Saturday, 4 May 2013

Poor Polar Purchase Process

One of the federal government's big-ticket purchases is a set of icebreakers, called Arctic Patrol Ships, which will be built in Nova Scotia by Irving Shipbuilding. Another is a larger icebreaker, the CCGS John G. Diefenbaker, which will eventually get built here in North Vancouver by Vancouver Shipyards. The other items in the shopping list include fighter jets, warships, replenishment oilers, military helicopters, and search-and-rescue aircraft. Shall we see how those are going?

First, the eight ships (or fewer, if the price per ship is too high) in the Arctic Patrol Ship Project. As a first step, Canada did its research on suitable ships and then purchased the plans for the most suitable, the Norwegian Svalbard class for the price of $5 million. So far, so good. Since we pretty much want a Svalbard, let's build it, right? Well, no. Ottawa will pay Irving Shipyard $288 million just to alter the design.

The Norwegians designed and built the Svalbard for less than $100 million. We have the plans in hand, so building should be cheaper. Instead, we are putting almost three times as much as the Norwegians paid for a ship just to alter a set of already usable plans. If that were not enough, Irving is getting paid over ten times as much as it should be for the design work it is doing, according to other shipyards. No explanation from the government has been forthcoming.

(Update: The government has started its defence. Have a look at Chris Alexander--Parliamentary Secretary to the Minister of National Defence--here to see if it's sufficient. My favourite part was his tarring of a critical shipbuilder as "a failed NDP candidate" and of the reporter who broke the story as "the old Trotskyite, Terry Milewsky." Oh-ho, I know who won't be sitting by him at the annual Parliamentary Press Gallery Dinner. Milewsky stands by his story and chuckled at the jaw-dropping reference to Trotsky. The Defence Minister himself, Peter Mackay, eventually stated that a third of the money is to order ship parts that take a while to be delivered and the rest is because we pay "a premium" to build ships in Canada). 

(Update: Irving Shipbuilding's own defence is two-pronged. First, that "definition" work is different from the engineering that is done to create blueprints. As a former draftsman, I don't quite understand the distinction. The other is that the Canadian ship will be considerably larger than the Norwegian ship, which is fair enough and takes us part-way to an acceptance of what's going on).

(Update: Chris Alexander's statement in parliament that the CBC was given the cost breakdown for the Arctic Patrol Ships money is false, though the CBC is still trying to get the details as of today, 9 May 2013). 

The selection of the F35 fighter plane has been covered on this blog before (here, here, and here). The first problem with it was that the military and the government decided which plane to purchase without properly considering the options. The result is that we were going to buy a plane with an escalating price, high operating and maintenance cost, and technological problems still to work through. The second problem is that the government originally lied about it. We'll see what happens now that the selection has been handed to a different ministry (Public Works) and is starting from scratch.

The warships mentioned above are the Single Class Surface Combatant, which will replace Canada's destroyers and frigates. As no design has been settled on, there is little room for a scandal so far. However, the Iroquois class destroyers were supposed to be retired in 2010, at the very ripe age of 40, but will have their service life extended until whenever the replacement comes.

The replenishment oiler purchase is going to cost about twice what it should, and provide less capable ships, because the Conservative government cancelled existing plans upon coming into office and restarted the process. A years-long timeline of the procurement process is here.

(Update: another problem exists. The CCGS John G. Diefenbaker, a heavy icebreaker for the Canadian Coast Guard, is intended to be built at the same time as the replenishment ships in a shipyard that can only take one such project at a time. The scheduling conflict, as the linked site says, means that the government must "decide whether resupplying Canada’s navy or Arctic sovereignty is more important...").

The replacement of the fifty-year-old Sea King military helicopters is, according to the Minister of Defence himself, "the worst procurement process in the history of Canada." A replacement was selected back when Mulroney was in power and was cancelled for political reasons by Jean Chretien. The Sikorsky Cyclone that was selected under Paul Martin's government in 2004 is being designed for the Canadian forces and (as it turns out) will only be used by the Canadian forces. It was supposed to be delivered, ready for use, in 2009, but has been pushed back to later this year. The budget for these helicopters has already doubled.

