National Shipbuilding Strategy: Standing Committee on Government Operations and Estimates—July 23, 2020

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Context

The National Shipbuilding Strategy (NSS) is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy (RCN) and Canadian Coast Guard (CCG), create a sustainable marine sector, and generate economic benefits for Canadians.

Key message

The government is delivering on its commitment to continue to renew the RCN and the CCG fleets, revitalize the shipbuilding industry across Canada, create middle-class jobs, and ensure Canada’s marine services have the modern ships that they need.

Progress on current work

• At Seaspan’s Vancouver Shipyards, the first 2 offshore fisheries science vessels have been delivered to the Canadian Coast Guard, with delivery of the third vessel expected in summer 2020. Work is ongoing on the first joint support ship (JSS)
• At Irving Shipbuilding, 4 Arctic and offshore patrol ships are under construction with the first to be delivered to the RCN in 2020. Design work on the Canadian surface combatant is advancing

Third yard

• Chantier Davie has pre-qualified to become the third strategic partner under the NSS
• Chantier Davie is now going through the next steps of the process which include a third-party assessment of the shipyard’s infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure
• Subject to successful negotiations, Canada intends to enter into an umbrella agreement with the third yard in early 2021
• The third yard will build 6 program icebreakers for the CCG
• The entire invitation to qualify process was overseen by an independent fairness monitor

Opportunities for other yards / Chantier Davie

• Across the country, opportunities exist for Canadian shipyards and businesses to win contracts for small vessel construction, repair, refit and maintenance
• Since 2012, Chantier Davie has been awarded $2.1 billion in NSS contracts. They are presently converting 2 icebreakers for the CCG, and are undergoing a process to become the third shipyard under the NSS

If pressed on the polar Icebreaker:

• the government is exploring procurement options for construction of the polar icebreaker. No decisions have been taken
• a request for information was issued on February 28, 2020 to obtain information on domestic shipyard capability and capacity to build a polar icebreaker which closed on March 13, 2020

If pressed on interim icebreaker capacity for CCG:

• the government awarded $817 million in contracts to Chantier Davie for the acquisition of 3 medium commercial icebreakers and conversion work. The first vessel began operations in December 2018, with the second vessel CCGS Jean Goodwill and third vessel CCGS Vincent Massey available by fall 2020 and spring 2021 respectively

If pressed on JSS (Note: Questions related to the budget for the project and technical requirements (including the design requirements) should be referred to the minister of National Defence):

• the Government of Canada is committed to the NSS and providing members of the RCN with the equipment they need to ensure their future operational effectiveness
• under the NSS, we are building whole new classes of ships, in new shipyards, with new workforces. The construction of a new class of ships is a complex endeavour and cost and schedule estimates are prone to fluctuations as the design of the JSS is finalized
• construction of the first JSS that began in June 2018 is ongoing
• The impact of COVID-19 on the JSS project has thus far been minimal. Early block construction of the first vessel has continued throughout the pandemic
• Award of the JSS build contract was announced on June 15, 2020. This contract will allow the transition to full-rate construction of the first ship, the construction of early blocks for which began in June 2018, and then the second ship

Background

Contracts under the National Shipbuilding Strategy

From 2012 to the end of 2019, the government signed approximately $13.78 billion in new NSS contracts throughout the country. These contracts are estimated to contribute over $17.04 billion ($1.54 billion annually) to gross domestic product (GDP), and create or maintain more than 15,521 jobs annually, through the marine industry and its Canadian suppliers between 2012 and 2022.

Table 1: National Shipbuilding Strategy contracts awarded 2012 to the end of 2019

Irving Shipbuilding Inc. (ISI)	Seaspan’s Vancouver Shipyards (VSY)	Chantier Davie	Other shipyards/companies
$4.74 billion	$1.84 billion	$2.05 billion	$5.14 billion

Table 2: Project budgets and delivery dates

Vessel	Delivery date	Budget
Offshore fisheries science vessel (OFSV) 1	June 27, 2019	$687 million
OFSV 2	November 29, 2019	$687 million
OFSV 3	Summer 2020	$687 million
Joint support ship (JSS) 1	2023	$4.1 billion
JSS 2	2025	$4.1 billion
Offshore oceanographic science vessel (OOSV)	2024	$331 million (under review)
Arctic and offshore patrol ship (AOPS) 1	2020	$4.3 billion
AOPS 2	Late 2020	$4.3 billion
AOPS 3	Fall 2021	$4.3 billion
AOPS 4	Fall 2022	$4.3 billion
AOPS 5	Summer 2023	$4.3 billion
AOPS 6	Winter 2024	$4.3 billion
AOPS 7	Winter 2025	$1.5 billion (estimate)
AOPS 8	Fall 2025	$1.5 billion (estimate)
Canadian surface combatant (CSC)	15 CSCs between 2020s to 2040s	$56 to 60 billion (estimate)
Multi-purpose vessel (MPV)	Up to 16 MPVs starting in late 2020s	$14.2 billion (estimate)

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