Cover photo: A Canadian submarine manoeuvring in the vicinity of the Halifax Naval Dockyard. Photo courtesy of Department of National Defence National Shipbuilding Procurement Strategy: Charting the Course Maritime Security Occasional Paper No. 17 Edited by Ian Wood Prepared by Tim Dunne © Centre for Foreign Policy Studies, Dalhousie University, Halifax, Nova Scotia, 2014. PART THREE: THE CANADIAN SURFACE COMBATANT Table of Contents What the NSPS has Delivered Ian Parker . 37 The CSC Statement of Requirements: Pushing the Envelope LIST OF ACRONYMS . i Eric Lerhe . 47 INTRODUCTION . 1 Value Propositions and NSPS: A Canadian EXECUTIVE SUMMARY . 3 Success Story? SUMMARIES OF PANEL PRESENTATIONS . 13 Kevin Arthurs, Lockheed Martin Canada . 53 PART ONE: SPECIAL PRESENTATIONS Canada’s NSPS Successes and Transitioning Joint Support Ship to CSC Challenges Brian Lavigne . 15 Jerry McLean, Thales . 58 Arctic Offshore Patrol Ship Improving Economic Outcomes: Value Lieutenant-Commander Jamie Sangster . 17 Proposition Considerations Scientific/Research Implications of Rich Billard, MDA Corporation . 61 the AOPS Jim Hanlon . 18 CONCLUDING REMARKS . 63 WORKSHOP PROGRAMME OF EVENTS . 65 PART TWO: NSPS: CURRENT PROGRESS AND ABOUT THE PRESENTERS AND CHAIRS . 67 POTENTIAL FUTURE CHALLENGES CANADIAN NAVAL REVIEW LATEST ISSUES . 75 Budget 2014, the CFDS Reset and the Impact on the NSPS David Perry . 20 Key Industrial Capabilities and the NSPS: Sailing toward Global Leadership Yan Cimon . 22 Independent Cost Estimating at the Parliamentary Budget Office Erin Barkel . 27 The NSPS Programme View Matthew Crawley . 30 DGMEM Director General Maritime Equipment Manage- ment DGMEPM Director General Maritime Equipment Pro- List of Acronyms gramme Management DND Department of National Defence DPS Defence Procurement Strategy DRDC Defence Research and Development Canada AAW Anti-Air Warfare FMF Fleet Maintenance Facility ADM Assistant-Deputy Minister FMG Fleet Maintenance Group ADM(Mat) Assistant-Deputy Minister (Materiel) FMI First Marine International AOPS Arctic Offshore Patrol Ship FWSAR Fixed-wing Search and Rescue AOR Auxiliary Oiler Replenishment Ship FY Fiscal Year ASUW Anti-Surface Warfare GAO Government Accountability Office ASW Anti-Submarine Warfare GDP Gross Domestic Product AWD Air Warfare Destroyer HCM FELEX Halifax-class Modernization Frigate Life Ex- BMD Ballistic Missile Defence tension BRIC Brazil, Russia, India and China ICEAA International Cost Estimating and Analysis C2 Command and Control Association CAF Canadian Armed Forces IP Intellectual Property CANEWS Canadian Naval Electronic Warfare System IRB Industrial Regional Benefit CANSEC Canadian Defence and Security Exhibition ISS In-Service Support CANTASS Canadian Towed Array Sonar System ILS Integrated Logistics Support CCG Canadian Coast Guard ISSCF In-Service Support Contracting Framework CCV Close Combat Vehicle JSS Joint Support Ship CFDS Canada First Defence Strategy KIC Key Industrial Capability CFPS Centre for Foreign Policy Studies MATCALS Marine Air Traffic Control and Landing System CMDO Chief of Maritime Doctrine and Operations MARCOM Maritime Command CPF Canadian Patrol Frigate MARSS Maritime Surface and Sub-Surface COTS Commercial Off-the-Shelf MOTS Modified Off-the-Shelf CSC Canadian Surface Combatant NGS Naval Gunfire Support CSI Combat Systems Integrator NRC National Research Council DAI Defence Analytics Institute NSPS National Shipbuilding Procurement Strategy DDE Escort Destroyer O&M Operations and Maintenance i ii OAG Office of the Auditor General OEM Original Equipment Manufacturer OGD Other Government Department OSI Open Systems Interconnection PMO Project Management Office PWGSC Public Works and Government Services Canada RCAF Royal Canadian Air Force RCN Royal Canadian Navy R&D Research and Development RFP Request for Proposal SAR Search and Rescue SHINCOM Shipboard Integrated Communications SHINMACS Shipboard Integrated Machinery Control SHINPADS Shipboard Integrated Processing and Display System SME Small and Medium Size Enterprise SOIQ Solicitation of Interest and Qualifications SOR Statement of Requirements SPA Single Point of Accountability SR&ED Scientific Research and Experimental Devel- opment SRU Ship Repair Units SSM Surface-to-Surface Missiles TB Treasury Board TBS Treasury Board Secretariat TRUMP Tribal-class Update Programme UAV Unmanned Aerial Vehicles iii iv 2 Maritime Security Occasional Paper 17 ambition, the evolving naval capabilities, and the budgets.” As a result of this concern over funding the Maritime Security Introduction Programme Research Fellows at CFPS felt that this was an opportune time to examine the current progress of the NSPS and the challenges ahead. The purpose of this workshop was to bring together invited