By Dan Middlemiss, 19 October, 2023
An interesting article was just published about the Canadian Surface Combatant (CSC).[i] The author, Philippe Lagassé, is a well-respected Canadian academic with a long-time interest in Canadian defence matters. Moreover, Dr. Lagassé served as a member of the little known Independent Review Panel for Defence Acquisition (2015-2022) and in that capacity was responsible for reviewing the requirements for the CSC.
Dr. Lagassé addresses several issues relating to the CSC project, and acknowledges that important questions have arisen about the schedule, costs and capabilities of Canada’s new frigates.
Lagassé suggests that knowledgeable observers have pointed out that there are other, highly capable warships available that cost far less than $5.6 billion per ship (his figure), and admits that there is far more than requirements driving up the CSC costs, most notably the decisions to re-establish a domestic military shipbuilding industry and to build the new warships in Canada. These decisions, he says, have probably increased the costs of the ships by roughly 30 per cent.
He then touches briefly on the now familiar reasons why it has taken so long for Canada to get started on the CSC: setting up the National Shipbuilding Strategy; shipyards reacquiring skilled workers and creating the necessary infrastructure; and refining the requirements for the CSC while the Arctic and Offshore Patrol Ships were being built.
He asks whether Canadian defence planners were “too cavalier in their requirements
and design modifications?” His answer: “Maybe.” However he contends that these same planners were trying to foresee capabilities for a warship that the navy will likely be operating until 2100 and perhaps beyond.
Lagassé states candidly that “Doubts about the CSC are going to keep multiplying. The per unit costs can only increase so much before people start seriously discussing reducing how many of them will be built. You can be sure that some within government are already asking ‘Why 15? Why not 12?’” For Lagassé, the real question facing Canadians and their government is not why we are not buying cheaper ships, but whether we are “prepared to accept less capability to cut costs”.
Lagassé also suggests that serious concerns are also being raised about the capacity of Canada’s defence budget to maintain the warships, keep them technologically upgraded in future years, and whether the RCN will be able to recruit enough sailors to operate the ships once they are constructed.
Lagassé concludes with the following recommendations: “To address these concerns, the government must let DND/CAF better explain what the CSC is designed to do and why it needs to do it. Simply telling Canadians that it’s the right ship isn’t enough when it’s easy to point to lower-cost alternatives. As well, the government needs to be far more transparent about estimates of costs and what’s driving them. Political and public support for the CSC shouldn’t be taken for granted, and growing concerns about the program can’t be simply brushed away.”
[i]. Philippe Lagassé, “Time to worry about our warships,” The Line, 17 October 2023. Accessed at: https://www.readtheline.ca/p/philippe-lagasse-time-to-worry-about
9 thoughts on “Comment about ‘Time to worry about our warships’”
Esprit de corps Volume 30, Issue 7 has more information available regarding upcoming CSC financial info from the Department of National Defence. It should be released before the end of 2023 and will apparently go into detail about something more akin to a “sticker price” for the individual CSC program vessels at this point in time, stripping away much of the extras which bloat the cost. Thankfully as well from this article, DND seems uninterested in moving away from CSC and starting this entire process again.
https://online.fliphtml5.com/insrc/wlio/#p=8
(Text taken from the article)
“The Canadian Surface Combatant program will see a critical milestone emerge in the fall as the federal government expects to release an updated cost estimate to build the warships.
The CSC project was originally valued between $56 billion to $60 billion for the construction of 15 warships, as well as all of the components required to design, build and bring the ships into service. National Defence spokeswoman Jessica Lamirande told Esprit de Corps that the breakdown of that figure is as follows: approximately 65 per cent for building the actual ships: five to 10 per cent for design and project management costs; approximately 10 per cent for weapons and infrastructure to support bringing the ships into service (jetties, training facilities. test and integration facilities); and 15-20 per cent for contingency funds.
The new review of the proposed build cost will focus only on the ships themselves. “A build cost estimate is expected in late 2023 to support project implementation authorities,” Lamirande added. The revised build estimate will include a specific cost estimate for the build of the first three ships, as well as a cost estimate model update for the total 15-ship build program including material and labour, contractor program management, integration engineering, the technical data package as well as training, she stated.
“The cost estimate model will include weapons. but will not include other items such as ammo and spare parts,” said Lamirande. “The procurement of these items will be recurring over the life of the CSC so won’t be included in the revised build estimate.” Lamirande outlined the build schedule as it stands now: Construction of the first Canadian Surface Combatant is still set for next year with low rate production and the building of a production test module. Full rate production will start in 2025 with the first ship delivered in the early 2030s.” [end quotation]
Going off some quick and dirty napkin math (take this with a major dose of salt), taking 65% of $60 billion for building the ships and dividing that by 15 gives us a unit cost of $2.6 billion CAD per CSC. The UK Type 26 has a per unit cost of $1.31 billion pounds which converted from pounds to CAD gives you a cost of $2.18 billion Canadian for a UK built Type 26. $420 million CAD difference between the specifications of both vessels alongside accounting for a more advanced UK shipbuilding industry points to me that Canada might not really be getting ripped off once you peel back all of the layers of extra fat tied around the CSC program.
