Canada spending $650 million on U.S. missiles for warships

The Canadian government is spending around $650 million to buy new missiles and launchers from the U.S. for the Royal Canadian Navy.

Canada is buying 100 Standard Missile 2 Block IIIC missiles and 100 MK 13 Vertical Launch Systems.

The total estimated cost of the purchase is $500 million U.S., according to the U.S. government, which posted details of the deal on Thursday.

The U.S. State Department announced it had approved the pending sale and Congress has also been notified. It is expected to proceed, but there were no details about when the weapons would be delivered. The missiles will be installed on the 15 Canadian Surface Combatant ships, according to the U.S.

Raytheon Missiles and Defense of Tucson, Ariz., will build the weapons.

Last year, the Liberal government signed a deal that would lead to the eventual construction of 15 Canadian Surface Combatant warships in the largest single government purchase in Canadian history. A final contract, however, has not yet been signed.

Lockheed Martin offered Canada the Type 26 warship designed by BAE in the United Kingdom. Irving is the prime contractor and the vessels will be built at its East Coast shipyard.

Construction of the first ship isn't expected to begin until the early 2020s. But the Canadian Surface Combatant program has already faced rising costs. In 2008 the then-Conservative government estimated the project would cost roughly $26 billion.

The overall project is currently estimated to cost around $60 billion. The $60 billion price tag is now being examined by the Parliamentary Budget Officer.

That report was supposed to be delivered to the House of Commons government operations committee on Oct. 22 but has been delayed. No new date has been provided on when the report will be delivered.

“Approximately one-half of the CSC build cost is comprised of labour in the (Irving's) Halifax yard and materials,” according to federal government documents obtained by this newspaper through the Access to Information law.

But some members of parliament, as well as industry representatives, have questioned whether the CSC cost is too high. There have been suggestions that Canada could dump the Type 26 design and go for a cheaper alternative since the project is still in early stages and costs to withdraw could be covered by savings from a less expensive ship.

In 2017 then Parliamentary Budget Officer Jean-Denis Fréchette, estimated the CSC program would cost $61.82 billion.

The entry of the BAE Type 26 warship in the Canadian competition was controversial from the start and sparked complaints the procurement process was skewed to favour that vessel. Previously, the Liberal government had said only mature existing designs or designs of ships already in service with other navies would be accepted, on the grounds they could be built faster and would be less risky.

But the criteria was changed and the government and Irving accepted the BAE design, though at the time it existed only on the drawing board. Construction began on the first Type 26 frigate in the summer of 2017 for Britain's Royal Navy.