Warship plan a mess, Ottawa told

Canada’s multibillion- dollar project to buy a replacement for its frigates is so poorly structured that one of the world’s largest shipbuilders has warned the Liberal government it won’t bid unless changes are made.

A number of other ship designers are also considering backing out because of the problems plaguing the project to spend more than $ 26 billion on a new fleet of Canadian Surface Combatants.

Italian shipbuilder Fincantieri sent Procurement Minister Judy Foote a detailed outline of why the acquisition process is in trouble, warning that, “Canada is exposed to unnecessary cost uncertainty,” according to the Oct. 24, 2016, letter obtained by the Ottawa Citizen.

There is also a belief in industry circles that the federal government is favouring a design from the British firm BAE, which is offering the Royal Canadian Navy the Type 26 warship.

Foote had previously said only proven warship designs would be considered to reduce the risk of future problems.

But the Liberal government retreated on that and will now accept a Type 26 bid, even though the vessel has not been built yet.

Preparing a bid for the Canadian Surface Combatant or CSC will cost companies between $ 10 million and $20 million. If they see their chances of winning a contract as slim, firms could decide not to enter the competition, further narrowing the choices for the Liberals on a new vessel for the navy.

The government a nnounced Oct. 27, 2016, that Ir ving Shipbuilding, its prime contractor, had issued a request for bids from companies on the design of the new ships. The firms have until April 27 to provide those bids, which must not only include the design but details of teaming arrangements with Canadian firms.

In its letter to Foote, Fincantieri pointed out that the current structure of the procurement limits the role of the warship designers to simply providing engineering and design services to Irving, which will then build the vessels.

In return for that small role, the companies are being asked to provide valuable intellectual property to their designs, access to their established supply chains and transfer technology to Irving and Canada.

In addition, the warship designers have to provide a warranty on the integration of technology into their designs, even though they are not responsible for buying that equipment.

The project as it is structured now leaves little incentive for warship designers and builders such as Fincantieri, which has designed and constructed ships for the navies of Italy, the United Arab Emirates, India, Iraq, Malta and Malaysia.

“If the current proposed procurement approach is retained, then it will be very difficult for Fincantieri to obtain approval to bid from i ts board,” the company warned Foote.

Fincantieri declined to comment on the letter.

Fincantieri instead proposed to Foote that a fixedprice competition be held, with the winning shipyard building the first three warships, complete with Canadian systems, and delivering those to Irving.