PBO Pegs Total Cost of the Navy’s Joint Support Ship Project at $4.1 Billion
(Source: Canadian Parliamentary Budget Officer; issued Nov. 17, 2020)
The Parliamentary Budget Officer (PBO) today released an independent cost estimate of the Royal Canadian Navy’s project to build two Joint Support Ship (JSS) vessels, and an estimate of the cost of contracting similar capacity from Chantier Davie Canada Inc. (Davie). This report was prepared in response to a request from the House of Commons Standing Committee on Government Operations and Estimates (OGGO).
The JSS project aims to build two new support ships to replace legacy Protecteur-class auxiliary oiler replenishment vessels decommissioned in the last decade. Since the two new vessels are expected to be delivered in 2023 and 2025, the federal government contracted Davie to convert a commercial vessel, the MV Asterix, to military support ship specifications to maintain the Navy’s at-sea replenishment capability during JSS construction. Davie has also offered the government an option to contract a second vessel, the Obelix.
The report, The Joint Support Ship program and the MV Asterix: a Fiscal Analysis, estimates the total cost of the new JSS vessels to be $4.1 billion. This is comparable to the $4.1 billion estimate published by the Department of National Defence (which does not factor in the cost of the provincial sales tax).
The total net cost of the current MV Asterix contract is projected to be $733 million over 5 years ending in 2023. The PBO projects that total cost of a new 5-year contract for the Obelix, starting in 2023-2024, would be $801 million.
The Department of National Defence also has the option to purchase the contracted vessels from Davie.
“Net of any costs associated with this initial contract, we estimate a total cost of approximately $1.4 billion for the purchase of the two Davie vessels”, explained Yves Giroux, PBO. “This is lower than the cost of new vessels under the JSS project.”
An assessment of the capabilities of the Asterix and Obelix as commercial vessels converted for military purposes versus those of the built-for-purpose JSS vessels is outside the scope of this report.
These estimates do not assume any COVID implications on the costs or schedule of the JSS.
Click here for the PBO’s report (29 PDF pages), on the Canadian Government website.
Statement by the Department of National Defence on the Parliamentary Budget Officer’s Report on the Joint Support Ships
(Source: Canadian Armed Forces; issued Nov 17, 2020)
OTTAWA, Ontario --- We thank the Office of the Parliamentary Budget Officer (PBO) for their work. We will continue to work with the Office of the PBO in all of the important work that it does.
The Department of National Defence (DND) has reviewed the PBO report entitled, The Joint Support Ship program and the MV Asterix: a Fiscal Analysis, and notes that there are a number of key factors that were not taken into account as they are outside the scope of the report.
The two types of ships compared in the report are very different. As the PBO noted, the assessment did not consider the capabilities of MV Asterix and MV Obelix as commercial vessels converted for military purposes versus those of the built-for-purpose Joint Support Ship, as this was outside the scope of their report.
When sending our sailors into dangerous situations, we insist on providing them with the best and safest equipment possible. That is always our first priority.
MV Asterix, and the proposed MV Obelix, do not have the same capabilities as the future Joint Support Ships. The Joint Support Ships were designed to be able to deploy into harm’s way, a key element of the military design.
Examples of capabilities that were designed into the Joint Support Ships that are not available on MV Asterix include:
-- a mine-avoidance degaussing system,
-- systems to detect and protect against chemical, biological, radiological, and nuclear threats,
-- a dual redundant propulsion system,
-- damage control capabilities that meet military standards,
-- a cyber-resilient command management system,
-- self-defence capabilities, including a combat management system, naval remote weapon systems and close-in weapon systems,
-- a hangar and flight deck that can support the Cyclone aircraft, and
-- certified, fitted magazines to transport specialized ammunitions, such as torpedoes.
These additional features provide a survivability that is critical to ensure the safety of our sailors in high-risk areas, as the Royal Canadian Navy (RCN) must have the capability to maintain a persistent presence in high-threat areas if the security of Canadians demands it. No modifications to MV Asterix could provide the survivability offered by a built-for-purpose ship. Purpose-built warships like the Joint Support Ships provide the best available protection for our sailors with a military design that incorporates higher damage control standards and counter-measures against threats from torpedoes, mines, or missiles.
It is important to note that the figures included by the PBO do not include the money already spent on MV Asterix, or money that would be needed to be spent in the future. The figures only consider the cost of purchasing two modified, used commercial ships, whereas the cost for the Joint Support Ships includes a number of expenses, such as the salary of project staff since the project’s inception, design costs to incorporate RCN operational requirements, engineering services, government supplied material, and initial spare parts.
The proposed life expectancy of MV Asterix of 40 years from the time of its conversion is unlikely to be realized without significant investments. The operational and maintenance costs that would be required to keep MV Asterix operating would not represent value for money.
Our choice of the Joint Support Ships was made after years of industry consultation and analysis of possible options, including the conversion of used ships. The Joint Support Ships are the right ship for the Royal Canadian Navy, and will provide the best value for the military, Canada, and the Canadian economy.