By Barnacle Bill, 12 January 2024
(Although I appear to be responding to Dr. Middlemiss's post, I want to create a new post for what follows. Having seen/heard too many people call for a change in course for the CSC program, I believe that the 'option' outlined below deserves more scrutiny, which is best accomplished in a separate post.)
In his recent post on CSC updates (or lack thereof), Dan Middlemiss cited John Ivison's op-ed in the National Post (10 Jan) in which the journalist castigated the Government of Canada for a lack of progress on shipbuilding. Towards the end of the article, Mr. Ivison added his name to a growing chorus of observers suggesting that Canada should consider building an initial batch of CSCs, then cut its losses and acquire the FFG-62 Constellation class, the unit costs of which appear to be much lower.
I know not what factors contributed to the agreed unit costs for the first four 'Connies' that the USN has contracted for. Perhaps the first four will embark lots of government-furnished equipment that is not captured in the project costs. Perhaps the latter does not include ordnance, infrastructure, or other things that may be captured in the CSC project costs. The point is that one should not assume that the Americans are doing it better before one tallies up what's included in the two different projects.
But if we assume that the USN is indeed building capability and managing costs better than we are, what then? Per Mr. Ivison's recommendation, can we assume that if Canada were to alter course and adopt the FFG-62, we would achieve better outcomes?
What would such a buy look like? Would the government insist that the assembly be done here in Canada? Is there a yard (other than ISI) that could tool up and execute the new work order at relatively short notice? At what cost compared to a US yard? Would the government/RCN insist on customizing the design, and at what cost? Or would decision-makers be willing to run afoul of domestic political and industrial constituencies and place the notional buy outside the NSS, thereby opening the way for us to accept the design as -- is (i.e., no modifications, little/no Canadian content), and have it produced down south under US labour rates?
It would be worthwhile to consider that the US shipbuilding workforce is stretched, and that Fincantieri USA is having to pull out all the stops to keep the FFG-62 schedule on track. (This mirrors the challenges that American submarine builders are having -- trying to build a minimum of 2 Virginia-class boats per year AND supply the same to Australia under the AUKUS agreement.) The firm's three Wisconsin yards are short of staff and so it is bringing in new technology -- welding robots -- to increase productivity. This article from Defense News observes that although the USN has the option of purchasing the technical data package from the Italian parent -- which would allow a second shipyard to participate in the build -- that request has not yet been made, likely because of labour shortages. [https://www.defensenews.com/global/europe/2024/01/08/fincantieri-taps-welding-robots-to-build-us-navy-frigates-faster/]
This latter point suggests that any request by Canada to build the FFG-62 in the US would be rebuffed due to a lack of yard capacity. (Any additional capacity would first be taken up by USN orders.) We'd have to do the work ourselves, which means further delays and all the temptations/risks of requirements-creep, fulfilling ITB obligations, etc.
I fear that this 'option' is not much of an option when probing questions are asked. However much the FFG-62 might better suit our needs, we'd fall even further behind in our drive to replace the Halifax class.
So, let the dissenters either be brutally honest about our ability/willingness to piggy-back on USN programs, or let them cease trying to make a case for switching horses mid-race.
28 thoughts on “Consider the Challenges of Changing the CSC Course”
Once again Barnacle, thank you for being a voice of reason!!
I wonder if the ‘usual crowd’ will cease blathering and let facts and thinking get in the way of their prejudices and disdain for Canada, Canadian shipyards, the CAF, the RCN, our government, and the public service. I am not too hopeful!
Ubique,
Les
Could not agree more – not all is groovy with that project either:
https://news.usni.org/2024/01/11/first-constellation-frigate-delayed-at-least-a-year-schedule-assessment-ongoing#:~:text=The%20service%20has%20briefed%20Congress,to%20USNI%20News%20this%20week.
Greetings Bill!
Your excellent post goes to the very heart of important issues concerning the CSC. Essentially, will (or should) Ottawa change its current plans for this important shipbuilding project at this point?
