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If anyone thinks that the cost quoted for Constellation, FREEM, or Type 31 is what Canada would actually pay is dreaming in technicolor. That is the wholesale price and not the drive away price. The Constellation for example is the cost of the hull and engineering spaces, everything else is costed separately

As for the CSC, our accounting is adding in the new jetties (A&B Jetty in Esquimalt, and new Ammunition jetty in Rocky Point, and upgraded jetties in Halifax), the LBTF on Hartland Point NS, the O&M on the class and fuel for the ships and wages of the sailors for 50 years. The cost of the project office and on and on.

The continuous build for the RCN and CCG is the right thing to do. We did it during the 50's with the St. Laurent Class which developed into the Annapolis Class in the 60's. But after the 280's and the two AOR's in the early 70's (the last gasp of an unofficial National Shipbuilding Program) we shut it all down only to invest a few billion to restart it again in the mid 80's. Only to shut it down again when HMCS Ottawa sailed away from Saint John NB in the late 90's.

So here we are, billions again to revive a strategic industry that is critical for the defence of Canada and NA. Will we throw that away for the promise from a slick foreign salesman? I certainly hope not.

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You have hit upon an important point with these numbers. The blending of capital costs of the ships with other elements - operational and physical infrastructure costs - obscures things more than anything else. For a kick-off, the only operational costs of interests in a capital decision to buy an asset are those that are incrementally higher (or God forbid, lower, which reduces the overall cost) than current costs. Ditto with extraneous capital costs associated with physical infrastructure. What you have identified are routine capital maintenance costs that are part and parcel of operating a navy. It is equivalent to assessing runway repairs for the F35 Project (maybe they did, not sure on the point). The unfortunate fallout is the general public having the vapours over the per unit cost that includes all these factors. On top of that is the length of time involved with the analysis - go beyond 5-10 years and you are Cloud Cuckoo Land with numbers that border on fantasy. Sure do the math if one is so moved but its relevance to decision making is limited.

For instance, over 50 years the Cdn GDP, taking no account of inflation or economic growth, will be in the $100 trillion range. Not sure if $80 billion for the navy over that period is particularly relevant or exciting, the moreso in that the $80 billion includes allowance for inflation and the 'Canadian Content Premium'. If you just want to count Federal expenditures, the number is equally meaningless, but does illustrate the limited scale of this cost ($400 billion per year or $20 trillion - rounded numbers, the actually figures are higher).

This is not to suggest 'who cares' and get on with it. But it does strike me that Canada can manage this investment.

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founding

Great observations Don, and I appreciate also the follow-on from my friend Ian Yeates -- he too knows of what he speaks.

I know you are aware, but many of our readers may not be familiar with the previous ship projects to which you refer. For any who might care, I have done a series of short articles in the Canadian Encyclopedia covering all of them (St Laurent / Iroquois 280 / Halifax CPF) as well as Cold War Antisubmarine Warfare that includes the SSN (nuclear submarine) studies; each entry discusses the reasons for the acquisition as well as their employment: https://www.thecanadianencyclopedia.ca/en/author/richard-gimblett

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Given our mostly unprotected Arctic , would it not make more sense to invest in a few nuclear submarines, which, from what I understand , may cost less than each of these CSC’s? We then may also be able to join AUKUS from which we have been embarrassingly excluded.

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founding

Knowing a little bit about this subject... Canada has looked into getting SSNs three times in the past -- each time assessing that the Navy is technically and operationally capable of running them, but the political and social capital costs would be a “challenge”. If we can’t build pipelines in this country, it’s not worth the Navy going down this radioactive hole. Watching with interest how the Aussies pull it off.

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Ah, "political and social capital costs ...."

And there you have it in terms of political leadership (or lack thereof).

You are entirely correct to point out that "if we can't build pipelines ..."

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founding

Thanks Ken. See my just-now reply to Donald Mitchell, which you may find informative.

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This country should avoid made-in-Canada projects until such time as its citizens have an underlying knowledge of, and passion for, technology and manufacturing. We used to (e.g. Avro Arrow, telecom switches by Nortel, automobiles and aircraft that were actually designed here) but have spent the last half century obsessed with notions of human rights that apply only to a tiny sliver of the population and not offending anyone. There is a bit of technical skill remaining in the automotive sector but mostly in assembling vehicles designed elsewhere.

Whenever we prioritize made-in-Canada the results are usually something like the BC FastCat ferry which failed to deliver on any of its design requirements, especially when reduced sailing time was eroded by severe wakes and increased loading/unloading times. The builders also tried to use the program to instruct a few hundred people in the skills of aluminum welding but the result was only defective hulls with cracks. They were sold off at a huge loss and we were left with nothing.

Truth is, government-funded projects have as their over-arching priority one fundamental goal: jobs for Canadians. This applies to our wildly inefficient healthcare system, our education system, and most recently the decision to contribute jaw-dropping funding to the creation of EV battery manufacturing plants (in the words of the CBC: "It will take 20 years for the federal and Ontario governments to break even on the pledge to give $28 billion in production subsidies for those two plants, the Parliamentary Budget Officer concluded.").

Sometimes we can't even get procurement from a non-Canadian source right. The handgun-replacement program for the Canadian Armed forces will have taken 15 years to get new handguns for our soldiers at a cost 3-4X what the Brits paid per weapon (oh, and the Brits also completed the program in 3 years).

