Liberal government to hire shipbuilding expert after costs soar

The new Liberal government has moved to reform Canada's costly National Shipbuilding Procurement Strategy, promising a new system to evaluate costs, launch quarterly public updates and provide annual reports to Parliament.

Public Services Minister Judy Foote is also hiring a shipbuilding expert to advise the government, filling a gap in expertise in her department, tasked with managing the massive multibillion-dollar ship program, CBC News has learned.

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In an indication of how swiftly the government intends to move to repair the shipbuilding program, the government is expecting to begin its interviews of experts as soon as Friday.

The National Shipbuilding Procurement Strategy was developed by the government to assist in rebuilding the Canadian industry and providing domestic capacity to rebuild the fleets of both the navy and the Coast Guard.

Budget problems

The program had an initial budget of some $39 billion to build as many as 30 large ships for the two capital fleets.

But the program has moved slowly and build contracts have only been let for two of six classes of ships. The NSPS is also now beset by budgetary problems.

CBC News on Tuesday reported massive cost increases in one of those projects to build new warships for the navy to replace its aging frigates and destroyers.

The budget for the Canadian Surface Combatant program had been set years ago at $26.2 billion. But CBC News learned that's nowhere near enough cash for 15 modern warships as planned.

To be quite blunt, we got a lot of it wrong.- Vice-Admiral Mark Norman

The build portion of that budget was set at $14 billion, but it's now estimated to cost $30 billion, bringing the roughly estimated cost for the whole program to more than $42 billion. Those costs were confirmed Wednesday by navy commander Vice-Admiral Mark Norman in an exclusive interview with CBC News.

Norman admitted Canadians had not been given accurate information about the growing price of new warships. He said it flowed from a lack of professional capacity and maturity across the shipbuilding sector in Canada, from navy officials, to procurement bureaucrats right on down to shipbuilders.

"We didn't have that mature relationship," Norman said. "We didn't have the mature industry, and so there was a lot of guessing and speculation going on. And to be quite blunt, we got a lot of it wrong."

The navy commander said it was time to start having a more transparent public conversation about how many ships the navy needs, what it needs them to do and what the government should be prepared to pay for it.

New direction

That view seems to align with the government's new direction on shipbuilding.

Last week, CBC News revealed the ministers of defence and public services had been warned the government needed to institute a four-point "Action Plan" to get the program back on track.  

Foote and Defence Minister Harjit Sajjan were warned the government needed to hire new staff to increase its capacity to manage the massive shipbuilding program and to "hire a senior shipbuilding expert to advise the government of Canada."

Government will be asked to make some significant decisions soon.'- Briefing to ministers

They were told costs were rising for the navy and for the coast guard where the budget for three fisheries science vessels had ballooned 181.6% from an estimated $244 million in 2009 to $687-million in 2015.

There was also a warning that another planned coast guard ship, the Offshore Oceanographic Science Vessel, would need to have its funding envelope increased, as would the warship program.

"Government will be asked to make some significant decisions soon, including one on whether to approve the funding of OOSV and additional funding for [the frigate replacement]," Foote and Sajjan were told.

It appears the government is acting on those warnings and recommendations now.

The Liberal party campaigned on a promise to meet the commitments that were made as part of the National Shipbuilding and Procurement Strategy.

"Unlike Stephen Harper, we will have the funds that we need to build promised icebreakers, supply ships, arctic and offshore patrol ships, surface combatants, and other resources required by the navy," the platform said.