Judy Foote, Canada’s minister of public services and procurement, and Harjit Sajjan, minister of national defence, were on hand at Vancouver Shipyards in North Vancouver Tuesday afternoon to announce a $230-million design and engineering contract for the largest ships that will be built in the North Vancouver shipyards as part of the federal national shipbuilding strategy.
The contract, a significant milestone, will allow the shipyard to complete work over the next two years on finalizing the design, technical specifications and cost estimates for two 174-metre navy joint support ships.
Finalizing the design and cost of the ships, which will take about two years, is expected to mark an important moment in the shipbuilding program.
Only after that work is completed will Ottawa be in a position to issue a contract to actually build the joint support ships. That contract is expected to be one of the largest of Seaspan’s federal contracts under the national shipbuilding program.
The project budget for the two ships is currently estimated at $2.6 billion. But that budget was developed over a decade ago under the previous Conservative government. An auditor general’s report in 2013 flagged the $2.6 billion figure as unrealistic, pointing out the Navy had already been forced to drop the number of support ships from three to two in order to fit the budget. The auditor general suggested a figure of between $3 billion and $4 billion as more realistic.
Foote appeared to acknowledge that in her answer to questions about the joint support ship budget on Tuesday, commenting that “unrealistic numbers” put forward initially for a number of the federal ships had been challenge for the government. In many cases, original budgets didn’t include “overall maintenance costs, inflation, equipment costs, labour costs,” said Foote.
The life-cycle budget for the three fisheries ships currently under construction at the yard was originally pegged at $244 million under the Conservatives, but almost tripled to $687 million by the time construction contracts were awarded.
Foote said the final budget for the joint support ships won’t be known until the detailed design work has been completed.
But both Foote and Sajjan hinted in their speeches Tuesday that controlling costs is an issue for Ottawa, with Foote referring to federal officials who are working with the shipyard “to effectively manage costs and to ensure Canada gets best value.”
Sajjan referred to Seaspan carrying out work on the federal ships “while driving down costs to ensure they can be built at a reasonable price, which is very important.”
Federal politicians on hand Tuesday also emphasized the importance of the national shipbuilding program to both the local and national economy.
“Seaspan is a very important member of the North Vancouver community,” said North Vancouver MP Jonathan Wilkinson, pointing out the shipyard now provides 1,100 “well-paying middle class jobs” for about 750 tradespeople and over 350 office staff.
Vancouver Shipyards awarded about $200 million in subcontracts to 383 Canadian companies in 2016 alone, said Foote.
Sajjan said when completed, the joint support ships will mean greater independence for Canada’s military. “Our Navy won’t have to rely on our partners and allies to re-supply at sea,” he said.
“It will enable us to act independently in the defence and security of our country,” he added.
Once design of the joint support ships is finalized, it is expected to take about three years to build the ships.
Construction on the first ship is currently scheduled to begin in 2018. The first ship is scheduled to be ready in 2021, according to Ottawa, with a second ship to be completed in 2022 – although that timeline has also been described as unrealistic by critics.
Ministers were on hand Tuesday for joining of final “grand blocks” that make up the hull of the John Franklin, the first of the 63-metre offshore fisheries vessels under construction at Seaspan as part of the national shipbuilding program.
Work will now continue on the internal systems of that ship, scheduled to be launched in the fall of 2017 and delivered to the federal government three months after that, said Brian Carter, president of Vancouver Shipyards. Work on the second and third fisheries vessels is also currently underway at Seaspan.
Between the fisheries vessels and the joint support ships, the shipyard will also build an 86-metre oceanographic vessel. Design work on that ship is currently underway although Seaspan has not yet been awarded a construction contract to build the ship. The budget for that ship was originally set at $144 million.
