Question Period Note: Defence and Marine Procurement – General accomplishments and project status

Suggested responses and background information is provided on defence and marine procurement accomplishments and status of projects.

Note: Questions on defence procurement delays or the Department of National Defence (DND) questions should be directed to the Minister of National Defence.

• Canada’s Defence Policy: Strong, Secure, Engaged, reaffirms the Government’s commitment to ensure that Canada has an agile, multi-purpose military and that members of the Canadian Armed Forces are well equipped. We are delivering on this commitment
  • Over the last 2 years, significant progress has been achieved on major defence and marine procurement projects and activities
  • Over two thirds of projects under Strong, Secure, Engaged are completed or underway
  • For example, National Defence has provided the Canadian Army with Medium Support Vehicle Systems which are currently deployed in Latvia
  • Additionally, the Royal Canadian Navy’s Halifax-Class Frigates have been modernized and deployed overseas

Most recently:

• On September 10, 2020, we awarded a $155-million contract to purchase the Motor Vessel (MV) Villa de Teror as an interim measure to replace the MV Madeleine ferry. The vessel, renamed the Madeleine II, was delivered on February 18, 2021 and is expected to enter into service in summer 2021
• On September 25, 2020, the arrival of the first Fixed-Wing Search and Rescue (FWSAR) CC295 was celebrated in Comox, British Columbia, and the official name, “Kingfisher”, was announced
• On October 9, 2020, the third and final Offshore Fisheries Science Vessel was delivered to the Canadian Coast Guard (CCG)
• On November 6, 2020 we announced a $182-million contract award to General Dynamics Mission Systems–Canada, from Ottawa, Ontario, for in-service support on 6 Halifax-class combat systems (HCCS)
• On November 19, 2020 an Advance Contract Award Notice (ACAN) closed signaling our intention to enter into a contract with Chantier Davie for required vessel life extension work on the CCGS Louis S. St-Laurent, Canada’s largest icebreaker. Contract award is anticipated mid-Summer 2021 with work scheduled to begin Spring 2022
• On November 23, 2020, the second medium icebreaker, the CCGS Jean Goodwill, was delivered to the CCG with the third vessel expected to be in service in 2021
• In December 2020, the 2 new Challenger aircraft returned to Canada after completion of the final modifications
• On February 18, 2021, we announced a $453.8 million (taxes included) build contract award to Seaspan’s Vancouver Shipyards for the construction of one Offshore Oceanographic Science Vessel. Construction began on March 25, 2021
• On May 6, 2021, the Government of Canada announced that it will move forward with the construction of 2 new Polar icebreakers as part of the National Shipbuilding Strategy (NSS). Seaspan’s Vancouver Shipyards will engineer and construct 1 vessel while the other will be engineered and constructed at Chantier Davie, pending the successful completion of the ongoing selection process to select it as the third strategic partner for large ships construction under the NSS
• As of May 7, 2021, 19 Royal Australian Air Force F/A-18 Hornet aircraft being acquired under the Interim Fighter Capability Project (IFCP) have been delivered to Mirabel, Quebec, to undergo the required Canadian upgrades for integration within the CF-18 fleet

If pressed on impacts of COVID-19 to budgets and schedules:

• Due to COVID-19, several defence procurement projects slowed, including the construction and maintenance of ships
• Given the uncertainties associated with the duration of COVID-19 and related strategies, the full schedule impact to projects is not yet fully understood
• That said, we recognize that COVID has impacted the defence sector, and are working closely with industry to mitigate budgetary and schedule impacts of existing procurements
• Our government is taking strong action to protect our economy, jobs, and the health and safety of Canadians during the global COVID-19 outbreak
• Canada continues to monitor the situation, analyze potential impacts and explore all possible financial measures available to support the defence and marine industry and protect Canada’s long term national security interests
• We are currently assessing the impact of COVID-19 on the delivery of ongoing and future major procurement projects
• We urge all employers during this critical time to follow the recommendations of public health officials, so that workers are kept safe in this extraordinary situation

If pressed on ‘excusable delay’ requests:

• In order for Canada to consider excusable delays, certain conditions set out in the contracts must materialize, including a requirement for contractors to notify Canada and to submit a work around plan
• Therefore, in the specific context of COVID-19, contractors wishing to submit an excusable delay claim to Canada should review their contracts and proceed in accordance with the provisions they contain

If pressed on the status of Defence Procurement Canada:

• The government continues to seek opportunities to enhance defence procurement

At the same time important progress is being achieved against numerous major defence and marine projects, and key equipment is being delivered including new fixed-wing search and rescue aircraft, the Arctic and Offshore Patrol Ship, Fisheries Science Vessels, the Medium Support Vehicle System and Tactical Armoured Patrol Vehicle.

