Federal government opts for off-the-shelf design to cut costs of new warships

HALIFAX — Ottawa is going to save time and money in the construction of its next generation of warships by buying and modifying an off-the-shelf design, the federal public services minister said Monday.

Judy Foote said during a news conference Tuesday that holding a competitive bid for an existing design will knock about two years off the process.

"The new approach significantly reduces the design and technical integration time," she said during a news conference at the Halifax shipyard.

Behind her, welding sparks flew while shipbuilders worked on the keel portion of the navy's first Arctic patrol vessel, which is due for completion by 2018.

Foote said the work on the patrol ships will continue into "the early 2020s," before any construction begins on the warships.

The Halifax yard is one of two construction sites contracted in the government's bid to build new warships, with the surface combatant fleet to replace the Iroquois-class destroyers and the Halifax-class frigates.

Over the past year the figures on just what the massive program will cost have been shifting.

Original projections put the cost of building 15 new vessels at $26 billion, but internal documents and reports published last fall suggest the bill could run as high as $40 billion.

Last month, Foote indicated the government would stop making public cost projections to allow for wiggle room as the project evolves.

She held by that approach on Tuesday, saying it would be "irresponsible" to interfere with the competitive bids by 12 pre-qualified firms.

However, she added that after the requests for proposal are complete, her department will make the costs public.

Kevin McCoy, the president of Irving Shipbuilding, predicted major savings.

"You're essentially saving 10 per cent of the cost if you can knock two years off the time period," he said after the news conference.

"A modern warship costs over $2 billion to design from scratch. ... Canada will not have to pay that money. There will be some licence fees still to be determined during the procurement process, but think of the effort it takes to design a warship from scratch. Canada won't have to go through that."

Commodore Craig Baines, the commander of the East Coast fleet, said the navy is still hoping for the 15 ships proposed originally.

However, he added that total could change depending on "how much capability goes into the ships and what Canada can afford."

"They'll end up where they end up," he said.

Foote said the Halifax shipyard will build "up to 15 ships," but also said during a news conference that the Royal Canadian Navy's requirements may change as the frigates are produced.

"It depends again on the requirements ... Those requirements might change as it goes on. So maybe we'll be able to accomplish what we need to accomplish with fewer ships than 15 ships in terms of the navy."

James D. Irving, the president of parent firm J.D. Irving Ltd., said he remains optimistic that the yard won't see its original task scaled back.

"We need 15 (ships), possibly we can do more than that," he said.

Foote estimates that about 2,400 jobs will be created at the peak of construction for the surface combatants and Arctic offshore patrol vessels.

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Michael Tutton, The Canadian Press