Media were not invited but some follow-up academic re- representatives from industry, academia and government to search and articles emanating from the discussions are antici- identify, discuss and share their perspectives on the potential pated, again with non-attribution in effect per the Chatham challenges and issues as the National Shipbuilding Procurement House rules. The biographies of all of the speakers and panel Strategy (NSPS) proceeds through the various phases in the pro- chairs are available at the end of this report. curement process. In order to have a comprehensive discussion The event organizers would like to thank the generous spon- it was important to have representation from all these groups. We sors for making this workshop happen. We would also like to were very pleased to have good academic and industry attend- thank the CFPS staff along with Centre Fellows, faculty and ance. As well, the federal government representatives included student volunteers for their role in the successful completion of the Royal Canadian Navy (RCN), Department of National this well-attended workshop. Defence (DND), Public Works and Government Services Canada PWGSC, Canadian Coast Guard, and officers of Parliament, and representatives of the government of Nova Scotia were also Upcoming Events present. Chatham House rules were in effect so this report will not contain the private question and answer session details. CFPS is already in the planning stages for the second installment However the presentations given by speakers are available on the in this series of NSPS Workshops at Dalhousie University. The CFPS website (www.cfps.dal.ca). next workshop is entitled “National Shipbuilding Procurement Up to this point, the National Shipbuilding Procurement Strategy Part II – ‘Human Capital’ and the NSPS.” It will take Strategy (NSPS) has focused on contractor selection and design. place on Friday, 14 November 2014 at University Hall, There has been criticism but recently the Office of the Auditor MacDonald Building, Dalhousie University. General concluded that “[t]he NSPS should help the government If you are interested in attending, sponsoring or presenting, to procure federal ships in a timely, affordable manner, con- please contact the Centre for Foreign Policy Studies. sistent with the build-in-Canada shipbuilding policy.” However the broader environment may not be as favourable – leading the Auditor General also to note that “a gap appears to be developing between the CFPS [Canada First Defence Strategy] level of 1 4 Maritime Security Occasional Paper 17 Combatant; • In British Columbia Seaspan will build the Non-Combat Executive Summary Vessels Package, consisting of Offshore Oceanographic Science Vessels, Offshore Fisheries Science Vessel, Joint Support Ships, Polar Icebreaker, Offshore Patrol Vessel and The opinions discussed here are derived from the presentations Medium Endurance Multi-Tasked Vessels. given at the workshop. Let us begin by understanding where we • there will be a further $2 billion worth of smaller vessels are today with the NSPS. On 3 June 2010, the government of through competitions among other (smaller) shipyards; and, Canada announced Canada’s National Shipbuilding Procurement • repair, maintenance and refit contracts will be negotiated to Strategy. It stated as follows: sustain the needs of the government’s new fleet of ships. • for large ship construction, Canada will establish a strategic As with other major capital contracts, elements of the NSPS relationship with two Canadian shipyards, selected through work that is sourced offshore will be matched dollar for dollar by an open and fair national competition, and designate them as Industrial Regional Benefits (IRBs). Furthermore, under the sources of supply, one for combat vessels and the other for conditions listed in the federal government’s Value Proposition, non-combat vessels. shipyards are committed to invest in Canada to enhance the • for smaller ship construction, Canada will set aside the marine industry. individual projects for competitive procurements amongst The shipyards are modernizing their infrastructure to build Canadian shipyards other than the shipyards selected to build the ships efficiently. These improvements have been done at no the large ships and their affiliated companies. cost to the government of Canada. Vancouver Shipyards Mod- • for ship repair, refit and maintenance, these requirements ernization is estimated to cost $200 million and is on track for will be competed through publicly announced request for completion in October 2014. All production shops and equip- proposals. ment will be commissioned and ready to commence the building of the Coast Guard’s Offshore Fisheries Science Vessel in late The pillars