National Shipbuilding Procurement Strategy
The National Shipbuilding Procurement Strategy is a Government of Canada program operated by the Department of Public Works and Government Services. The National Shipbuilding Procurement Strategy (NSPS) was developed in an effort to renew the fleets of the Royal Canadian Navy (RCN) and the Canadian Coast Guard (CCG). The strategy was broken into three sections; the combat package, the non-combat package and the smaller vessel package. The smaller vessel package was not able to bid on by those companies who won one of larger ship packages.
The National Shipbuilding Procurement Strategy was launched on 3 June 2010 and the results for the two larger packages were made public on 19 October 2011. Contracts for smaller vessels under the NSPS were announced as they were awarded.
The NSPS program was charged with selecting Canadian shipyards capable of rebuilding the fleets of the RCN and the CCG through two large packages of work (the projects), valued at about $38 billion. Another package of work for smaller vessels was separate but part of the overall strategy.
- c. $30 billion for 21 combatant (warships) vessels to serve in the RCN
- $8 billion for 17 non-combatant vessels to serve in the CCG and RCN
- 2 vessels from the Joint Support Ship Project (for the RCN)
- 1 vessel, CCGS John G. Diefenbaker (for the CCG)
- 1 vessel from the Offshore Oceanographic Science Vessel Project (for the CCG to replace CCGS Hudson)
- 3 vessels from the Offshore Fisheries Science Vessels Project (for the CCG to replace CCGS Alfred Needler, CCGS Teleost, CCGS W. E. Ricker, and CCGS Wilfred Templeman).
- 5 future Offshore Patrol Vessels (for the CCG).
- 5 future Medium-Endurance Multi-Tasked Vessels (for the CCG).
The Department of Public Works and Government Services issued a "Solicitation of Interest and Qualification" on 20 September 2010 and closed it on 8 October 2010. Five Canadian shipyards were short-listed to build the large vessels:
- Kiewit Offshore Services (major yard in Marystown, Newfoundland and Labrador)
- Irving Shipbuilding (major yard in Halifax, Nova Scotia)
- Davie Yards Incorporated (major yard in Levis, Quebec)
- Washington Marine Group (major yard in Vancouver, British Columbia)
- Seaway Marine and Industrial (major yard in St. Catharines, Ontario)
Between October 2010 and January 2011, the short-listed shipyards were consulted on the content of the "Request for Proposals" (RFP), the umbrella agreements, the proposed schedule, and the evaluation methodology.
The RFP was released on 7 February 2011, and closed on 21 July 2011. Five proposals were received from three bidders:
- Irving Shipbuilding Inc.
- Seaspan Marine Corp. (renamed from Washington Marine Group in 2011)
- Davie Yards Inc.
Two of the proposals received were for the combat work package and three were for the non-combat work package.
An evaluation organization composed of Canadian Forces and Canadian Coast Guard personnel, as well as public servants from the departments involved (Public Works and Government Services Canada, Industry Canada, National Defence, and Fisheries and Oceans Canada) evaluated the proposals. An independent fairness monitor oversaw the process. The shipyards were evaluated on a combination of mandatory and rated requirements.
During the final evaluation period, one of the proponents, Davie Yards, underwent a corporate restructuring which was accepted by the NSPS governance on 27 July 2011. Davie Yards Inc. was changed to 7731299 Canada Incorporated which was a consortium between Davie Yards Incorporated, Seaway Marine and Industrial and Daewoo Shipbuilding & Marine Engineering.
On 19 October 2011 the Government of Canada selected Irving Shipbuilding Inc. for the $25 billion combat work package and Seaspan Marine Corp. for the $8 billion non-combat work package. In 2012, the two companies negotiated the contracts for the first projects of each package.
On 16 January 2015, the Government of Canada finalized the contract for the construction of the Arctic Patrol Ship Project. Initially slated to cost $3.1 billion to build eight ships, the budget was increased to $3.5 billion for five ships, possibly six if no cost overruns on the first five. Construction started on the first ship in September 2015.
The search for the two main subcontractors on Irving's Surface Combatant package began in June 2015. In 2017, the Government of Canada will make its choice for two main subcontractors; one for combat systems integration (gun, missile, radar, sonar, communications) and the other for the design of the ship. The list of those pre-qualified candidates which applied for the Surface Combatant subcontractor positions was released on 18 November 2015.
In September 2015, reports emerged that climbing costs would lead to a reduction in the number of Surface Combatants the Canadian government would receive. Problems were reported to have emerged from the Seaspan-apportioned part of the contract. In order to get the contract, Seaspan's yard had to be upgraded, which was only completed in November 2014. According to the agreement signed in 2012, the yard was to be ready to build by January 2015, but missed that date. Construction only started on the first Coast Guard ships in June 2015, leading to fears that the Joint Support Ships could be delayed.
In November 2015, reports of climbing costs associated with the NSPS, reportedly up to 181%, has led to possible cancellations within the program. The newly elected Canadian government is set to review the entire program, after senior officials reported that the funding estimates outlined in the original plan were too low to meet operational requirements. However, the new government also simultaneously committed itself to retaining the NSPS.
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