A report from the Canadian Global Affairs Institute, authored by Jeffrey Collins, has compared Australia and Canada’s national shipbuilding programs as both states seek to overcome the boom-bust cycle of the shipbuilding industry.
The programs – Australia’s $90 billion Naval Shipbuilding Plan (NSP) and Canada’s C$73 billion National Shipbuilding Strategy (NSS) - are the largest procurement projects either state has ever undertaken.
Collins notes that common troubles have emerged in both.
“In Canadian eyes, Australian defence policy appears to be getting it right… [and] that such projects are being acquired amid a constant turnover of people in the prime minister’s chair makes the contrast with Canada’s ever-constant drip of procurement woe headlines even starker.
“But dig a little deeper and it becomes clear that Australia has seen its share of procurement challenges.”
The Collins-class submarine is, perhaps unsurprisingly, foremost amongst these in the report. The AWDs also get a mention at $2.5 billion over budget and over two years behind schedule. As work on the NSP shifts into higher gear, Collins notes the ANAO’s finding that the program is at ‘extreme risk’ as cost assumptions have not yet factored in major design changes to the Hunter-class frigates and Attack-class submarines.
Doubts also persist in regard to in-service support costs, the capacity of Australia’s steel industry to meet demand, and the likelihood of delays to the Attack-class resulting from intellectual property transfer disputes that caused last year’s ‘roadblock’ in negotiations with Naval Group.
Canada has also had its fair share of issues. All NSS projects are reportedly three to five years behind schedule; major skills and infrastructure shortages at shipbuilding yards increased cost estimates; and recent court actions by US firm Alion disputing the selection of the Type 26 as Canada’s next frigate delayed the build.
These common troubles, the report argues, share common causes.
“For one, the rational approach to naval shipbuilding is not devoid of procurement politics and regionalism,” Collins argues. “Determining which province or state will be home to billions in contracts over many years remains a zero-sum game no matter how arms-length the process of yard selection.”
“The likely explanation lies in the ability of the NSS and NSP to offer governments the ability to do highly visible multi-year projects that employ thousands of people.”
Past experience also plays a role: “As Australia and Canada experienced with overseas submarine purchases, foreign builds bring problems in obtaining spare parts and maintenance support.”
“It’s not always clear in the long term how much cheaper building ships overseas is when intellectual property transfer costs and overseas in-service support are factored in.”
Finally, both states suffer from scheduling issues.
“Failure to [keep to schedule] opens production gaps and necessitates that Ottawa and Canberra consider alternative options,” Collins notes.
In short, the report comes to a conclusion obvious to anybody following the progress of major naval builds across the world: “Even with the best-laid plans, naval shipbuilding is complicated.”