Canada's military procurement woes mount; this time it's ships

Tue Nov 26, 2013 10:40am EST
 
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By David Ljunggren

OTTAWA (Reuters) - In the latest blow to Canada's crisis-hit military procurement process, the country's official spending watchdog said on Tuesday the government has underestimated how much a multibillion-dollar naval shipbuilding plan will cost.

As a result, said Auditor-General Michael Ferguson, Canada would either have to make do with fewer ships or settle for vessels with fewer capabilities than initially planned.

In 2010, faced with the need to replace ships that in some cases had been in service for 40 years, the Conservative government announced plans to build 165 vessels over a 30-year period at a cost of more than C$50 billion ($47.2 billion).

The new ships are designed to play an important role as Canada asserts its sovereignty claims in the Arctic, a disputed region rich in energy and mineral resources.

Ferguson said the budget for the ships was set early on and had not been changed despite signs that costs would rise.

"According to National Defense, there have been significant increases in cost elements, which are impairing the affordability of the military ships," he said.

One major element of the shipbuilding plan is the Canada Surface Combatant (CSC) project - C$26.2 billion to replace three destroyers and 12 frigates with 15 modern warships.

"The CSC project budget of C$26.2 billion is insufficient," Ferguson said bluntly.   Continued...

 
Canada's Auditor-General Michael Ferguson listens to a question during a news conference upon the release of his report in Ottawa April 30, 2013. REUTERS/Chris Wattie