HALIFAX -- Canada’s auditor general has released a report into Ottawa’s national shipbuilding strategy, finding the strategy has been "slow to deliver" replacement vessels for the country’s aging Navy and Coast Guard vessels.

Karen Hogan’s audit covered Jan. 1, 2018 to Jan. 1, 2020 – before the pandemic began – and looked at whether the federal government was doing enough to handle continual shipbuilding delays. Her report did not focus on the industry’s role.

Canada’s National Shipbuilding Strategy was officially launched a decade ago, with Irving Shipbuilding selected in 2011 to build 15 Canadian surface combatants. But work on those vessels has yet to begin, with delivery of the first not expected until 2030.

Irving is also contracted to build eight Arctic and Offshore Patrol ships. One of those ships, HMCS Harry DeWolf, was delivered to the Royal Canadian Navy in July 2020 - two years overdue.

In her report, Hogan cited poor schedule management by various government departments as part of the problem around the delays. She also says officials did not take a number of risks, such as a shortage of workers at Canada’s two main shipyards, into account.

"Departments need to look for opportunities to further improve how they manage risks, and contingencies," says Hogan.

Wednesday, the Parliamentary Budget Officer released his cost estimate for building the Canadian Surface Combatants, pegging it at $77.3 billion – $17 billion over the federal government’s own projections.

"The problem is in the inclusion of an American radar system, information system, and weapons system, or AEGIS." says independent analyst Ken Hansen, who spent 33 years with the Royal Canadian Navy.

He says the Department of National Defence already owns the system and it insisted it be incorporated into the BAE Systems design chosen for Canada’s warships – known as Type 26. That, he says, is complicating the design and engineering process, leading to continual delays and cost overruns.

Hansen says he sees two options moving forward: either the Strategy needs to adjust to build different types of ships or start over.

"If it is absolutely essential that we get this AEGIS system, I don’t think it’s feasible to put it into the Type 26," says Hansen. "And you have to go back to either designing your own ship or buying a ship from the United States that will be able to comfortably accommodate the weapons."

In a statement, the Department of National Defence says it is "confident" in its own cost estimate for the CSC program, which is between $56 and $60 billion before taxes. It also says choosing a new design would lead to "significant economic loss for Canada’s marine industry and those employed in it."

UNIFOR National representative Chad Johnston agrees.

"It’s absolutely critical not only for Halifax, but for Canada," he says. UNIFOR represents more than 1,000 workers at the Halifax Shipyard. Johnston says the best way forward is to maintain the current course.

"To think that you could stop that program, to kind of retool it, and start again, would be catastrophic," he says.
But even as workers at the Halifax Shipyard continue work on the five Arctic and Offshore Patrol Ships (AOPS) under its shipbuilding contract – with the next AOPS vessels scheduled for delivery later this year – the auditor general warns there is "little room" for any more delay.

The risk, the AG says, is that the Navy and Coast Guard could find themselves short of ships, if new ones aren’t delivered in time to replace aging vessels badly in need of retirement.