Canadian trade magazine FrontLine Defence takes a close look at the Halifax shipbuilder’s very powerful place in the government’s acquisition program (aka “National Shipbuilding Procurement Strategy“):
Editor’s CornerGovt Tackles Procurement Challenge
BY CHRIS MACLEAN
The NSPS, Canada’s most ambitious procurement in recent history, hopes to recreate and stabilize a national shipbuilding sector that can fulfill the federal needs. It seemed likely that the new government, particularly PSPC Minister, Judy Foote, would want to thoroughly examine the process and progress to date, and recent events have shown that to be true.
Minister Foote may have been surprised to realize just how much control a commercial entity has over the Canadian Surface Combatant program (the crown jewel of the NSPS). Irving Shipbuilding appears to be in almost complete control of the selection process for hull design and combat systems. This is not normal for a program of such magnitude and may not sit well with the Liberals. Notwithstanding ITBs and Value Propositionrequirements, it is questionable whether NSPS will achieve the job creation goals originally envisaged, particularly when the company is not taking the time to be briefed by small to medium sized Canadian supplier companies (more on that in our next edition).
As written earlier this year (FrontLine 2015, issue #2), “an up-to-date warship must be a highly integrated system of systems – with no individual function disconnected from another.” Experienced warship providers agree that the Systems Integrator should be in charge, however, the current construct for CSC has put Irving Shipbuilding in the driver’s seat. This was surprising since, despite the fact that the company has a long history in Atlantic Canada, it has never built a modern warship (Halifax class frigates were built in St-John, NB; and AOPS are basic patrol vessels with no significant combat system on board), and depends on Lockheed Martin Canada to do the complex Halifax Class Modernization. As the Prime Contractor though, Irving gets to prepare the RFP documents for the WD and CSI streams and share critical intellectual property with its American partners. According to the current construct, Irving will be awarded the design contract and then choose a much more experienced WD and CSI winner. What will that choice be based on? Few observers believe it will be based only on what is best for Canada. Conflict of interest or opportunity for collusion?
Should a commercial company be given the authority to choose the WD or CSI winners? Earlier this year (FrontLine 2015, issue #1), former ADM(Mat) Alan Williams soundly admonished the previous government for abdicating its responsibility by handing off such nationally important decision-making to a commercial entity, which by definition must make decisions based on what is profitable or beneficial to itself. Anyone who thinks Irving executives will choose an option that does not first benefit Irving, is deluding themselves.
Despite the fact that the Government has even less experience at shipbuilding, at least we know that its number one responsibility is to the Canadian people and is three-fold… in this case, it means getting the best product for the navy, at the best price it can, while improving economic prosperity where possible. In that order.
In particular, one may wonder if the acquisition process as it is presently defined – with separate CSI and WD streams and Primed by the steel cutter / welder experts – will lead to developing a whole new warship (with escalating risks, costs, delays) and becoming an integration nightmare.
Canada’s experience/expertise in warship design, combat system development or integration dissipated decades ago. Undeniable logic dictates that a project of this complexity should be undertaken by an experienced warship integrator (that includes WD, plus CSI, plus Platform System Integrator) to avoid disaster in the form of delays and cost…
Canada has taken a shipbuilder with limited experience with the complexities of modern warships, and placed it in a position of authority to determine which companies it prefers to work with. This is completely backward to the normal build process of any large and complex project. It’s like putting the construction foreman in charge of choosing which cyber security engineers he/she would prefer to work with when building the new CSIS facility.
Will the Liberal government push back from the bullying tactics that have been displayed, and reconsider if the best option for Canada wouldn’t be to change to the most capable design procurement strategy? It’s not too late to turn this ship around…