Search and rescue aircraft "has been listed as a 'top priority' by every Federal government since 2003," though with no results so far. Here is how one story on the process begins.
After more than six years of delays, the federal cabinet is expected give approval this week to open a project office to buy new fixed-wing search and rescue planes, according to senior federal officials.
It is the first step in getting the stalled, nearly decade-old program to replace C-115 Buffalos and older model C-130-H transport aircraft.
The $3.1 billion replacement plan has been mired in controversy and bureaucratic in-fighting almost since it was announced by the Martin government -- obstacles that Prime Minister Stephen Harper's government has yet to overcome.
 As with the decision to buy the F-35 fighter, the decision was made early on by the Ministry of Defence to buy one particular type of plane. Specifications were rigged so that no plane other than the C-27-J Spartan would be considered.
One of the competitors, the Spanish-made EADS C-295, was shut out because its cruising speed was just 12 knots slower, and its cabin just 15 centimetres shorter, than the Defence Department’s specifications.

At this point, the procurement was taken out of MacKay’s hands. The National Research Council was asked to review the situation and, in 2010, it criticized a number of the Defence Department’s decisions and recommended that the specifications be rewritten.
The planes may arrive in 2017, fifteen years late.

As Auric Goldfinger stated in the James Bond book that bears his name, "Once is happenstance. Twice is coincidence. Three times, it's enemy action." By this standard, successive Canadian governments have been the enemy of the Canadian Armed Forces and, more generally, the Canadian people. There has been the occasional smart purchase, such as the used Leopard 2 tanks that Canada bought from the Netherlands in 2008. On the whole, however, military procurement of new equipment has been a national embarrassment.


There's a chance that, if the Conservative Party loses the next election, it will be because of its history of poor military procurement and worse damage control efforts (including bluster, untruths, and stonewalling) about the poor military procurement. Chris Alexander's ad hominem attacks just add a bitter flavour to the already unpleasant stew.

Update (26 June 2013): The next twist on the military helicopter procurement is this:
CBC News has learned that Public Works Minister Rona Ambrose has gone outside government and hired a consultant to study Sikorsky's work, and Canada's contract, to determine whether it's even possible for the U.S. helicopter giant to deliver the aircraft Canada ordered.

Update: 12 October 2013

The government has placed the navy's replenishment ships at a higher priority than the Coast Guard's big ice breaker, according to a CBC report. Other interesting points in the article:
  1. The government thought that building the replenishment ships in Canada would cost about 10% more than building them in Canada. Ten percent evidently sounded reasonable. However, I strongly doubt that the figure has any worth. As I have pointed out before, the British are getting four, much larger replenishment ships built for only $712.8 million Canadian. The two, smaller Canadian ships will cost us either $2.6 or $4.1 billion, depending on whether one accepts the government or the Parliamentary Budget Officer's figures. The British are achieving this by giving the work to a South Korean shipyard. If we did the same, or even asked the British to tack two more onto their order for us, could we get our ships for only $360 million? That's a lot bigger difference in price than 10%.
  2. We have a date for the start of construction of the replenishment ships: construction will start "in late 2016 with a target of having them in service by 2019-20, almost two years later than the last estimate contained in last spring's federal budget."
  3. As for the Louis St-Laurent (the Coast Guard ice breaker), it will have to "remain in service until 2021-22, but it will require as much as $55 million in refits and upgrades to keep going over 10 years." Fortunately, the ship is in good shape at the moment. The year in which her replacement will be ready was not included in the article. 
Update 12 October 2013

An October 4 story on the CBC web site says that government officials are meeting with manufacturers of military helicopters to explore alternatives to the Sikorsky Cyclone. Government officials met "executives of AgustaWestland and NH Industries, but also Cyclone manufacturer Sikorsky." They were handed "an abbreviated set of requirements" and given three weeks to say if they could meet the requirements. The copters being looked at are "Royal Navy HM-1 Merlin helicopters built by AgustaWestland," Eurocopter's NH-90, and not only Sikorsky's Cyclone but its other maritime helicopter, the MH-60 Sea Hawk.

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