Canada to make $33-billion ship procurement

On Wednesday, the Canadian Government announced the awarding of two huge shipbuilding contracts worth a total of $33 billion.

Most of the money will go to build ships for the Royal Canadian Navy, making this the largest military procurement in Canadian history.

According to news reports, the larger of the two contracts, totalling $25 billion, will go to Irving Shipbuilding of Halifax for the construction of 21 combat vessels: 15 warships to replace Canada’s existing destroyers and frigates and 6 Arctic/Offshore Patrol Vessels. An additional $8-billion contract will go to Seaspan Marine of Vancouver for the construction of 7 non-combat vessels: 2 Joint Support Ships for the Navy and 5 Coast Guard ships. Altogether, the contracts provide for the construction of 28 vessels, 23 of which will be for Navy service.

Previous estimates of the cost of these procurements put the cost of the 15 surface combatants at roughly $26 billion and the Arctic/Offshore Patrol Vessels at about $3 billion, for a total of around $29 billion. The Joint Support Ships were estimated to cost up to $2.6 billion, and the Coast Guard ships about $1.2 billion, for a total of up to $3.8 billion.

All told, these figures add up to around $33 billion, comparable to the announced size of the contracts. But if these earlier cost estimates are anywhere near correct, it is not clear how $8 billion of the work is expected to end up in Vancouver. Will some of the component work for the Halifax contracts be done in Vancouver?

Whatever the answer to that question may be, expect the total cost of these projects to rise in years to come.

Tags: Arctic/Offshore Patrol Vessel, Canadian Surface Combatant, Coast Guard, Defence policy, Joint Support Ship, National Shipbuilding Strategy, Royal Canadian Navy