I note that your own thinking has changed somewhat in this regard. In earlier posts, you expressed reservations about the amount of “Canadianization” involved and about the comparatively limited capabilities Ottawa was getting for its money. You even speculated about the possibility of CSC batches with different capabilities (hi-lo?) in each.
Several years ago, when the escalating costs of the CSC were assessed by the PBO, I held out some hope for the prospect of procuring a comparable warship, such as the US Constellation-class. I did so in the hope that FMM might open a second shipyard in the U.S. where Canada might then negotiate a deal to insert mostly ‘as is’ ships for the RCN into the U.S. construction queue along the lines of the deal Ottawa negotiated for the C-177 Globemaster strategic transport aircraft for the RCAF.
But, I agree with you that type of arrangement is probably no longer possible. I strongly doubt that Ottawa would alter its strict ‘build-in-Canada’ policy at this stage, and I believe, like many in this Forum, that Ottawa will eventually sign a contract for the first batch of three CSC warships no matter what the unit costs.
But please let us dispense with the red herring entertained by many, that the Constellation-class ships have extra, hidden costs associated with them. They do not, as I have pointed out on a couple of occasions in previous posts. True, American naval yards have largely written off some of the basic infrastructure and systems’ development costs that are skewing some of the total costs for the CSC, but that is a comparative advantage for the U.S. because the USN builds a lot more ships than Canada ever will. The fact is that the current Constellation warships cost about $1.5 billion CDN, and I simply do not think that the CSC will end up costing anything near that figure. Make of that what you will.
Finally, the really big question concerns what Ottawa will do after the first batch of 3 CSCs. Will Ottawa do what governments often do and simply defer decisions for the future, all the while costs continue to rise? When Cabinet finally gets a look at the CSC costs, will it decide to reduce the total number of frigates to 10, 8, or perhaps even 6 ships? If drastically fewer ships are procured, then how will that constrain the RCN’s operational capabilities in 15-20 years’ time?
So all I hear is let’s build these ships in Canada, but at a huge cost to taxpayers. Why not build the first batch here and explore building the 2nd batch of 3 in a foreign ship yard, say Korea, Vietnam, Denmark, anywhere else for a comparison. Maintain the same design as the Canadian built ships. Would we get the ships 50% cheaper? You would get the ships built faster if not cheaper.
Good afternoon Wondering,
If I understand it, you believe that we should:
– build the capacity to construct three CSCs;
– abandon that new capacity (and the ability to repair/maintain the CSCs); and
– then pay “top dollar” to foreign shipyards to get around to building the same ships as we are already able to construct, thus ensuring that we need to go back to them for maintenance and refits.
Have I correctly understood your view?
Ubique,
Les
I’m saying 3 ships off-shore and have a good look at their cost and timelines to build. Then you can have double the ships out there in 10 years. I don’t mind keeping work here but are we getting value for our dollar? The ships are to be identical to ones built here or cut the number and build destroyers offshore. As tax payers are we getting value for our dollar? How much of CSC is truly Canadian? How much is foreign?
Like the comment below why did Canada abandon 15 ships for 30 billion from Fincantieri? Now we pay double if not 3 times and wait for 10 years to see a ship.
Thank you for the insightful and a fairly rare reasonable opinion regarding this topic. Canadian shipbuilding has many issues but people have a bad tendency to focus only on those issues without seeing the positives. The Government is not helping due to the lack of transparent, clear and timely updates which seems to give people slanted expectations which they use to make poor comparisons. Many people do not understand that the entire National Shipbuilding Strategy is focused on spending as much money as possible in Canada and keep these supply chains and shipyards operating at a reasonable pace. Sending work overseas is perhaps a good way to save money in the short term but you are selling your own sovereign defense capability away in order to do so.
Changing to the Constellation or any other design at this point would be unwise unless the CSC design turns out to be fundamentally unworkable, especially if this involves going overseas. All of the work from the National Shipbuilding Strategy is centered around domestic shipbuilding and to abandon that now for short term cost savings is woefully misguided. Foreign yards can just as easily fall to corruption, incompetency, delays, etc. Many Canadians believe the grass is greener when you get away from Irving, Davie and Seaspan but that couldn’t be further from the truth. None of this even touches the delays and legal battles one would be dealing with by trying to kick off LM/BAE from the CSC contract, Irving would be pretty unhappy as well watching decades worth of steady work evaporate.
