Science-ship project cost sails up
Expected bill for federal vessel rises nearly tenfold since 2008
The cost of building an offshore science vessel for the federal government, originally set at $108 million, has jumped to almost $1 billion.
The estimate for the project had been steadily climbing, from $108 million in 2008 to $144 million in 2011 and then to $331 million, according to federal government figures.
But on Feb. 18 the cost to taxpayers for the offshore oceanographic science vessel — or OO SV project — took its steepest jump yet with new figures showing it had climbed to $966.5 million.
South Africa is constructing a similar oceanographic vessel with an ice-strengthened hull in a project with a budget of around $170 million.
Retired Liberal senator Colin Kenny, the former chairman of the senate defence committee, said the significant jump in cost of the Canadian-built oceanographic vessel is staggering. “Why isn't anyone in government saying that this type of expense is crazy and it's time to put an end to this level of expenditure for a single ship,” Kenny said.
But Barre Campbell, spokesman for Fisheries and Oceans Canada and the Canadian Coast Guard, noted in an email, that the original budget was set based on the best data and methods at the time. “As the project has progressed and moved closer to construction, the estimated project cost has been updated to reflect the value of negotiated contracts and actual costs incurred,” he added.
The cost has been reviewed by independent experts, Campbell added.
Construction of the OOSV at Seaspan shipyards in Vancouver is expected to begin shortly. The vessel will be delivered in 2024. Seaspan has already received around $280 million over the past six years to work on the design and other elements of the OOSV, according to information presented to Parliament.
For major projects such as the OOSV, contracts are generally longer, which can cause an increase of cost drivers such as inflation, labour rates, commodity prices, engineering, spare parts, insurance and warranty, Campbell added.
But in December 2011, a team of auditors warned Fisheries and Oceans and the Coast Guard that they had failed to adopt a strategy to deal with construction delays for the vessel.
“By not developing adequate risk mitigation strategies for time delays, the Canadian Coast Guard is vulnerable to higher-than-anticipated costs and ineffective delivery of programs,” the independent auditors hired by the federal government said.
The auditors also noted that the procurement staff overseeing the acquisition of the OOSV had erroneously concluded the project was “low risk.”
The OOSV will be outfitted with equipment for marine and scientific research on ocean currents and the seabed. It will replace an existing Canadian Coast Guard science research ship. The new vessel will be capable of performing multiple tasks, including oceanographic, geological and hydrographic survey missions. This work will contribute to Canada's understanding of oceans and the impacts of climate change, the federal government says.
The OOSV is being built as part of the federal government's National Shipbuilding Strategy. Auditor General Karen Hogan is currently examining that strategy, with a report to be released Feb. 25.
The day before that audit is released, Parliamentary Budget Officer Yves Giroux will make public his study on the cost of another shipbuilding strategy program, the Canadian Surface Combatant. That project to buy 15 new warships has also skyrocketed in price.
The Canadian Surface Combatant project would see the construction of Type 26 warships for the Royal Canadian Navy at Irving Shipbuilding on the East Coast. The vessels will replace the current Halifax-class frigate fleet. However, the project has already faced delays and significant cost increases in cost, from an original $14-billion estimate to $26 billion and then to $70 billion.
The PBO study comes at the request of the House of Commons government operations committee, which wanted to get the latest cost figures on the surface combatant project.
The Department of National Defence revealed Feb. 1 that the delivery of the first ship would be delayed until 2030 or 2031. It was to have been delivered in 2025, according to DND documents. The five-year delay is expected to cost taxpayers billions of extra dollars.