Feds await bids on warship fleet

OTTAWA • The federal government expects bids for a multibillion-dollar fleet of warships to be submitted by early November, with a winner selected sometime next year. But bidders will be allowed a one-time free pass if their proposals initially don’t meet Canada’s requirements, giving them the opportunity to rejig their bids for the $62-billion program.

“They’ll get feedback on whether the bids meet all of Canada’s mandatory requirements,” Lisa Campbell, an assistant deputy minister at Public Services and Procurement Canada, said in an interview. “Where there are gaps they’ll be allowed one time — only once — to submit additional information to demonstrate that their bids meet our requirements.”

She said having that option improves the competition in the long run and removes past issues where firms had been punted immediately for not meeting all criteria.

Canada has pre-approved 12 firms to bid on various aspects of the Canadian Surface Combatant program, which will see Irving Shipbuilding construct a fleet of ships for the Royal Canadian Navy.

Those companies will receive the final bid package by the end of the month, and will then have another month to prepare their proposals. “We expect the final date for submission is early November,” Campbell said.

Evaluation of the bids was originally expected to be finished by the end of this year but that has been delayed slightly, added Campbell. Instead, bids will be evaluated in early 2018 and a winner is expected to be determined later that year. Construction of the ships would begin in the early 2020s, Campbell said.

She said at this point no company has withdrawn from the program. Some industry officials, however, predict that may soon happen as a number of firms could decide that bidding on the program is not worth their while.

Campbell said she believes that concerns over companies having to turn over the intellectual property rights on equipment they’ve developed have been dealt with. “We think we’ve struck the right balance,” she added. “Canada will make sure that whatever we pay to develop, we own. For the rest we have licensing and access.”

The program calls for the construction of 15 ships. The original budget for the CSC program was $26.2 billion, or $1.7 billion per ship for 15 ships. But parliamentary budget officer Jean-Denis Fréchette estimates the program will cost $61.82 billion, or $4.1 billion per ship — roughly 2.4 times more than budgeted.

This estimate includes costs resulting from development, production, spare parts, ammunition, training, government program management and upgrades to facilities. It does not include costs associated with the operation, maintenance and mid-life refurbishment of the ships, other than the spare parts that will be purchased when the ships are built, the PBO said in a June report.

The PBO also estimated the cost due to inflation for delaying the awarding of the contract after 2018. “We estimate that for each year of delay, the program would cost about $3 billion more,” Fréchette wrote in the study.

Irving Shipbuilding president Kevin McCoy has said his firm is ramping up to work on the CSC, with its workforce of around 1,800 expected to grow to 2,400 by 2020.