The federal government is behind schedule in delivering new ships for the Navy and Coast Guard, resulting in serious cost overrun and increased potential risks of vessel shortage.
An report put forth by Auditor General Karen Hogan in February revealed that the National Shipbuilding Strategy has “significantly delayed” the delivery of many federal ships, increasing the risks of old combat and non-combat vessels being retired before new ones are replenished.
Bill Matthews, deputy minister of the Public Services and Procurement Department and chair to the interdepartmental committee in charge of overseeing the strategy, blamed the delays on “overly optimistic forecasts” of delivery schedules during the House of Commons Public Accounts committee on Tuesday.
“The initial schedules way back [then] were indeed not realistic,” Matthews said. “As time marched on, people realize that those initial schedules just weren’t going to hold, and there were adjustments made.”
Matthews noted that the outbreak of COVID-19 has also posed challenges to the project, an argument supported by the assistant auditor general and other deputy ministers who testified to the committee, despite the audit period concluding prior to the pandemic.
“We cannot yet know the full impacts of COVID on shipbuilding timelines,” Deputy Minister of the Defence Department Jody Thomas said. “Until we are over the pandemic, we will not have a complete and accurate picture of what the full impact has been, including anticipated delays on major procurement.”
Delays in delivering new ships can be very costly. According to Hogan’s report, the delays have resulted in an additional $111 million for building the Canadian surface combatant vessels alone. Indirect costs of labour could also add between $39.8 to $101.5 million.
The Navy and Coast Guard are taking measures to extend the lives of their existing ships while waiting for new vessels to arrive. But Matthews says vessels life extension will still bring about “substantial” and incremental maintenance costs as the ships get older.
In 2012, the Procurement Department entered into agreement with two Canadian shipyards, Vancouver Shipyard and Irving Shipbuilding, to build up to 28 vessels. Following a competitive process, the government announced in 2019 that Chantier Davie was pre-qualified as the third shipyard to build polar icebreakers for the Coast Guard.
Officials defended the delay in finalizing Davie’s selection as the third shipyard, saying the government’s decision was to ensure the requirements set out in the National Shipbuilding Strategy were met. Matthews added that the selection process is underway, and will hopefully conclude in coming months.
Fisheries and Oceans Canada Deputy Minister Timothy Sargent also defended the federal government’s decision to build two polar icebreakers instead of just one, saying that two vessels are needed in emergency situations.
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