By K. Joseph Spears
On June 7, 2017 Canada’s Liberal government released its 113-page Defence Policy Review entitled Strong Secure Engaged. The review was a culmination of a year-long process that sought input from Canadians along with that of our allies, parliamentarians and subject matter experts. The goal was to set the stage going forward to 2027 to provide a roadmap for Canada’s Defence policy in a changing world and signify priorities and sustained funding for these policy goals. It also provides a twenty year funding commitment that is set out in the document. The day before, Canada’s Minister of Global Affairs announced a new direction in foreign policy that arguably interacts with the Defence policy review. Both of which demonstrate the need for Canada to have a robust naval capability.
The National Shipbuilding Procurement Strategy (NSPS), announced by the Conservative government in 2010 and since morphed into the National Shipbuilding Strategy (NSS), a renaming by the Liberal government, has been underway for the last seven years. NSS was created to restore Canada’s shipyards, marine industry and create sustainable jobs in Canada while ensuring our sovereignty and protecting our interests at home and abroad.
The first two decades of the 21st century have seen the changing geopolitical landscape and the rise of non-state actors which have created threats and instability throughout the world, such as piracy off the Horn of Africa.
These threats need to be countered, which requires capability and financial commitment.
There has clearly never been a stronger need for naval capability throughout the globe, which has been recognized by our NATO and other allied partners throughout the world. The continued role of the Royal Canadian Navy (RCN) is set out in the Defence Policy Review and essentially follows the Navy’s internal policy document Leadmark 2050. Canada is a maritime nation and our economy is increasingly dependent on the movement by sea of our exports which requires stability of the global commons. Canada’s RCN is involved as a long term committed player in maintaining stability of the global commons over the horizon, and out of sight of most Canadians. The Policy Review maintains that the RCN remains a blue water navy and has a persistent presence in offshore waters. The RCN needs tools to undertake this role which translates in the need for state-of-the-art warships, which are expensive. The present fleet of twelve Halifax class frigates are midway through their operational lifespans, and are now over twenty years old .
Canada’s Defence Policy Review made it clear that Canadian sailors, soldiers and airmen require the best equipment possible and Canada is committed to developing that capability. Building warships in Canada is a major challenge since we are moving from a standing start with the associated growing pains and start-up costs, and a steep learning curve after having abandoned naval shipbuilding in the mid-1990s upon completion of the Halifax class frigates. At this stage, seven years after the National Shipbuilding Procurement Strategy (NSPS) was announced, a lot of money has been spent, and we only have two partially completed vessels. The Policy Review has indicated that between 56 and $60 billion will be allocated for the design and construction of fifteen surface combatant ships to project completion beyond 2027. Previously documents related to NSPS mentioned up to fifteen warships based on original program costs of $26.3 billion.
As was noted in the article on Arctic Defence Policy elsewhere in this issue, this government is committed to proceeding with the Arctic Offshore Patrol Vessels (AOPV), and estimates that the first of these Harry DeWolf class vessels will be commissioned late in 2018. The Review is relatively silent on the need for new submarines and maritime patrol aircraft which are critical given the increase in nation states having an underwater and submarine capability throughout the world’s oceans. During the Cold War, Canada was a premier antisubmarine warfare player and developed capable antisubmarine technology for use in the North Atlantic.
As was seen in the article on Project Resolve, Canada’s Queenston class AORs to be built by Seaspan Shipyards and slated for delivery in or about 2021, but may well be delivered later. They are next in line for construction at Seaspan’s North Vancouver shipyard after the completion of three offshore fisheries science vessels (OFSV) and one offshore oceanographic scientific research (OOSV) vessel for the Canadian Coast Guard.
The real unknowns in Canada’s combat vessel program relate to the timeline to completion, and the selection of vessel type and design. Construction will commence after delivery of the last of the AOPV vessels, which will see five and perhaps six vessels being built by Irving Shipbuilding in Halifax in the early 2020s. There has some commentary that there might be a delay of 1-2 years between completion of the AOPV and commencement of construction of the new surface combatants as the actual design has yet to be selected and developed, and a possible mixture of warship types, antisubmarine versus air defence and command vessels needs to be determined. The review is silent on selection of the class of vessel that will be RCN’s new surface combatant, in part because it is up to international bidders to make the determination of the mix of types of warship to be provided. However, the new Defence Policy confirms that Canada remains on target to replace twelve Halifax class frigates and four Iroquois class destroyers with fifteen new warships.
In a 2016 article in Frontline Defence, James Parker spoke about the complexity of modern warship design: “The modern warship is a highly integrated system of complex systems, and the hull represents a modest part of the cost, maybe ten to fifteen per cent. Platform systems (propulsion, power generation and distribution, safety, navigation) and combat systems (such as sensors, weapons, command and control) have become more and more sophisticated, and are evolving at about the same speed as our cell phones and personal computers. Moreover, all these systems, and the platform itself, are intimately interrelated. The performance of the ship doesn’t depend on the performance of every single component but on the quality of the whole integration.”