I would not take these figures incredibly seriously right at this moment though, waiting to see what the DND releases for figures should give us a good idea about CSC’s per unit cost soon enough hopefully.
There are really no revelations in the referenced article that haven’t been raised in social media or on forums such as this over the years. It’s very surprising that the quoted price of the Constellation Class that this article references doesn’t mention that the majority of the combat systems which is usually some of the biggest costs of the ship are US government supplied and separate from the quoted price which makes a big difference in what the actual price is. It is abundantly clear to me that the price of warships often quoted by government sources are highly suspect for instance the much quoted price of 66M for the Norwegian Svalbard Class of Arctic Patrol ship which is in fact much more in price but often used as a argument to discredit the class. This is nothing different and we are our own worst enemies in costing these ships including adding everything but the kitchen sink including the tax!
Other than the few regulars that seem to have a personal vendetta against this project really no one has been asking questions or complaining about the program. All I see is now is people trying to reference the Hunter Class issues as a way to discredit the CSC program. Hopefully the updated cost estimate will put the rest some of these “concerns”.
As a side note on personnel, once they start cutting steel on the first CSC it will be 6 to 7 years before the first ship will be built and become operational and over many years the entire project to be built. A lot can happen over that period of time personnel wise. Its not lost on the RCN that we will need trained sailors to sail these ships.
Ted
I agree that there are no really new revelations here, but, contrary to your continuing concerns that only naysayers and people with a ‘personal vendetta’ against the CSC project are asking questions about the project, the author of the referenced piece is a true ‘insider’ who is probably very well acquainted with the actual information and data that is being forwarded to Ottawa officials in DND and PWSC.
Second, you are also correct in saying that the cited costs of the Constellation-class do not mention US GFE. However, some in this Forum continue to insinuate that huge extra charges should be added to any costs attributed to this class of frigate. For the record, Ivison’s quoted figure of $1.66 billion US for the FFG-62 actually overstates the current costs of this warship. For the fourth ship in this class, F/MM was awarded $526.3M (announced 18 May 2023) just for building the ship. As many reputable sources point out, the total authorized procurement costs for this ship is $1,135.2M. Therefore, the GFE is approximately $608.9M US. Translated into our currency, that total cost amounts to about $1,476M CDN. I have noted the costs for the prior warships in this class earlier in this Forum. No doubt some naysayers in this Forum look forward to how well DND can doctor the books in the forthcoming CSC costing update so as to make any apples to apples ship cost comparisons impossible. Ottawa officials have become highly adept at producing ship costing approaches that no other NATO nation uses. Call me sceptical.
Third, and following from this last point, I agree with you that ‘we are our own worst enemies in costing these ships’. Why we continually do this escapes me. However, our total program costs method does have the virtue of providing the real amounts that Canadian taxpayers have to pay. Clearly, Ottawa intends to use a very different calculus of CSC production costs in the forthcoming announcement. It will be interesting to see what is included, as well as excluded, from this cost update.
Fourth, it is easy for some loyal DND ‘influencers’ to disparage any and all who question just about any aspect of the CSC project. This ad hominem approach, combined with Irving’s ‘shoot-the-messenger’ default attitude, goes only so far. Many in this Forum (and outside it) have legitimate questions about what is going on with this project, if only because Ottawa prefers the Chinese water drip method in releasing anything of real use about the project, and then only on a sporadic basis.
Finally, while I would prefer that Ottawa be far more open and transparent with Canadians, I do not think that real audience for the coming CSC cost update is the everyday Canadian. DND could not care less about what Canadians think about defence projects such as this one. No, this announcement will be crafted to try to convince members of the federal cabinet, likely for the first time, that all is well with the project and that costs are well in control and reasonable. We shall see whether this approach pays dividends for DND.
The sad fact is that the majority of news articles by certain authors at times play very loose with details of certain aspects of the NSS and ship building program. Any person who would be willing to do a small bit of research or read available online reports that are available to the public would find glaring omissions in these news articles supposedly written by professionals. Either its by design or the author didn’t do their research. In most cases I can only conclude that they have a bias toward aspects of both the NSS including the CSC because criticism either warranted or made up sells. It can never be a positive story, always negative. When confronted by people at least with a bit of common sense the age old “I’m a tax payer” excuse is often given for total disclosure or what are they hiding?
I don’t include the author of the article you referenced but as mentioned for a “insider” very surprised they omitted the fact the government supplied equipment makes up a great percent of the true cost of the Constellation class and like most use it in the comparison between the CSC and it, even when official reports has stated it’s an apples to oranges comparison. For an “insider” they certainly should have mentioned this. From what I can see direct comparisons between projects from different countries is not entirely possible. Lately the flavor of the day seems to try and link the CSC project to the troubled Hunter Class project and suggest we are on the verge of reducing our numbers or a cancellation entirely. Other than a few of the regulars that post on the CSC there hasn’t been anything as far as I can tell from politicians about the CSC demanding more info, cheaper ships or a cancellation.