Time for a modern-day CD Howe, Minister of Everything with the power to over-ride low-level bureaucrats. The day when our entire economy is based on selling each other (and a few foreign people) the same residential properties over and over has to be relegated to the past permanently.

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A very nice (although - honestly - cynical) analysis.

As for your final comment, that of wishing for a Clarence Decatur Howe, I do wish you luck but I am also cynical and see no possibility of such an outcome.

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This is an interesting corrective on the actual cost escalation in the NSS program. The perception of a bloated, out of control program is largely driven by the discrepancy between an estimate of $30 billion at the inception of the NSS and the current (apparently realistic) price of $80 billion. It'd be interesting to figure out the sources of that initial figure, although I'm guessing it was an effort to lowball the cost by unrealistically narrowing the scope and also using optimistic figures. That's the usual playing field for fighting over military programs: the proponents try to make the cost look lower by picking some number like flyaway cost for a new fighter, and the opponents try to put the cost in the worst possible light by citing a program cost that includes everything for a 40 year program life. It's pleasantly surprising that we've avoided replaying that game with surface combatant program, but maybe it's just because in this case the opposition party sees the objective as important enough to avoid playing the game, and the government sees partisan advantage in keeping it going.

The ability to sustain modern warships is probably the most important element of the National Shipbuilding Strategy. These are complex systems, and relying on external technical support would eat us alive in sustainment costs and also end up being a critical vulnerability in a time of crisis or war. The much-maligned submarine program has been so hard because Canada had to re-develop the capability to operate and sustain them. That sort of know-how is highly perishable, and the key insight of the NSS was establishing a sustainable, predictable stream of work so that the capability was retained. The problem is that a strong rationale like that can be used to justify a lot of bloated organizations, schedule slips, poor management, and inept execution. I'll keep my fingers crossed.

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Thoughtful article but depressing as hell. Two words to consider going forward, Leadership and Transparency. Leadership in procurements is, and has been lacking for years. Consider the triple fiascos of Sea King replacements, new fighter jets and, now, unnecessarily complicated, overly expensive, replacement naval ships. Transparency is anathema to governments as demonstrated weekly by our present federal government. Canada needs change from the top down.

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founding

Excellent survey of the waterfront Philippe!

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An excellent column!

I, like many people, am disgusted at so much incompetence in our government. In particular, the military procurement function (or lack of) has bothered so many of us and for very good reason.

Having said that, I always knew that this was a very difficult area, what with geographic concerns (which shipyard, which coast, etc.), language concerns, recognition that whichever shipyard is awarded a contract will do EXTREMELY well financially and the other shipyards will have to be propped up somehow, and so forth. Having said that (again!), M. Lagasse has provided a very lucid explanation for some of the complications and costs associated with military procurement.

It seems to me that the single biggest solution is to have an ongoing procurement process for many projects but the government approach that has been favored for decades of cutting military budgets to allow spending elsewhere and politicizing the remaining procurement has made such an ongoing sensible defense procurement process an oxymoron in today's Ottawa.

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Thanks to Philippe for writing this article, and to Matt and Jen for publishing it. I can't recall ever seeing a similar explanation of Canadian military procurement, aimed at a general audience.

I'm curious how much of the cost is custom software. Jennifer Pahlka's "Recoding America" talks about the mismatch between US government procurement processes (very top-down) and software development processes.

As an interested layperson, it'd also be helpful to have an understanding of the expected capabilities of these warships.

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founding

I’m by no means a military guru or defense policy wonk but it would seem reasonable to accept lower capabilities so long as Canada can meet its threats within the timeline that the threat is expected to be material. Alternatively, if Canada has no material domestic threats to worry about, the roles we can effectively support on foreign missions should set the parameters for capabilities. For example, Canada doesn’t need Iron Dome capabilities because Hamas is not here (though I note the first graduates will be exiting our universities any day now) but maybe we need better intelligence gathering and cybersecurity defenses.

Ultimately my point is Canadian military should have a strong identity and know what its good at and what it relies on its allies for. Small population, large airspace, massive shoreline, snails pace procurement, shrinking fiscal room, political interference from all sides... it’s not a context to support broad, long term, high tech, expensive military capabilities. If Canada can figure out what it wants to do well and how it wants to support allies then probably we can be good at a couple of things, just not everything.

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This entire procurement debate reminds me of the Avro Arrow, with Canadian investment added in as another complicator. Because we're a tiny population, we can't afford a lot of anything. So we try to cram everything into one platform, asking it to do far more than is reasonable at an absurd cost that the taxbase can't really afford. Our military planning should (in my vast knowledge opinion...ok pretty ignorant opinion) should be based on our participation as always being part of a team. The US or UK will always be part of the teream. What can we provide that supports what they already bring to the table?

We cannot functionally patrol our shores. We could do that with drones.

By the time these ships are actually in service, they will already technologically be out of date. So we'll likely restudy, and have huge add-on costs that delay things further. Stop studying, start building and we'll adapt as we have to. But that's not Canada's way.

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The whole problem of national defence in Canada, in a nutshell: Canadians will never, at any point, worry about our warships.

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founding

Good article. If something is'nt done for our armed forces, we stand to lose a lot more then 15 so far fictional ships

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"Most of the responsibility for this pathos falls on the Liberal governments"

Wrong.

Most of the responsibility for this pathos falls on the people of Canada.

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What sort of combat situations is the CSC designed for?

Will this acquisition be enough for our 2% NATO target?

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