Defence Minister Peter MacKay announces the National Shipbuilding Procurement Strategy on June 3, 2010. (Photo: Corporal Jax Kennedy, Canadian Force Combat Camera)
OTTAWA The parliamentary budget officer says replacing the navys two existing supply ships is expected to cost $4.13 billion, far more than the $2.6 billion budgeted by the Harper government.
Kevin Pages latest report could spell more political trouble for the Conservatives, whove been hammered over delays and cost overruns in a series of military equipment projects.
The budget officers staff say they used a couple of different models in their calculations and cut government officials some slack in terms of delivery dates, but essentially came up with the same numbers.
The analysis says $3.2 billion would be needed to replac the navys 45-year-old replenishment ships, HMCS Preserver and HMCS Protecteur.
RELATED: Halifaxs Irving shipyard big winner in $33 billion federal ship contracts
But it adds that a contingency cushion of almost $900 million should be added in, given the engineering complexity of the project and the fact that shipyards havent built such vessels in decades.
Thats an idea backed by American naval construction experts at the Government Accountability Office in Washington.
Building in such a buffer for decision-makers conveys the level of confidence in achieving the most likely cost and also informs them on cost, schedule, and technical risks, U.S. officials were quoted as saying in the budget officers report.
The support ship program has travelled a long, convoluted path.
It was first proposed in the defence white paper of 1994, but the Liberal government didnt get around to ordering replacements until 2004.
The shipyard proposals were deemed too expensive by the Harper government in 2008 and the project went back to square one, with a drastic scaling back of the capabilities the navy wanted.
The program is now not expected to deliver replacement ships until 2018.
Pages analysis shows that had the government stuck with the original plan, it would have delivered more capable ships to the navy at less cost than what is now projected.
In an attempt to get out ahead of Pages report, Public Works and Defence officials held a background briefing Wednesday and insisted the program is on track and the ships will be built for $2.6 billion.
They conceded the design is not complete and must be reviewed for cost before the program goes ahead.
The budget officers report says one of the factors driving the higher cost is the insistence that the ships be built entirely in Canada, something that runs contrary to the defence practices of many other nations.
only the United States and Britain, among the major allies, design, build and launch their own warships. Britain, however, is expected to use foreign sources for some future construction.
European countries, notably France and the Netherlands, out source some of their naval construction to lower-cost builders such as Romania and South Korea.
Building in Canada will come with a cost, one that the government doesnt seem willing to acknowledge, the report suggests.
Liberal defence critic John McKay said the report draws into question the Harpers often-celebrated national shipbuilding strategy, which promised to deliver at total of 28 warships and coast guard vessels.
Government officials acknowledged in the background briefing that the number of hulls is not fixed.
Todays report from the parliamentary budget officer reconfirms this governments fiscal incompetence when it comes to military procurement; incompetence that directly jeopardizes Canadian jobs as well as the capabilities of our navy, McKay said in a statement.
Huge delays and inaccurate costing estimates have produced this latest failure. While the Conservatives continue to cut ribbons and fund self-promoting publicity stunts, it is increasingly clear that the government has hidden the real cost of this project from Canadians.
The Conservatives must immediately come clean and disclose whether they now plan to purchase fewer naval ships or how many billions more will be required from hard-working taxpayers to compensate for this latest ineptitude.