For the record I believe there should be some transparency for the public but only up to a point. I also would state that I believe in this project. Many of the critics seem to be upset that the government has the gall to not publish all technical aspects of the project and detailed costing so they can analyze on social media and ultimately criticize. I realize for many that it’s an interest, for some who actually worked in the industry but really the government does not need all of the details out there for foreign interference to manipulate and turn public opinion against what we’re trying to procure. Does the government have the right to do that? I think they do. It seems now even the upcoming reporting on the costs of the ships is already being called in doubt by some who think DND and the government by extension won’t be truthful and may cook the books in order to make the project look good. I too am interested in seeing what the sail away price of the ships are and I know they are probably more expensive than other platforms but by how much.
Hello Ted. Thank you for posting a more positive view on the CSC project and what most “so called” informed “professional media” and others are trying to imply or cast doubts on to produce some literary “Shock and Awe” for their own effect. In my view, a great ASW Frigate that most other navies are envious over including the US Constellation, Australian Hunter and the original UK BAE Type 26 class versions. No matter what happens this Fall WRT the final pricetag of this program, each and every one of these 15 CSC Frigates will see their crews come safely home to their families each and every time. How do you put a pricetag on that! That’s what Canadians need now and for the future. As far as I’m concerned, you cannot compare these ships, as the CSC is in a class by itself. You cannot compare “apples to oranges” as you say. At the end of the day, no matter what the cost, we need each and every one of these ships to protect Canada’s sovereignty for the future. There are limits, yes, but I believe the report this Fall will indicate there will be an increase to the costs but will be doable. Your statement about transparency rings so true for both the government and the Canadian people. I have always been a strong proponent for these ships, but I too have questioned some things that have gone on with this program and at times it has been frustrating with all the delays and secrecy, but at the end of the day I believe most Canadians have confidence in this NSS CSC Frigate program. My concerns will be the ability of this CSC Frigate to be able to “Future Proof’ in the next few decades and I believe that was one of the reasons for the removal of the 8 MK 41 VLS system forward. I have some concerns however such as choosing CAAM was not the correct decision midships, but overall a great ship to defend Canada for the RCNs future! Cheers!
Two quick observations:
First, I agree that technical matters such as the weight of Canada’s CSC would not normally be of much interest to even well informed commentators let alone to those who would interfere in our shipbuilding programs. However, given the relative paucity of even broad-brush information from Ottawa about the progress of the frigate program as a whole, the media tend to look elsewhere for something to report on. And what did they discover about a fairly similar frigate program in Australia? Lo and behold, the weight of the Hunter-class had become an explosive domestic political issue, and further, that the weight had potentially both performance and cost implications that were threatening elements of the overall warship program! So, not too difficult to see why the Australian program has become a surrogate fixation for certain journalists in Canada.
Second, one of the key lessons that Lagassé is underscoring is that large, expensive defence procurement programs do not sell themselves, no matter how meritorious DND believes them to be. Furthermore, should it transpire that the coming CSC costing update will produce a BIG NUMBER – as many in this Forum, including yourself, suspect it will be – then the sticker-shock genie will be out of the bottle and partisan politics on all sides will become fully engaged.
This program will represent the single most expensive military procurement in Canada’s history, and will be surfacing in a climate where the current government is trailing in the opinion polls, is embroiled in contentious fiscal issues such as the cost of affordable housing, addressing climate change, and is even hauling grocery chains before parliament to explain the cost of a loaf of bread.
DND is likely to find itself fighting a losing rearguard action in trying to convince Canadians and their elected representatives that the CSC is good value for their money. I am afraid that DND’s strategy of cloaking the CSC program under a cone of (relative) silence will backfire. Efforts to redress this now will amount to too little and far too late.
Hello Dan. Agree with most of what you have said, however I still believe the next CSC Frigate costing update this Fall will rise past what DND’s estimates have always been but not nearly to the point of $82B CAD as has been alluded to by government sources. Quite possibly past the original DND $60B CAD figure and perhaps as high as $70-72B CAD. Yes, a bigger number but as I said, it will be manageable in my opinion. Cheers!
Another Possibility
On 25 May 2016, in her Keynote Address at the CANSEC Trade Show in Ottawa, the Hon. Judy Foote, Minister of Public Services and procurement announced that the government “…will not be announcing a new cost estimate for the Canadian Surface Combatant until we have signed a build contract”.
So, does this proclamation still hold and does it signal that Ottawa may be about to announce an initial build contract in conjunction with the already announced CSC cost update? Or, was this just another way that Ottawa was trying to duck awkward questions about the ships’ costs?
RE Dan Middlemiss/CANSEC Trade Show 2016. I believe that Judy Foote’s Keynote Address at the Trade Show was all “Fluff” and just for show and effect at the time. I believe the next contract will not be signed until at least the Fall of 2024 and this is only a DND update of “true” costing of the CSC Frigate with take away prices and taxes not included as DND has said before. Cheers!