Tag Archives: shipbuilding

Shipbuilding contract holds $250M mystery

Cost of Arctic patrol ships’ design sparks warning of another procurement ‘fiasco’

By Terry Milewski, CBC News

A CBC News investigation has uncovered a $250-million mystery at the heart of Canada’s ambitious shipbuilding program.

Public Works Minister Rona Ambrose and Defence Minister Peter MacKay announced March 7 in Halifax that Ottawa will pay Irving Shipbuilding $288 million just to design — not build — a fleet of new Arctic offshore patrol ships.

Irving will then build the ships under a separate contract.

However, a survey of similar patrol ships bought by other countries shows they paid a fraction of that $288 million to actually build the ships — and paid less than a tenth as much for the design.

In addition, the design of Canada’s new ships is based upon a Norwegian vessel whose design Ottawa has already bought for just $5 million.

The Norwegian ship, the Svalbard, was designed and built for less than $100 million in 2002.

Experts say the design price is normally 10-20 per cent of the total cost of the ships.

Another country with Arctic interests, Denmark, acquired two patrol ships for $105 million in 2007.

They have modest ice-breaking capability, similar to the Canadian project, which allows for the ships to crunch through “summer ice” – about one-metre thick.

The Irish navy now is building two offshore patrol ships for $125 million.

In all cases, these prices include the design.

Why is Canada paying more?

Ambrose, MacKay and Public Works officials running the Canadian project were not able to explain why Canada would pay so much more to get so much less: shelling out more than twice as much merely to produce a blueprint for similar ships, without building any.

Continue reading Shipbuilding contract holds $250M mystery