Major progress on defence and marine procurements over the last 2 years:

Canadian Surface Combatant for the Department of National Defence (DND):

• The Canadian Surface Combatant (CSC) project is the largest, most complex procurement undertaken by the Government of Canada, with a total estimated project budget of $56 billion to $60 billion
• On February 7, 2019, the CSC Design Contract was awarded to Irving Shipbuilding
• In February 2019, the Government of Canada and Irving Shipbuilding selected Lockheed Martin Canada following an open and transparent competition for the design of 15 new CSC that will be built at Irving Shipbuilding’s Halifax Shipyard. The CSC design will be based on BAE’s Type 26 Global Combat Ship
• In early November 2019, Irving Shipbuilding and Lockheed Martin Canada were authorized to progress to the Preliminary Design phase of the design process; the second of the 4 design phases
• On April 13, 2021, Canada entered into an arrangement with the United States Government to purchase 100 SM-2 surface-to-air missiles for the CSC project via the Foreign Military Sales Program, at a cost not to exceed USD 500 million
• On May 10, 2021, the United States Congress was notified of a proposed Foreign Military Sale of AEGIS Combat System and related equipment for the CSC project to the Government of Canada at an estimated cost of USD 1.7 billion
• Navantia, an unsuccessful bidder for the competitive CSC Request for Proposals has applied to the Federal Court for a Judicial Review of the results of the bid evaluation
• With respect to the Navantia Application for Judicial Review and the application of Section 38 of the Canada Evidence Act: while we cannot speak to specific content at issue in the materials, the Attorney General of Canada received notice that sensitive or potentially injurious information was contained in some of the documents required to be produced to Navantia
• The Attorney General has the responsibility, by law, to protect such privileged information from disclosure through Section 38 of the Canada Evidence Act, in order to prevent potential injury to national security, international relations or national defence
• The Parliamentary Budget Officer’s report on the CSC was published on February 24, 2021. Shipbuilding is highly complex, and Canada continues to work with shipyards and industry to address ongoing challenges, including costs, estimated timelines and productivity

Acquisition of 360 Light Armoured Vehicles:

• On August 16, 2019, in support of Canada’s Defence Policy Strong, Secure, Engaged, the Government of Canada announced its intention to acquire up to 360 armoured combat support vehicles (ACSVs) and that it was in the advanced stages of negotiating a contract, through a non-competitive process
• On September 5, 2019, Public Services and Procurement Canada (PSPC), on behalf of National Defence, awarded a contract to General Dynamics Land Systems – Canada (GDLS-C) valued at approximately $2 billion for 360 ACSVs, initial spare parts, technical manuals, and training
• In May 2020, production of the first ACSV began in London, Ontario at the General Dynamics Land-Systems Canada manufacturing facilities. These new vehicles will fulfill a variety of combat support roles such as that of Troop/Cargo Vehicle, ambulance, command post, and mobile repair and recovery
• On December 17, 2020 the first Troop Cargo vehicle variant came off the production line; a total of 11 vehicles were scheduled and signed off for factory acceptance for FY 2020 to 2021
• The contract will support over 1,700 jobs at GDLS-C site in London, Ontario and will benefit a large number of businesses

Two Transport Canada ferries to be built at Chantier Davie:

• On May 22, 2019, an Advance Contract Award Notice (ACAN) was issued, signaling the Government of Canada’s intention to enter into a contract with Chantier Davie for the construction of 2 new ferries for Transport Canada. Other interested suppliers had 15 calendar days to submit a Statement of Capabilities to show they met the requirements laid out in the ACAN. None were submitted
• On June 19, 2019, the Government of Canada announced that it was entering into contract negotiations with Chantier Davie of Lévis, Quebec, for the construction of the vessels
• On November 14, 2019, Lengkeek Vessel Engineering Inc. & Knud E. Hansen A/S Naval Architects (Joint Venture) were awarded a $3.1 million contract to provide expert advice and technical oversight to Transport Canada throughout the project leading to and including the construction
• In November 2019, the Government of Canada awarded an initial Ancillary Contract to Chantier Davie to establish a Project Management Office and initiate various studies to support design and construction of the new vessels. As of September 14, 2020 the contract is valued at $3.334 million (tax included)

Interim ferry:

• On July 2, 2020, the Government of Canada issued an ACAN, signaling its intention to purchase the Motor Vessel (MV) Villa de Teror as an interim measure to replace the MV Madeleine until the new vessel being built at Davie is ready for service
• On July 20, 2020, the ACAN closed, and a $155-million contract was signed for the acquisition of the vessel on September 10, 2020
• The vessel was delivered and accepted by Canada on February 18, 2021 and is expected to enter into service in summer 2021

Selection of a third Canadian Shipyard under the National Shipbuilding Strategy to build 6 Program Icebreakers for the CCG:

• To respond to evolving federal shipbuilding requirements, PSPC is carrying out a process to select a third strategic partner shipyard under the NSS. The selected shipyard will build 6 new program icebreakers for the CCG
• In December 2019, Chantier Davie pre-qualified in the first stage of the process to become the third strategic partner under the NSS. Chantier Davie has moved on to the Request for Proposal (RFP) and evaluation stage. This will include a third-party assessment of the shipyard’s infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure
• On July 29, 2020, the final RFP was sent to Chantier Davie
• An umbrella agreement is expected to be in place with a third shipyard in late fall 2021

Polar Icebreakers:

• On February 28, 2020, the Government of Canada issued a Request for Information (RFI), open to all Canadian shipyards, seeking information on domestic shipyard capability and capacity to construct and deliver a Polar-class icebreaker. The RFI closed on March 13, 2020, and PSPC received 4 responses
• On May 6, 2021, the Government of Canada announced that it will move forward with the construction of 2 Polar icebreakers under the NSS
• Seaspan’s Vancouver Shipyards will engineer and construct one vessel while the other will be engineered and constructed at Chantier Davie, pending the successful completion of the ongoing selection process to select it as the third strategic partner for large ships construction under the National Shipbuilding Strategy
• Chantier Davie is now going through a third-party assessment of its infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure

16 Multi-Purpose Vessels for the CCG to be built at Vancouver Shipyards:

• On May 22, 2019, the Government of Canada announced a $15.7 billion investment to renew the CCG fleet, in order to ensure capacity to deliver important services for Canadians. This includes building up to 16 Multi-Purpose Vessels (MPVs)
• Construction of the MPVs is expected to start in the mid-2020s, following the completion of the second Joint Support Ship (JSS)
• A run of up to 16 vessels will provide an opportunity for Vancouver Shipyards to generate efficiencies and economies of scale, as well as ensure greater workforce stability and minimize gaps in production
• In August 2020, the MPV ancillary contract was awarded, which will progress early design work on the vessels

7th and 8th Arctic and Offshore Patrol Ships for the CCG:

• On May 22, 2019, the Government of Canada announced a $15.7 billion investment to renew the CCG fleet, in order to ensure capacity to deliver important services for Canadians. This includes building 2 Arctic and Offshore Patrol Ships (AOPS) for the CCG
• The 2 new AOPS (7&8), to be built by Irving Shipbuilding, will be adapted for the CCG to perform a range of critical missions, including Northwest Atlantic Fisheries Organization patrols
• On November 1, 2019, the first contract relating to these ships was awarded. This contract is to have Irving Shipbuilding make the changes required to modify the AOPS design to satisfy CCG’s unique requirements

Acquisition and conversion of 3 medium icebreakers for the CCG:

• In December 2018, the CCG accepted into service the first of the 3 medium icebreakers being refit by Chantier Davie, the CCGS Captain Molly Kool
• On November 23, 2020, the second medium icebreaker, the CCGS Jean Goodwill, was delivered to the CCG with the third vessel, the CCGS Vincent Massey, expected to be in service in 2021

Invitation to Qualify for the Future Aircrew Training Program:

• Through an open and transparent competition, the Government of Canada is taking the necessary steps to renew its existing aircrew training services
• The Future Aircrew Training (FAcT) program has been put in place to develop and implement a new and cohesive training program that replaces the Canadian Armed Forces’ current Pilot, Air Combat Systems Officer (ACSO), and Airborne Electronic Sensor Operator (AES Op) training systems
• In December 2018, Canada established a list of Qualified Suppliers that demonstrated their ability to meet Canada’s needs, as defined in the Invitation to Qualify
• On December 16, 2020 a Draft Request for Proposal (RFP) was released to the 3 qualified suppliers
• In summer 2021, the formal RFP is expected to be released
• Industry engagement will continue until release of the final RFP

Invitation to Qualify for the Victoria-class In-Service Support Contract II:

