By Dr. Ann Griffiths, 13 October 2023
The Offshore Oceanographic Science Vessel gets more and more expensive – last week it was announced that the budget for the ship had increased 28% this year, an increase from $995 million to $1.28 billion. This ship is the largest and most complicated of the vessels being built for the Canadian Coast Guard by Seaspan under the National Shipbuilding Strategy. It is designed to undertake scientific and ocean mapping missions and track climate change in the Atlantic Ocean and Gulf of St. Lawrence. It was originally expected to cost $109 million with delivery in 2017. The price is now expected to be $1.28B and the delivery has been moved to 2018, 2021, 2023, 2024 and now 2025. A spokesman for the Department of Fisheries and Oceans attributes the cost increase to “the impacts of COVID-19 to the shipyard, higher than anticipated inflation and global supply chain challenges, a more mature vessel design, and a better understanding of production and material costs.” Another factor cited is the schedule revision at Seaspan which moved the construction of a Joint Support Ship before the vessel. According to Seaspan the ship is now 60% complete and on track for 2025 delivery. I’m sure the Coast Guard eagerly awaits.
See “Cost of Canada's new flagship ocean science vessel jumps a further $300M” https://ca.news.yahoo.com/cost-canadas-flagship-ocean-science-150020504.html
10 thoughts on “Coast Guard Vessel Costs”
Reports like this one are a good illustration of why it has become so difficult to trust, not just the government, but the Canadian public service as a whole. Nobody seriously thinks that Covid and a change to the order of production for ships that were already in progress could have caused a ten-fold increase in costs. They are giving the answers that they think might be acceptable, not the true answers. If they even know what those are.
Hello,
I agree.
It is also an illustration that Canada’s shipbuilding industry is not capable of delivering such a vessel at a reasonable cost. Shipbuilding is still a boom-bust industry here. Shipbuilders lose competencies with every bust and need time to regain them. This increases the pressure to inflate the cost of the products during every boom. At the same time, both shipbuilders and public-sector staff have no clue what a reasonable production cost for these things should be. This is accentuated by an economy that inflates the cost of living (primarily housing) and pushes it out of reach for much of the shipbuilding labour sector. The result is a wild guess, subjected to extreme inflationary pressures, resulting in outrageous costs with no clear limit.
Expect costs to rise further; this is a structural feature of our current system and cannot be any other way.
Regards
Agreed, Michael. This is truly egregious.
I could be wrong, but I see no evidence of an outcry from within our parliament, much less any inclination to subject this particular program to a thorough audit. Why was the final price not known prior to contract signing? I cannot fathom how we would pay as much for OOSV as most countries (although not us, apparently) would for a frigate, minus the ordnance.
The US is no stranger to defence cost overruns, but I imagine that if a ship-building program blew through its estimates by 1,000%, Congress would be apoplectic. It likely wouldn’t have let things get so far out of hand. Where is our oversight??
Add OOSV to JSS as yet another program that will cost the taxpayer far too much and take far too long to complete. Should have sent this contract to international tender.
Good morning Barnacle,
You assume that other countries’ shipyards do not have their cost overruns and screw-ups. History is replete with such examples, witness HMS Queen Elizabeth and Prince of Wales.
At least by building the ships in Canada we create jobs for Canadians, build capacity for future work, and have more control over the process.
I am sure that if the contracts had been let overseas the usual crowd would be screaming about that too. Plus, we would never be able to build capacity and thus would be beholden to foreign shipyards for construction and even refits forever.
Ubique.
Les
I made no such assumptions, Les. I merely point out that a relatively unsophisticated vessel need not set us back $1-billion. Cannot one build such a vessel domestically without paying frigate-like prices?
If there are plausible explanations for this fleecing of the taxpayer, I am more than willing to listen. But we should start with Seaspan opening its books to public scrutiny. This, I believe, was a condition of the NSS.
Bill,
I think part of the explanation for a lack of outcry from parliament and a disinclination to subject this program, as well as many others under the aegis of the National Shipbuilding Strategy, to a thorough audit is that Canada lacks truly independent agencies to oversee defence and other procurement programs.
For example, the Parliamentary Budget Officer (PBO) can only respond to requests emanating from Canadian MPs, and cannot undertake costing studies on her/his own. So the onus is on our not very well informed parliamentarians to make specific requests. Many analysts have pointed out that the PBO found only modest savings, for instance, in opting for foreign-designed options to the CSC. But no MP that I am aware of has ever raised a request to question Ottawa’s build-in-Canada policy, a policy that has been in place now for decades and that is fundamental to the NSS. So, the options the PBO explored all were predicated on these foreign designs being built at Canadian shipyards, with all the usual schedule slippages and cost overruns that entails.
Another option might be to rely on reports of the Auditor General of Canada (OAG) because that office can and does undertake studies of various defence procurement programs on its own initiative. However, the OAG is limited to scrutinizing how well DND programs are implemented and does not have the mandate to scrutinize the wisdom of the basic policies on which these programs are based in the first place. So, once again, no independent assessments of the build-in-Canada policy on which the NSS rests.
Finally, there is the mechanism of the Fairness Monitor and its investigations into different government procurement programs. But the Fairness Monitor is heavily process oriented, and so tends to investigate whether a program followed the rules providing for industry firms to air their grievances through industry engagement sessions and so on, but it does not rule on the substantive merits of their individual complaints, should they arise. This orientation tends to produce fairly bland reports stating that the rules were followed etc. and that the NSS is a model of an ‘open and transparent’ procurement process.
So, Canada does not have well staffed agencies like the Congressional Research Service or the General Accounting Office in the United States which routinely and frequently embark on detailed studies and reports on various government procurement programs, and which often challenge the policies and regulations on which these programs are based.
Enlighten us Michael, what are the “true” answers (according to you)?
Hi, David.
First of all, I am not opposed to the OOSV or the national shipbuilding strategy. Not being a shipbuilder or buyer myself, I have no idea what an appropriate cost should have been. Maybe a billion dollars is the right amount. But it seems obvious that COVID and the inflation that followed it could not have caused even a doubling of the costs.
I was serious when I suggested that the public service may not have any idea why the costs have gone up. They are attentive to every detail. Every routine purchase must be signed off by people four levels up as well as everyone in between. Vast efforts are spent on overseeing travel permissions, hiring procedures, how money is moved around, safety documentation.
I was in the public service, technical staff in a research department unrelated to shipbuilding. Projects were hugely ambitious. We had a big team for our subject area. We worked like madmen to try to get the work done and we accomplished a lot of secondary tasks. Yet in the eleven years I was there my work team did not complete any one of our core projects. And nobody noticed.
That is the kind of oversight you get from the Canadian public service.
In my opinion the Auditor General is the office responsible for telling us why, and outlining the details of, costs have increased with regard to NSS programs for both the CCG and RCN with their reports to Parliament based on the PBO’s budget reports specifically. So, if there is blame to be had with regard to the CCG ship programs, then look towards the AG office for reports. The Canadian Public Service is so inept not because of their jobs — I’m sure they do the jobs required of them very well — but how much oversight (or non-oversight) there is in the ‘system.’
Can we have a reference point?
I am trying to find the price tag for John P. Tully vessel which was build pre internet, any idea?
Thank you