Dan Middlemiss, 18 June 2021
There has been much discussion about the projected costs of the CSC, and it would appear that even the most ardent supporters of the CSC have now abandoned their earlier contention that the CSC will not cost significantly more than roughly comparable ships now in service or at the point of construction elsewhere.
Recently, the Parliamentary Budget Officer (PBO) estimated the total costs of the CSC to be $77.3 billion, with that amount rising to $82.1 billion if the contract is signed in 2022-23.[1] A DND spokesperson recently announced that an initial, limited-build contract would likely be awarded in 2023.[2]
DND has stated that it remains “confident” that its estimate of $56 billion to $60 billion (before taxes) for the CSC project remained valid.[3]
Putting aside the issue of which set of estimates is likely to prove accurate, a simple question arises: is there no cost beyond which the CSC could be deemed excessive?
I invite Broadsides readers to weigh in with their views on this basic matter. What level, if any, of CSC costs would you consider to be too high – and why?
[1] Canada, Parliamentary Budget Officer, “The Cost of Canada’s Surface Combatants: 2021 Update and Options Analysis,” Ottawa, 24 February 2021, p.6.
[2] David Pugliese, “Government to commit to building first three warships despite budget concerns,” Ottawa Citizen, 8 June 2021.
[3] “DND Releases Statement Regarding PBO Report on the Canadian Surface Combatant - Canadian Defence Review,” canadiandefencereview.com, 24 February 2021.
3 thoughts on “CSC Costs: Is Even the Sky Not the Limit?”
Hi Dan. Happy to “weigh-in” so to speak. Although the PBO reports over the last few years have been enlightening and informative, they are, nonetheless, PBO’s projections of what they perceive to be the facts ($77.3B if contracts are signed and construction started by 2023). For myself, I am glad to have these Frigate cost estimates from the PBO as it gives one encouragement that their figures just don’t seem to add up over the short term. DND seems to have thoroughly costed out the frigates to be approximately $61B CAD for the build period. Overall costs throughout the life of the frigates (40-50 yrs) will probable come in at a much higher cost than even the PBO reported figures (possibly around $150B CAD +). That would include new infrastructure, maintenance periods, training, personnel, ammunition (Missiles/gun rounds/bullets), food, fuel, new follow-on systems over the life span of the frigates. The PBO reports have always included taxes which the DND estimates do not. As far as I can tell, Canada is the only country building their version of the BAE Type 26 to use these PBO figures including taxes-in. Let’s just let PBO do their due-diligence as they should, and see what happens over the next few years. Britain’s first Type 26 hull, HMS Glasgow, has just been “rolled out” (mast to be added soon) with “out-fitting” over the next year or so. What ever happens, the CSC Type 26 frigates need to be built……and soon!
Hi David and Dan,
I definitely agree with David. I could also add that the CSC will operate with a smaller crew than the Halifax class (204 vs 225 official numbers). Last time I checked, human resources related spending count for 55% of total DND budget! Fuel also count for a big chunk of the spending but the power plant to be used on the CSC is even more efficient than the one on the Halifax class so fuel consumption will probably be not much higher than it is now. Although the quantity of ammunition carried is much higher, they probably won’t be firing much more shots in peace time; a few firings here and there for qualification and tests. Finally, the open architecture of the combat system will make it much easier to upgrade in time but the choice of cutting edge sensors from the beginning will make them relevant for a considerable amount of time.
Hello,
From the military perspective, consider our costs/value in relation to those of putative adversaries. For example open sources suggest that the newest Russian Admiral Gorshkov class frigate costs about $300 million CAD, while the Karakurt class corvette is about $42 million CAD equivalent. Similar comparisons can be made with the Chinese experience. Since adversaries can field cheaper platforms in higher numbers, with more effective armament within their coastal zones (Kalibr, Oniks, Zirkon missiles, for example), what is the effective military value of the more expensive CSC, when they can’t guarantee the ability to compel adversaries to do our will?
From an economic perspective, will the shipyards recipient of this investment build the capacity for long-term, sustained and globally-competitive ship building, both commercial and military, once the CSC contract is done? Will the next round of ships in 30-40 years be significantly cheaper, given the hoped growth of the industry? Will these shipyards be able to consistently deliver advanced ships to Canadian and global industry at low prices? Will the Canadian education system train cohort after cohort of leading STEM graduates to design and built those ships and their systems?