Thank you again.
My views on shipbuilding and specifically the Canadian surface combatant program are largely derived from my paper on this topic, released several months ago. In it, I went through the history of the program and identified key factors and objectives that guided the CSC program, three of which I find particularly relevant for this discussion. These are the desire to recreate a sustainable domestic Canadian government shipbuilding industry, the need to acquire highly capable vessels for the Royal Canadian Navy that can seamlessly operate alongside allied navies, and the lack of project management and design capacity within the Government of Canada resulting from cutbacks to the procurement workforce in the 1990s and 2000s.
The first two are policy choices the government may be able to alter, but the third is a capacity and experience issue that cannot be easily addressed. It must be rebuilt over time and at a significant cost, which has helped to determine how the program has unfolded. It lead to the umbrella agreements in which the shipyards took on a much more significant role in the production and management of the CSC.
My study did not suggest that the CSC is an optimal outcome. Like many other major government programs, it is the product of a less than ideal set of compromises, circumstances and intents. Still, it is difficult to challenge the program's outcome unless the government is prepared to modify either its desire to build these ships in Canada or to accept a significantly less capable vessel. To put it bluntly, there are no free lunches in defence procurement.
The CSC experience is not totally out of line with our allies' experiences with their own programs. For example, the recent U.S. budget submission suggested that the cost of the first Constellation class vessel, a very rough comparison to our CSC, has gone up by over 30% in the past two years, from $900 million U.S. to $1.3 billion U.S., with the Congressional Budget Office suggesting they go as high as $1.6 billion U.S. Good factual comparisons and understanding the challenges of establishing a shipbuilding industry are essential.
I do not believe there is an easy approach to finding major cost savings on the CSC program as it is currently constituted, even with a different ship design. There might be opportunities to curtail some costs by reusing the existing hull design to produce a less capable vessel, but even that brings a whole host of other challenges and may not result in cost savings.
I'd be happy to discuss this further in questions.