have to be built in the US you can “take that one to the bank”. There goes our NSS and Naval shipbuilding expertise “down the tubes”. We are way past the “point of no return” for the CSC project right now. Your hypothesis of a $120B CSC fleet cost is totally unrealistic if you are trying to “scare” the Canadian people. The PBO does cost-analysis budgets for all government departments in Canada and not the US. To ask the US to do this analysis for us does not make sense. I totally agree that without these PBO and AG reports on the CSC and NSS programs along with the media to keep the Canadian government in check, the Canadian people would be totally in the dark and nothing would be coming from the government or DND. Cheers!
David – agree with your comments. Good on you for responding. Many have given up on responding to Dan’s continuing outrageous comments.