As you say, it is a can of worms many people do not consider. CSC needs to succeed and constantly undermining the project with comments about questionable alternatives is not helping it. We need to keep the ship headed forward, barring some catastrophic revelation.
Each option has risk. Staying the course with CSC: further delays / cost overruns & other setbacks resulting in continued pushed back timelines and increased cost. The latest cost estimate for CSC is over $5 billion per ship – at current projections. If we continue to see problems with this program (which can result from any of Irving/BAE/DND/PSPC) this will continue to increase and at some point it just isn’t justifiable anymore for politicians to continue to fund (let’s say cost rise to $7-8B per) and so a future govt. might be inclined to kill the project altogether after the first three hulls since there is no way to justify the project at that expense. Then what? We may end up with 3xCSC and then a mix of a much less capable fleet (like an up armed National Security Cutter as an example). In my opinion, there is a real risk this will happen and it would be a massive setback to RCN capabilities.
So we should weigh this risk against the option of Constellation class hulls from a second US shipyard. You mention the challenges with this approach which I agree, but I also think they are more easily resolved than the risk currently facing CSC. From my reading it seems likely that the US will soon have a second yard started on Constellation frigates which will increase output to 4 ships per year. At that rate I would be willing to bet that we could see RCN Constellation frigates before Irving completes its first CSC – AND we don’t need to worry about the unknown future risks that loom for CSC that could continue to drive up costs. We could purchase 15 frigates have a great deal of certainty they will arrive on time and on budget, unlike the CSC program currently.
I would caution about taking program costs and dividing them up evenly to arrive at a “per ship” cost figure for the CSC. There is disagreement between the Parliamentary Budget Officer and the Royal Canadian Navy regarding what the CSC program costs, the Navy insists it is still in the ballpark of $60 billion and roughly 65% of that figure is directly related to the actual production of the ships. Using that figure, you get more like $2.6 billion per ship compared to $5 billion. Once inflation and conversion is taken into consideration, that per ship metric is reasonably similar to what the Royal Navy is paying for their own Type 26 frigates. We are supposed to be getting a cost estimate sometime in 2024 for the price of the first trio of CSC’s built, that should give us a more reasonable view on what the cost truly is instead of being blown out of proportion by other relevant but difficult to compare aspects.
I do not think the multitude of issues present with stopping the CSC program and going for a Constellation build abroad is workable. The loss of long term Canadian jobs and work to Irving Shipbuilding will undermine the entire purpose of the National Shipbuilding Strategy, alongside making any kind of purchase abroad into a politically untenable option when it could have been done at home. Without redesigning or major changes to domestic Canadian suppliers, we would be cutting many Canadian firms out of already contracted work with the CSC in favor of American counterparts for Constellation. It would invalidate all of the planning and funding put into Irving Shipbuilding up to this point, prematurely bringing back the “bust” part of the “boom and bust” cycle. The United States is looking to purchase potentially double or more than their current Constellation order, that is why they are considering bringing a second yard online. As the USN is in the middle of a massive rebuilding strategy to face China, they are going to be utilizing whatever yard space they have for their own purposes. Even with a second shipyard, it is very doubtful that there is room for such a large Canadian order nor that the US would be interested in delaying or staggering their own vital orders to assist a foreign nation, even an ally like Canada. A second yard has not been approved yet and is not on the horizon anytime soon, it is something being considered for the future.
The amount of issues that would stem from a Constellation buy would be quite annoying, from the Canadian government looking to modify the design to our own requirements, to things like having to deal with the legal fees and delays caused by canceling the CSC program in order to pivot. Bill makes many relevant comments to the concerns about transitioning to a Constellation built abroad. The Americans are running into personnel issues in their yard building Constellation and has thus seen delays, Canada is not the only nation able to have unforeseen issues impact shipbuilding. The grass is often not greener on the other side but many do not realize that until they’ve burned the bridge allowing them to return to their own side.
