Ad­viser’s re­port slams ship­build­ing pro­gram

Ottawa Citizen - - CANADA - DAVID PUGLIESE

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.

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