Canada’s Arctic Fleet Expansion Needs More Funds, Watchdog Says

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October 28, 2014

CCGS Louis S. St-Laurent. Photo credit: Canadian Coast Guard

ReutersBy Mike De Souza

OTTAWA, Oct 28 (Reuters) – Canada will fail to deliver a proposed fleet of six to eight Arctic patrol ships unless it spends significantly more than the C$2.8 billion ($2.51 billion) planned, the Canadian Parliament’s budget watchdog said on Tuesday.

The Conservative government had announced plans to build the fleet of polar-capable ships over the next decade as part of its strategy to exert sovereignty over the region and increase operating capability there.

But a review by the Parliamentary Budget Office, set up in 2006 to provide independent analysis to legislators, concluded that the government’s existing plan would only deliver three or four ships.

“It is not possible at any confidence level to build eight or six ships for the C$2.8 billion budget,” said the report released by Jean-Denis Fréchette, Canada’s parliamentary budget officer.

A government spokesman rejected the analysis.

“The numbers provided by the PBO are based on erroneous data, rough cost estimates of international vessels with varied capabilities and derived using inaccurate specifications,” said Marcel Poulin, a spokesman for Canada’s Public Works Minister Diane Finley.

Fréchette said that there was insufficient contemporary Canadian data on an acquisition of this nature. He also wrote that Canada’s defense department had removed details of the fleet’s proposed capabilities from its website and declined to share technical details.

But based on a detailed risk analysis that included consultations with naval experts, Fréchette estimated that the government would only have a 50 percent chance of getting six ships, even if it increased its budget by C$470 million.

The government has awarded a C$288 million design contract to Irving Shipbuilding and is scheduled to sign a construction contract in 2015. Poulin said the contract was “well advanced” but not yet concluded.

The first ship would likely be delivered in 2018, with the rest to follow over the next seven years, said Fréchette’s report.

He added that if the government did not increase its budget or reduce the number of ships, the only other way to deliver the fleet would be to scale back its capabilities.

But Poulin said the government was confident it would build six Arctic offshore patrol ships starting in September 2015 as part of a strategy that he said would create 15,000 jobs and C$2 billion in annual economic benefits over 30 years. (1 U.S. dollar = 1.1171 Canadian dollar) (Editing by Jeffrey Hodgson and Cynthia Osterman)

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