From what we have seen so far and especially recently, the CSC is progressing in a fine state. I see no reason to pull the alarm bells and plan to scuttle the entire ship without proper justification. If we seem to be approaching the point where the CSC program has grown out of control, I could see the value but now? Not especially.
The government will never admit it made a mistake, it should either get a second ship builder and or a second design. The cost is too high, takes too long to build and will be outdated when the last half of the ships are made. The fiasco continues to evolve same as the F-35’s.
So who is going to be the second ship builder, all Canadian yards are full. Buying offshore is not on the table and even if they tomorrow said let’s buy offshore it would add years to the overall build.
You make a lot of assumptions. First that the US government would allow us to have ships built there when their own program is lagging behind because of lack of skilled labor and most likely will affect that second yard coming online. The second is that the government would change the terms of the NSS which up to this point have been pretty clear — build here only. If by some miracle that tomorrow we signed a deal with the US to build 12 Constellation Class, do you think its really that simple? Keep in mind that it has to go through the procurement and design because in reality we can’t just walk onto a another country’s design and start sailing it. Believe me when I say that Canada has looked at ways to speed up the procurement. The only way I would know is for the government to get into the shipbuilding business and spend 50 Billion to build a separate yard somewhere and procure enough workers to build more than one ship at a time.
As you probably know the government hasn’t released the sail away cost of the ships without all the other costs piled on. All those other costs that play into this 5B per ship are going to be spent anyways regardless of what ship is built.
Remember: if Fincantieri’s firm, fixed-price contract had been accepted for 15 ships for $30 billions, the first ships would be in service now.
It is something to consider that the joint Italian and French design bid was not made in good faith and was therefore effectively irrelevant to the overall contest. It was made outside of the official CSC procurement competition and pitched directly to the Minister of National Defence, effectively trying to circumvent the entire procurement process to secure a sole source contract. This was and is unacceptable as it completely undermines the checks and balances that government has in place for these kinds of multi-billion dollar procurements. They submitted this bid only a month before the end of official submissions, only to decline supporting this offer officially within the contest itself later on.
The listed cost of their contract was so much lower than the other contestants within the program due to the fact that they specifically removed key cost figures required to be included in the CSC program such as project management, infrastructure, design, munitions, replacement parts, training, contingency funds, etc. If the proposal would have been accepted, Canada would have still had to pay those costs but they would have either been added to the program on the front or the back end. Those ships would not have been realistically cheaper and even if they were, the nature of the unsolicited bid meant that it could never have been accepted by the Canadian government.
Thank you Jimmy for bringing common sense and facts to this discussion!
Ubique,
Les
Good morning David,
You are assuming that Jimmy’s post of 15 Jan 24 above is incorrect with regard to foreign yards.
I think that we should say that accepting Fincantieri’s bid might have led to something being at some stage of construction, or not. The two certainties of such an acceptance are that any money spent would go overseas and Canada’s shipyards would be started on a death spiral.
Ubique,
Les
I’m not sure why we keep going back to building offshore, it’s not on the table under the NSS so speculation of what could have or might have happened is pointless.
Dave the unsolicited bid by Fincantieri didn’t include expenses such as IP rights, infrastructure, TDP, training and things such as lifecycle costs etc, etc. Even the PBO had said the FREMME still would have costs 10’s of Billions over the 30 Billion ‘bid’. Then of course there are details like the company was disqualified and the 30 Billion offer was nothing other than grandstanding. Building offshore is not possible under the NSS and you know that.
Perhaps the title of this post should have been: “Consider the Challenges of Changing the National Shipbuilding Strategy Course”. NSS was proposed and supported by all major political parties without any sort of meaningful debate or critique. Now, as we are entering the thick of NSS projects nearly every single one has been marred in significant cost overruns and delays. I think an honest (even if uncomfortable) discussion should take place if this sort of industrial capacity is feasible for Canada if this is the enormous cost it takes to get it done. I worry that many taxpayers are beginning to see NSS as not much more than a government subsidy with all three political parties courting voters in these key electoral areas. I worry if this program continues to see setbacks it will have long term negative implications for future procurement programs and overall military capability.
