Achieving a Cost-Effective Fleet in a Decade

By Roger Cyr, OMM, CD, 11 January 2022

The federal government is planning to build 15 new frigates, the British Type 26. This is good news since the navy estimates that the present frigates are nearing the end of their operational life. However, according to a report released in December 2021 by the Parliamentary Budget Officer (PBO), the costs for the new frigates have skyrocketed and the delivery of the ships will be delayed by decades.

It is a fact that building ships in Canada is more expensive than buying off-the-shelf from an offshore supplier. But, the reason they are built in Canada is to hopefully create a domestic supply chain with increased employment, intellectual property and industrial capacity. With the Type 26 frigates there will likely not be a domestic supply chain since all the machinery and combat systems are provided by offshore suppliers. The PBO report states that labour costs in Canadian shipyards are 55% higher than in the United States. The bottom line is that whether procuring these ships abroad would entail significant savings, or whether these savings would be sufficient to offset the loss-benefit to having a made-in-Canada fleet which will employ thousands of workers.

There are many political constraints to consider with all naval construction. There is the geopolitical situation with respect to contractors so that it serves government political objectives and public perceptions. These constraints affect the cost or delay in construction. Looking at the navy’s new Joint Support Ships, which are already years late and billions over budget, the PBO estimates a one-year delay in construction of the two vessels would add $235 million to the overall cost increase while a two-year delay would result in a $472-million and add years to the timeline for the building of the two ships. It is obvious that the government’s drive to build ships in various yards in Canada rather than procuring the ships overseas comes with a significantly increased cost and with a huge delay in production

It is a much worse situation for the new frigates. Construction of a new fleet of 15 frigates was estimated to cost $26.2 billion in 2008, it is now expected to cost as much as $82B, according to an analysis by the PBO. There is talk about looking at other alternatives for procuring the frigates. However, the Department of National Defence issued a statement saying reopening the current contract is not an option and that it remains confident in its estimate of $56 to $60B. It indicated that the Type 26 is the right ship for the navy and construction remains on course to begin in 2024. It is estimated that it will take seven and a half years to build one ship, with the first ship to be delivered to the navy at the earliest in 2031. This is partly because Britain, Canada and Australia are still feeling their way around how to build this ultra-modern warship.

The Royal Navy planned to build 32 of Type 26 frigates, but sticker shock lowered that number to eight, while the Australian navy plans to buy nine of them. The RN’s first Type 26 is to be delivered in 2023. With 15 ships to be built by Canada, it would have the world’s largest fleet of Type 26 frigates.

There is an alternative, and this is to take a proven offshore design and build the ships in one Canadian shipyard. A strong candidate for this option is the Frégate européenne multi-mission or FREMM. At least a dozen countries have chosen the FREMM for the decades ahead, including the United States.

The FREMM is a family of multi-purpose frigates designed by Fincantieri and Naval Group for the navies of Italy (10 frigates) and France (8 frigates), and also for the export market. The lead ship of the class Aquitaine was commissioned in November 2012 by the French Navy. Italy has ordered six general-purpose variants and four anti-submarine variants. France has ordered six anti-submarine variants and two air-defence variants. They are being built in their respective countries.

According to the French Armament General Directorate (DGA), FREMM, designed and developed by Naval Group, is a stealth, versatile and enduring surface combatant with advanced automation. Its main missions are the control of a zone of maritime operation, anti-surface warfare and anti-submarine warfare (ASW) precision deep strike with naval cruise missile. It is the only class of NATO ships in Europe with the capability to launch land attack cruise missiles from surface vessels. The FREMM has an overall length: 142 metres, displacement: 6,000 tonnes, maximum speed: 27 knots

In September 2017, a variant of the FREMM was offered directly to Canada. This direct bid included delivery of the first ship in 2019 if accepted within the year and a fixed price of $30 billion for all 15 ships, versus the $62 billion then estimated for the government’s prime-contractor ship building plan for the Type 26. The offer was rejected, citing the unsolicited nature of the bid as undermining the fair and competitive nature of the procurement. In October 2018, the Type 26 design was chosen by Canada as the winner of the program and a contact was signed to build the frigates. Selecting the FREMM instead would have resulted in a saving of some $30B.

On 30 April 2020, the US Navy announced that Fincantieri had been awarded a contract for the first FREMM, to be built at Fincantieri Marinette Marine in Wisconsin. The USN renamed it the Constellation-class frigate, and awarded a follow-on contract to Fincantieri to build a total of 10 frigates for $16B (US), which works out to about $1.6B (US) per ship. Construction of Constellation will commence in 2021 following the final design review. The ship is expected to enter service in 2026.

Comparing these numbers with the Canadian Type 26, government estimates peg the cost of 15 ships at $62B, or $4B per ship, and 20 years to build the fleet. If the current contract for the Type 26 goes ahead, construction of the new frigate fleet would begin in 2024, with delivery of the 15th ship in 2045. There are now concerns that today’s 12 CPF frigates in their present conditions will not last until the new Type 26 become available. Thus there will likely be a period that Canada will not have sufficient combat capable ships. It would leave the country vulnerable and not able to meet its NATO and international obligations. The Type 26 is not a proven design since there is no ship in service at this time. Yet the FREMM is proven and has shown its combat worthiness.

In 2021, the French Navy FREMM Frigates FS Provence and FS Languedoc won the US Navy’s ‘Hook’em’ award. This was the second year in a row that the US 6th Fleet awarded the trophy to French frigates for their ability to find and track submarines. The prize rewards anti-submarine warfare (ASW) excellence. The FREMM have demonstrated superior ASW readiness, proficiency and operational impact.

These ships can be procured as the Canadian Surface Combatant (CSC) at a lesser cost than the Type 26 and be available earlier. Should it be decided to go with the FREMM, then there would be a significant reduction in the cost of new frigates, in the range of at least $20B. The FREMM would also be available sooner and an increase in the operational capability of the fleet. Canada could buy the first ship offshore and build the remainder in Canada. The saving would be available to upgrade the existing Canadian Patrol Frigates (CPF). The upgrade could be handled by other Canadian shipyards while the Halifax Shipyard concentrates on tooling and building the CSC. There would be a two-prong process, one yard building the new frigates, and other yards extending the operational life of the existing frigates. There would be a continual process of upgrading the fleet and limit periods of fleet operational paucities.

The existing frigates (CPF) were commissioned from 1992 through 1996, and are now 30 years old. The fleet upgrade should start with the last ship to commission, which is pennant number 441 and go up the list with 340 and 339 next. Once a new CSC becomes available, then the crew of a CPF would be transferred to the new ship and the old ship paid off, and so on until all the existing frigates are replaced by new ones. Over a 10-year period, Canada would have a modern and effective fleet of frigates. By 2034, the fleet would comprise 6 CSC, 9 CPFs upgraded with life extension systems, and 3 of the existing frigates. The required number 15 would be eventually reached, and all the CPFs would be paid off.

It needs to be remembered that the next decade is one of significant risk. It is agreed that the international security environment is becoming more unstable. This instability is clear in the maritime domain, particularly with the rise of more assertive states, grey zone warfare and technological risk. The navy is being asked to take on increasing responsibilities around the world. What is needed is a realistic assessment of capability against government ambition. This is not the time to have Canada’s navy not being able to respond to its international obligations and commitments.

Share

Leave a comment

Your email address will not be published.

21 thoughts on “Achieving a Cost-Effective Fleet in a Decade”