Adviser’s report slams shipbuilding program

Canada’s ambitious multibillion dollar shipbuilding program is poorly managed and lacking oversight, the federal government’s independent adviser has warned.

In a series of reports obtained by Postmedia News through Access to Information legislation, Steve Brunton says this could result in both ballooning costs to taxpayers and a potential gap in navy capabilities.

“In its current form,” he writes in a February 2016 report, federal agencies “will not be able to cope with the pace of the program in full flow.” He adds that he doesn’t think the level of risk involved in the massive shipbuilding program is fully understood by the government.

The government has promised two new supply ships for the Royal Canadian Navy and 15 new warships to replace existing Halifax-class frigates. These will form the backbone of Canada’s future naval defence.

The construction of supply ships, contracted to Seaspan in Vancouver, has already faced delays. If delivery of surface combatants isn’t carefully co-ordinated, Brunton warns in his reports, the navy could be left short on available warships.

A number of international firms decided not to bid on the Canadian Surface Combatant project, responsible for procuring warships, and at least one firm voiced concerns that the program could fail because of how it’s being managed.

The federal government, however, appears confident it has addressed any concerns about its shipbuilding program.

Procurement minister Carla Qualtrough told defence firm representatives in late May that the surface combatant project — which she described as the largest, most complex procurement ever undertaken by the Canadian government — has adopted innovative acquisition practices.

This includes allowing firms to clarify information in their bids, instead of facing immediate rejection of proposals.

Specific costs won’t be known until those contracts are signed. But one of Brunton’s concerns has already materialized. His reports note that financial estimates for the shipbuilding programs had not been updated since they were set years ago and various costs were already climbing.

In June, the government increased cost estimates for the navy supply ships from $2.3 billion to $3.4 billion. Jean-Denis Fréchette, the Parliamentary Budget Officer, estimates an even higher price tag, $4.1 billion.

Fréchette believes the surface combatant project is likely to be $61.82 billion — not the $55 billion to $60 billion currently budgeted — and warns that every year the warship contract is delayed beyond 2018 will cost taxpayers an extra $3 billion because of inflation.