Minister of Public Services and Procurement, Judy Foote, announced on June 13, 2016 that Canada will purchase and modify an off-the-shelf design for the new warships, instead of designing them from scratch. The minister indicated that although the vessels will still be built in Canada, Canada will not seek a designed-in-Canada solution as it did with the Halifax class frigates and the highly successful Iroquois 280 class destroyers that were built in the early 1970s. Foote announced that only designs from ships already in service or mature existing designs would be considered. The minister said a competitive bid for an existing design would knock about two years off the process and save money. It was thought that this would save $2 billion in research and development expenses, which could allow for more ships to be built and the integration of more advanced technology with increased capability, over the long term. It was originally expected that bids would be received in the spring of 2017 but that time has been extended to the fall of 2017.
At this time, the procurement process with prequalified bidders is underway. No formal bids have yet been submitted. It remains unclear when the bidding will close. Some have suggested in the fall of 2017, followed by an evaluation of the bids and a final decision on vessel design. This will likely take a lengthy period of time. That said, there are various unique Canadian requirement to an off-the-shelf decision. Some commentators have indicated this will de facto result in a completely new design, with all the attendant risk exposure to redesign.
In the meantime, Canada has awarded a contract to the Canadian subsidiary of Thales, a major French multinational defence contractor for maintenance and service of both the AOPV and Queenston class resupply vessels. This contract has a value of over $5.2 billion over a possible 35 year term. Some in the media have expressed concern about contracting all of this maintenance work with one single vendor. While this is a legitimate concern, one must also consider the cost savings that might be negotiated with one vendor. This is seen by some as a way of privatizing some of the ship repair capability that is currently carried out exclusively by the Canadian Navy.
The bidding process has caused a great deal of concern to bidders as Canada requires limited licences to the intellectual property from successful bidders. Canada’s position is that it requires licences for the use and maintenance of all technologies utilized in the designs to enable it to maintain these vessels over their lifetimes.
NSPS originally estimated the cost of acquiring combatant ships at $26 billion, but some commentators suggested that the cost could rise as high as $60 billion. This was the finding of the Parliamentary Budget Officer in a recent report when all project costs were considered over the life of the project. This would be by far the largest procurement in Canadian history. Although some tinkering may take place around the edges, the government is fully committed to acquiring the naval assets in question, and funding for them will need to be allocated with priority. Many of the assets to be acquired will replace assets which have already been scrapped, or will be ready to be scrapped when replacements are ready.
It is full speed ahead with NSS to design and build the surface combatants. It should be noted that the United States Navy is also seeking proposal for twenty warships of a similar type, which may dilute the interest of potential bidders. Presently there are twelve prequalified bidders. There is some concern that the Canadian modifications essentially create a new vessel design.
In the interim, while this process is taking place, the well-used twelve Halifax class frigates delivered in the 1990s have all been given midlife modernization upgrades which may have extended their lives by another twenty years to perhaps to 2036 with new weapon systems upgrades and computer systems. They remain highly capable antisubmarine warfare vessels when combined with the new Sikorsky CH-148 Cyclone maritime helicopter operated by the Royal Canadian Air Force off the stern. The loss of the Iroquois class 280 destroyers that were modernized as both command and air defence vessels, which were in use for over forty years, leaves a hole in Canada’s naval capability, which needs to be addressed through the Canadian surface combat requirements of NSS.
Modern warships are extremely complex integrations of numerous systems to acquire and track targets, and guide lethal power at adversaries. With these systems comes a great deal of proprietary information and intellectual property which is of enormous strategic value to the vendors and the nation states hosting these vendors. Manufacturers go to great length to ensure their systems are protected from cyber attacks, and go to equally great lengths to make sure their technologies are not illicitly acquired by competitors through industrial espionage or espionage involving nation states. Western governments want to make sure that technologies developed for their nations’ defence systems do not fall into the wrong hands, either to be “reverse-engineered” or to be used against friendly nations. Finally, some countries that were past customers for warships and paid for proprietary technology, do not want the technology to be available for “free” to another potential foreign buyer, such as Canada. In a recent instance, reported by the CBC on August 11, one NSS bidder was prevented from bidding because its government refused to deal with the Canadian shipbuilders, and insisted on dealing with the matter though government-to-government negotiations and the exchange of formal diplomatic notes.
Canada’s Defence Policy Review has confirmed the strategies established in the past, and confirms Canada’s commitment to the successful completion of the NSS process in obtaining fifteen surface combatants for the RCN. These warships are expected to be in use for over forty years, so it’s important to ensure that the design of these ships takes into account the increasingly collaborative role that NATO forces will need to play to gain maximum value from ever-greater technical complexity and the ever higher-cost Navy assets. Throughout the design, development and construction process, Canada needs to be flexible to ensure that she gets the best warships for the money.
K. Joseph Spears has been involved in various aspects of ship building and has been a frequent commentator on the importance of the global maritime commons to Canada’s economic future. Joe is an associate editor at Frontline Defense magazine and has been invited to speak at U.S. Navy’s War College. Joe can be reached by email at firstname.lastname@example.org.