• Through an open and transparent competition, the Government of Canada is renewing the in-service support contract for the Royal Canadian Navy’s Victoria Class submarine fleet
• Canada has a fleet of 4 submarines that were purchased, used, from the UK in the early 2000’s
• An Invitation to Qualify closed January 8, 2020 from which 5 bidders qualified:
  • BAE Systems (Canada) Inc.
  • Babcock Canada Inc.
  • Serco Inc. and Chantier Davie Canada Inc. in a Joint Venture carrying on business as the Canadian Submarine Alliance
  • NAVAL GROUP
  • Thales Canada Inc. and Thales Australia Ltd. in a Joint Venture
• These successful respondents of the Invitation to Qualify will be part of the industry consultation group that will lead to the finalization of the RFP. First industry engagements with the prequalified bidders took place in September 2020 and will continue into 2021
• Babcock Canada Inc. is the current prime contractor and the current contract will remain in place until June 2023, if all option years are exercised. Victoria Shipyards Limited of Victoria, B.C. is one of the principal subcontractors to Babcock

Invitation to Qualify for Remotely Piloted Aircraft Systems:

• Through an open and transparent competition, the Government of Canada is taking the necessary steps to procure an armed Medium Altitude Long Endurance Remotely Piloted Aircraft System (RPAS)
• This new capability will provide intelligence, surveillance, target acquisition, reconnaissance and precision strike capabilities to the Canadian Armed Forces in support of operations domestically and abroad
• In May 2019, Canada established a list of Qualified Suppliers that demonstrated their ability to meet Canada’s needs, as defined in the Invitation to Qualify
• Industry engagement will continue until Spring 2021 to refine the requirements
• The initial draft RFP was released to the Qualified Suppliers on November 16, 2020
• Spring 2021, the formal RFP is expected

Invitation to Qualify for Logistics Vehicle Modernization Project:

• Through an open and transparent competition, the Government of Canada is taking the necessary steps to revitalize and replace Canada’s light and heavy logistics vehicle capabilities
• In July 2019, Canada established a list of Qualified Suppliers that demonstrated their ability to meet Canada’s needs, as defined in the Invitation to Qualify
• Currently, the draft RFP is being released incrementally to Qualified Suppliers under the Review and Refine Requirements (RRR) phase and industry engagement activities will continue up to the end of Spring 2021
• In Summer 2021, the formal RFP is expected

Delivery of Offshore Fisheries Science Vessels:

• The first 2 Offshore Fisheries Science Vessels, the CCGS Sir John Franklin and CCGS Capt. Jacques Cartier, were delivered to CCG in 2019. The final vessel, the CCGS John Cabot, was delivered in October 2020 marking the completion of the first class of large ships built under the NSS

Offshore Oceanographic Science Vessel:

• The Offshore Oceanographic Science Vessel (OOSV) will be capable of multi-tasking oceanographic, fishery, geological and hydrographic survey missions, and will contribute to Canada’s understanding of the oceans and the impacts of climate change
• In February 2021, a $453.8 million (taxes included) build contract was awarded to Seaspan’s Vancouver Shipyards. Construction of the OOSV began in March 2021 with delivery of the vessel expected in 2024
• The OOSV project budget is currently $966.5 million

Halifax-class Frigates work period contracts awarded:

• The Royal Canadian Navy currently operates 12 Halifax-class ships:
  • 7 ships are assigned to Maritime Forces Atlantic
  • 5 are assigned to Maritime Forces Pacific. The Navy intends to continue operating these ships for approximately another 2 decades, until the Canadian Surface Combatants are delivered
• In 2016, extensive industry engagements, along with market survey processes, identified 3 Canadian shipyards capable of performing the level of maintenance services needed to support the frigates through to the end of life
• In November 2018, Advance Contract Award Notices were issued to Irving Shipbuilding, Chantier Davie, and Seaspan’s Victoria Shipyards
• In July 2019, 2 contracts totaling $1 billion were awarded to Victoria Shipyards and Chantier Davie. In August 2019, a $500-million contract was awarded to Irving Shipbuilding. The contracts are expected to rise in value to over $7.5 billion as additional work packages are added
• In August 2020, maintenance work on the first East Coast frigate, HMCS St. John’s commenced at Chantier Davie. Work is expected to be completed in November 2021 and the vessel returned to the Royal Canadian Navy
• HMCS Regina will be the second frigate to undergo maintenance work under the Halifax-class work period contract on the West Coast at Victoria Shipyards. According to the current fleet plan, Regina work will commence in October 2021
• In August 2022, maintenance work on the second East Coast frigate, HMCS Halifax will commence at Irving Shipbuilding

Joint Support Ship (JSS):

