Thursday, June 7, 2018

RCN Supply Ship Cost Increases by $1.1 Billion; Now over $3 Billion

By: David Pugliese, National Post 

At one point, the first ship was supposed to arrive in 2012. That date has changed a number of times. DND is now hoping for delivery in 2022 or 2023

Taxpayers will have to spend an additional $1.1 billion to build two new supply ships for the Royal Canadian Navy, the federal government has revealed.

The cost of building the Joint Support Ships, or JSS, had been pegged at $2.3 billion. However, the government ordered a review of that figure and in an email to Postmedia procurement minister Carla Qualtrough’s office confirmed the cost is now expected to be $3.4 billion.

Of the $3.4 billion price tag, the actual cost of building the two ships accounts for a little more than 60 per cent, Finn said. Pat Finn, the head of procurement at the Department of National Defence, said the new price tag includes items the government had not previously included. In some cases equipment for the ship has been purchased, so the government has a more accurate understanding of what it actually cost, Finn said in an interview Monday. The inflated figure also takes into account new infrastructure and delays with the program which have driven up its price as the cost of materials has increased over the years.

“The build period has changed quite dramatically,” Finn acknowledged.
Workers watch as the main girder of a new 300-tonne gantry crane is lifted into place at Seaspan Vancouver Shipyards in North Vancouver, B.C., on Wednesday April 2, 2014. Darryl Dyck/Canadian Press
At one point, the first ship was supposed to arrive in 2012. That date has changed a number of times with the government later hoping for a 2018 delivery and then a 2019 arrival for the first vessel.

DND is now hoping for the delivery of the first ship in 2022 or 2023. Construction of some initial portions of the vessels will begin at Seaspan Shipyards in Vancouver this summer, Finn said, which it hopes will head off any potential layoffs of skilled employees at the shipyard.

Finn said the new costing model for the JSS is more akin to the one used by the parliamentary budget office. That office had an even higher estimate for JSS when it concluded in 2013 that the final tally for taxpayers would be $4.13 billion.

The Joint Support Ships are seen as being critical for the navy, as they will provide fuel and supplies for warships at sea.

The navy retired its last two aging supply ships years ago, one after being damaged beyond repair in a fire, the other because of excessive corrosion. After their retirement the Canadian military had been relying on the Spanish and Chilean navies to provide it with supply vessels for short periods of time.

Because of the delays to the JSS program, the previous Conservative government entered into agreement with Davie Shipyards in Quebec to lease a commercial vessel converted into a supply ship. That ship, the MV Asterix, is at the heart of the federal government’s case against Vice-Admiral Mark Norman.

In March, the Norman was charged with a single count of breach of trust. The RCMP accused Norman of warning Davie in the fall of 2015 that Liberal cabinet ministers wanted to derail the Asterix project. When word of the Liberal plan leaked to the media, the resulting embarrassment forced the Trudeau government to back down on its plans and the conversion of Asterix proceeded.

Norman was put under investigation and Prime Minister Justin Trudeau predicted on two occasions the officer would ultimately end up in court.

Norman denies the charge and has said he looks forward to clearing his name. A date for the trial has not yet been set.

Asterix is considered a rare achievement in Canadian military procurement in that it was delivered on time and on budget. The supply ship is now at sea with Royal Canadian Navy and is headed to a major military exercise to begin later this month.

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