Question Period Note: PBO Report on Polar Icebreakers

• In 2021, the Parliamentary Budget Officer released a report on the Polar Icebreaker project, which concluded that a $7.25 billion dollar budget was necessary to build the two ships.
• Over the past several months, my department has cooperated fully with the Parliamentary Budget Officer's updated polar icebreaker project cost analysis by providing all requested information in support of this work.
• I thank the work accomplished by the Parliamentary Budget Officer. We will carefully examine the report's findings.

• On December 16, 2021, the Parliamentary Budget Officer (PBO) released a report on the Polar Icebreakers which concluded that a $7.25 billion dollar budget was necessary to build the two ships.
• On February 7, 2024, PBO informed the Canadian Coast Guard (CCG) that they were undertaking an updated cost analysis of the Polar Icebreaker project, and PBO requested information to support that work.
• PBO submitted follow-up requests in March and April 2024 for additional information on the Polar Icebreakers, as well as information on the Offshore Oceanographic Science Vessel, as they stated it would help inform their costing analysis.
• CCG was informed on June 3, 2024 that the updated PBO report would be released the week of June 17, 2024.
• Initial estimates for one Polar Icebreaker were developed over a decade ago.
• CCG recognizes that initial cost and schedule expectations were not accurate due to changes to the vessel’s design and consideration of new aviation regulations, as well as items such as engineering costs, construction, project management, and contingencies were underestimated.
• Once the negotiation of upcoming pre-build contracts with Chantier Davie Canada Inc. (CDCI) and the build contract with Vancouver Shipyards (VSY), CCG will be in a better position to disclose its updated cost estimate.

Project History
• Budget 2008 allocated funding for the acquisition of a Polar Icebreaker to replace CCGS Louis S. St-Laurent. Subsequent policy and funding approvals occurred between 2012 and 2021.
• The original Polar Icebreaker design was completed in 2014 by VARD Marine Inc. The project was then put in hiatus due to the sequencing decision to build the Joint Support Ships before the Polar Icebreaker at VSY. CCG refreshed the Polar Icebreaker design throughout 2019-2021.
• In May 2021, Canada announced that CCG would be procuring two Polar Icebreakers – one to be built at VSY, the other at CDCI, once CDCI was formally added to the National Shipbuilding Strategy (an Umbrella Agreement was signed with CDCI in April 2023).
• In July 2021, Canada awarded an Ancillary Contract to VSY to finalize design and undertake work in preparation for comprehensive construction engineering.
• In December 2022, construction engineering and long-lead items contracts were awarded to VSY. Work under those contracts remain ongoing in preparation for full rate construction to begin in 2025.
• In February 2024, work was completed on a prototype block at VSY. This marked an important step in the shipyard’s work on the project.
• Work on the Polar Icebreaker at CDCI is tentatively expected to commence in 2024, once the Ancillary Contract is negotiated and signed.

If pressed on the Polar Icebreaker budget:
• Since the launch of the National Shipbuilding Strategy 15 years ago, we have deepened our understanding of the costs associated with this work.
• The previous costing undertaken by Parliamentary Budget Officer was based on the Polar Icebreaker design from 2014. In 2022 the ship's design was optimized and lengthened to take into account aviation regulation changes. Currently, negotiations for an upcoming build contract for the Polar Icebreaker at Vancouver Shipyards remain ongoing, and negotiations still need to occur for pre-construction contracts for the Polar Icebreaker at Chantier Davie.