Chris, you are right. The NSS can be considered a success if the criteria are creating work (and large profits) for our shipbuilders, and (heavily subsidized) jobs for their employees. The NSS has worked well at resuscitating and propping up an internationally uncompetitive industrial sector. On the other hand, all evidence to date points to the NSS as being a failure in producing ships on time and on budget. Not. A. Single. Project.
The latest article from David Pugliese on the $500 million increase — in a single year — in the project costs for the 2 Canadian Coast Guard patrol ships, is but the latest example of seemingly uncontrolled Canadian shipbuilding activity. The by now familiar list of excuses (blame the pandemic! blame inflation! blame global supply chains!) are supposed to represent the “challenges” the shipbuilding industry is facing, and not evidence of fundamental problems with the NSS itself.
The government’s own projected costs for this 2-ship project has increased from $1.5 billion in January 2023 to $2.1 billion by December 2023. Nobody is held accountable, and nobody appears to care.
So to return to the planned, but overdue, updated cost estimates for the CSC. If the acquisition “production” costs prove not to be within DND’s initial $56-$60 billion range – a figure produced early in 2019 when extensive design revisions had yet to be made on the CSC and when inflation was running at lower rates than today, but rather are more in line with the $80.2 billion projected by the PBO in October 2022 – based on information received from DND itself and using well accepted ship costing methodologies – then so what? Should we just yawn, deny the facts (do facts only count when they support the Navy and the shipbuilders?), or simply say we have gone this far, so we might as well continue to blunder on.
The real developmental and production problems (oops, I meant “challenges”) for the CSC will only really begin when the contract is signed. Based on the evidence to date, we should expect more delays and cost increases. Moreover, there does not appear to be much Ottawa or the Navy can do about most of the performance shortfalls, cost increases, and schedule delays that will be encountered. The warranty period is usually laughably short and shipbuilders can ‘run out the clock’ so they will not be held responsible. And, after conducting an exhaustive search for authoritative government, industry, or academic reports on how well Canada’s military contracting systems can enforce compliance on industry contractors, I can find little but anecdotal accounts (some by the original architects of the NSS) of how contractual warranties, liability clauses, and penalties (the latter usually being but a tiny percentage of the value of the overall contract) can alter the behaviour of shipbuilders after a contract is in place. Legions of industry lawyers are always on hand to contest any claim and to deny responsibility.
So, my advice on the CSC? Build the first batch of 3 ships and then cancel the entire project. The RCN will have a few vanity ships to trot out on goodwill tours, and they will deserve much of the blame for the expensive showboats they have insisted on. But on a positive note: by the time these ships finally get in the water, if the current trends in naval personnel shortfalls continue, the Navy can take credit for operating an entire fleet of uncrewed warships!
Thank you Dan for such a useless suggestion.
Now, perhaps you can do the hard work and suggest what comes after the canceled project! A different design? Which one? Built where? To do what? No ships at all?
Ubique,
Les
Come off-the-pot Dan! I hope you are advising on the CSC project in jest. We need reasonable solutions to these problems with regard to the CSC program. My advice is…., STAY THE COURSE!!! Canada and the RCN needs all 15 of these ships no matter how long it takes! Let’s all get with the program. Unless you have some “Reasonable Alternatives” to put forward.
Sifting through all the comments I can say for a great deal of certainty.
1. Fincantieri’s bid for 30B for 15 ships is blatantly false and was never going to happen and was significantly more expensive than generally known.
2. Constellation-class are having their own difficulties with skilled workers and experiencing delays like many current shipbuilding projects.
3. There is no spare capacity or desire to insert the RCN into the build orders in the US.
4. The NSS will never go offshore with an election in the 2 years if ever.
5. Building only three ships will waste hundreds of thousands of person hours and drive up the costs of the three ships substantially.
6. Building warships in a foreign yard robs Canada from developing a strategic capability and having a project built in a unstable area is probably not a good idea.