• The JSS project will deliver 2 support vessels to the Royal Canadian Navy to supply other ships with fuel, ammunition, spare parts, food and water. These ships, which are being built by Seaspan’s Vancouver Shipyards, will also provide a home base for maintenance and operation of helicopters, a limited sealift capability, and support to forces deployed ashore
• The JSS build contract was awarded in June 2020. This contract will allow the construction, testing, commissioning and delivery of the 2 JSS
• Construction of the first JSS is underway. Delivery of the first ship is expected in 2023. The second ship will begin construction in late 2021 / early 2022, and delivery is expected in 2025

Interim Fighter Capability Project:

Note: All questions related to capability gap should be answered by the Minister of National Defence

• Canada is acquiring up to 25 F/A-18 Hornet aircraft (18 flyable and 7 non-flyable) from the Royal Australian Air Force (RAAF)
• The first 2 were flown to 4 Wing Cold Lake, Alberta, by RAAF aircrew
• Aircraft 3 to 7 were delivered to the CF18 3rd line depot at Mirabel, Quebec via RCAF CC177 Globemaster transport aircraft
• On August 25, 2020, a transportation contract was awarded to Momentum Decisive Solutions Canada Inc. to transport the remaining aircraft to Canada via commercial carrier
• Aircraft 8 to 19 were delivered to the CF18 3rd line depot at Mirabel, Quebec via commercial carrier
• Of the 19 Australian F-18 aircraft delivered to Canada, the Royal Canadian Air Force has integrated 3 into regular service. National Defence will continue to integrate the Australian F-18 Hornet aircraft into service at regular intervals, until the final aircraft is integrated by December 2022
• By Summer 2021, all IFCP aircraft are expected to be delivered

Canadian Armed Forces Pistols:

• Acquisition:
  • The Department of National Defence currently has a requirement for a firm quantity of 8,000 pistols and holsters for the Army plus additional options of up to approximately 8,500 pistols and holsters for other potential users within the CAF
  • The draft Request for Proposal to solicit feedback from industry was posted on February 26, 2021 and closed on March 12, 2021. A final Request For Proposal is planned to be issued by the end of April
• Sale of Colt Canada:
  • On February 11, 2021, Colt Holding Company LLC (Colt) announced that it had executed a definitive agreement to be acquired by Czech small arms manufacturer CZG – Česká zbrojovka Group SE. The agreement also covers Colt Canada, Canada’s designated small arms supplier under the Munition Supply Program. The change of ownership of Colt has to go through standard regulatory approval in both Canada and the United States before being confirmed. No immediate impacts are expected upon Colt Canada employees or their domestic suppliers

Impact of COVID-19 on shipyard operations

Irving Shipbuilding

In response to COVID-19, Irving Shipbuilding Inc. (ISI) suspended most industrial operations as of March 20, 2020, with special measures for working from home or within ISI’s offices implemented where possible. Most of the workforce is now back in the shipyard while also ensuring physical distancing. COVID-19 safety measures have been implemented, including temperature screening for all individuals entering the site

ISI is working at reduced levels of efficiency due to COVID-19. On July 31, 2020, the first AOPS was delivered and accepted by the Royal Canadian Navy, and maintenance of the HMCS Charlottetown was completed in March 2021. However, ISI has indicated a 6 to 9 month delay to future AOPS due to COVID-related disruptions and other slippage, with these timelines at least partly dependent on whether COVID-19 measures are continued or enhanced

Vancouver Shipyards

Operations at Vancouver Shipyards (VSY) continue during COVID-19 but are being closely monitored. A number of non-production staff have returned to the office while others continue to work from home. Measures being taken include following self-isolation guidelines, additional social distancing measures, cancelling large gatherings and increased cleaning. VSY has been working closely with WorkSafeBC in implementing these practices, and has adjusted and escalated actions in response to new regulations and guidance

This approach has allowed VSY to continue construction at a reduced rate of production for the first Joint Support Ship and final Offshore Fisheries Science Vessel, the latter of which was delivered in October 2020

VSY has experienced more significant COVID-19 impacts during the second and third waves of the pandemic and has reported impacts labourers and subcontractors which is lowering efficiency. VSY continues to experience supply chain challenges, with numerous delay notices received to date. The availability of engines, cabling, and steel are of particular concern and could impact the achievement of milestones

Chantier Davie

On March 24, 2020, in response to COVID-19, the Quebec Government published a list of essential industrial sectors, under which Chantier Davie qualified. Chantier Davie has conducted on-site training for dealing with COVID-19, implemented a set of strict directives, and negotiated with their union to maintain intact squads instead of rotating employees through different teams. Nonetheless the workforce numbers and capacity have diminished to accommodate the social distancing measures implemented Chantier Davie remains functioning in the 80% to 85% capacity range due to COVID-19.

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