What I think is that three ships will be built and we’re taking over ten years here. A lot could happen and in the interim the RCN will shrink the number of operational hulls available. What I would like to see is Irving bought out by the government or a second yard funded, built and run by outside SME’s for the government.
And here I was thinking you must work for Irving!
There is a longstanding idea that private industry is more efficient than the government. It’s true much of the time but there is a reason: insecurity. Private companies in competetive industries are always at risk of losing customers if they charge too much or do a bad job. Every decision they make is made in light of that fear – and the result is performance.
Governments, monopolies, and companies whose business comes mainly from insurance claims (think autobody, dentists, etc) are not at risk of losing business because of inefficiency. In the case of monopolies, the customer has no alternative. In the case of insurance claims, the person who benefits from the procedure makes the decision, but someone else pays the immediate cost. Government has both problems. it is a natural monopoly; citizens have nowhere else to turn. Government officials don’t intend to provide bad service, but decisions are made by individuals who are disinterested: they do not benefit personally or pay personally. They have a strong incentive to impress others in government service (that gets them promotions or at least keeps their colleagues happy) and no personal incentive to optimize the result either for the taxpayer or the beneficiaries of whatever task they are doing. However, governments have a mechanism that provides a degree of accountability: elections.
Politicians who want to reduce costs often do so by laying off government employees and hiring the “more efficient” private companies to do the job. This can work, provided that there are many private companies that provide similar services and that want the job. But a lot of government-associated jobs are not like that. The government is the only possible customer; once the government awards the contract all companies except the winner disappear. Where does that leave the winner? With a monopoly. And the customer of a monopoly is powerless.
The solution to constant cost over-runs in government shipbuilding and elsewhere is to reintroduce performance-related fear (the polite term is “accountability”) in as many places as possible. There has to be one director of the NSS. The director has to be judged on performance alone and against clear standards. No weasel words about the pandemic, no distracting requirements from unrelated government objectives. The Prime Minister must have the power (and the stomach) to fire him or her. The director in turn has to have real power to make things get done – that means he has to have the power to fire poorly performing subordinates and contractors. He/she has to be able to make decisions that others will think arbitrary, without going through months-long processes. Including, if necessary, firing Irving, Seaspan, and Davie. Our shipbuilders will never become the efficient competetive companies the nation needs them to be unless they believe that their survival depends on it.
So I agree with you, Ted. A government controlled shipyard, properly run, could introduce an element of competition into the system – by punitively taking contracts, or portions of contracts, away from the worst performing major yards. Delays and cost overruns will dry up fast when everyone including the boss believes his/her own job is on the line. Irving might even become efficient enough to win contracts on price and quality, instead of patriotism!
Dan Middlemiss
Michael,
You have introduced an intriguing new element to this discussion, one worthy of separate analysis by itself. I love the way you put it: the introduction of “performance-related fear” (i.e. accountability) into the NSS process. Wonderful!
However, we must pause to consider how this might be done in practical terms, especially in light of the historical record related to Canadian defence procurement. Here the lesson might well be: be careful what you wish for. One consistent criticism of both Canadian defence procurement, and of the NSS in particular, is that they are already over-burdened with layers upon layers of accountability processes. These lead to endless organizational churn and often result in risk-averse behaviour by the alleged ‘decision-makers’. Gridlock is the familiar outcome.
As many observers of, and indeed participants in, the NSS world have lamented, Canada needs to follow the lead of other countries (the UK and Australia) and appoint something akin to a shipbuilding Tzar (some use the phrase single point of accountability) who has real power to make and to alter key decisions. Then again, others could legitimately argue that these examples have not exactly produced unequivocally successful results to date.
The familiar problem is that industry and bureaucratic reforms mean nothing without concerted oversight by the top political leadership. Another problem is that the bureaucratic objects of these reform resort to a familiar and usually successful tactic: CYA behaviour. As I am sure that many of you are aware, they are true experts in deploying this tactic.
In practical terms, modifying shipbuilder behaviour all starts with the type of contract agreed to. Under the NSS, thus far we have seen cost-reimbursable incentive fee (CRIF) contracts, as compared to, say, the fixed-price incentive (firm target) contract type being used in the Constellation-class program in the US. CRIF-style contracts often have the perverse effect of rewarding the shipbuilder for cost growth instead of discouraging cost escalation. Why? Again, the evidence is sparse and mostly anecdotal in Canada, but insiders like Ian Mack have noted that the numerous lawyers shipbuilders have at their disposal are especially adept at tracing back the sources of cost growth to change orders insisted upon by the government. This ‘lawyering up’ tactic is not without merit in many cases, and was experienced during both the DDH-280 and Halifax-class frigate programs.
In any case, as I alluded to in another comment, both shipbuilding warranties and penalty clauses have little or no impact on shipbuilder behaviour. The warranty periods (usually one year) are often too short to identify performance problems in time, and the penalties are so minuscule in relation to the total value of the construction contract that they might as well be considered just another cost of production. SJSL was brought under material breach of contract numerous times under the CPF program, all to no avail.
Two other potential avenues of introducing the ‘fear’ you mention, might be shifting the contract to a different shipyard, and the ultimate weapon, cancellation of the program altogether. The first of these is a non-starter because the other major NSS shipyards have their hands full (and are experiencing their own cost and schedule difficulties). The cancellation option is so fraught with adverse political fall-out for the government that it is seldom employed. The shipbuilders know this, and thus do not really fear this threat being employed against them.
So there you have it. Once shipbuilding contracts are signed – indeed, maybe once the original competition is over – Ottawa is effectively neutered, and has little or no recourse to intimidate the shipbuilder into bringing cost growth and schedule delays under control. As many of you have noted, Ottawa has sunk so much time and money into the CSC already that it has little option but to gamely stagger on…perhaps until the entire NSS edifice goes down with ships.
Hello,
This all seems to skirt around the issue that defense and shipbuilding should not be ‘business,’ but rather core strategic state institutions. The purpose of these businesses is to generate revenue for their shareholders by selling products and services at maximum achievable cost, which is different from the purpose of providing the state with effective means of defense from foreign action. As long as we focus on workarounds to direct control of these industries, the problems will persist. The correct mindset should be ‘if we do not have access to effective systems and platforms affordably and in a timely manner, we will die.’ Other countries understand this and control their critical industries accordingly.
Regards!
I would like to know why people seem to think that this is new information. When the original yards were selected for the NSS they weren’t going to agree to build anything without certain guarantees or conditions favorable to the shipyard by the government who would look quite stupid if they couldn’t get yards to build these ships in Canada. As soon as the build order was agreed upon no yard is going to agree to a fixed price over decades. As we have already seen the government is willing to stay the course and accept delays and cost overruns. Many of these overruns are the government’s responsibility by the way. We can do all the comparisons in the world to other yards but the reality is that ships will be built in Canada at a shockingly finite amount of yards regardless of the cost it seems. Nothing will be cancelled or given to another yard as the crown will incur massive penalties under the NSS agreement.
This from Jane’s Defence Weekly (5 Feb/24):
“Greek Minister of National Defence Nikos Dendias has announced that the country is interested in the joint production of a modified version of the Constellation-class frigates being built for the US Navy (USN). Dendias’ comments were made following a meeting with the defence minister of the Republic of Cyprus on 29 January.
“”On 16 January we received a letter from the US Navy accepting in principle our interest in the co-design and co-production of up to seven new Constellation-class frigates in Greek shipyards,” Dendias said. If an agreement could be reached, Dendias added, Greece would be able to participate in the programme from the beginning and could accordingly contribute to designing and customising the ships according to the needs of the Hellenic Navy.”
“The latest announcement comes just days after the Greek Prime Minister’s Office released a letter received from the US State Department, which, among other defence-related transfers, contained provisions for the transfer of four ex-USN littoral combat ships (LCSs) to Greece as part of Excess Defense Articles (EDA) assistance.
“Taken together, these two developments represent significant movement on the part of the Hellenic Navy’s frigate ambitions.”