As the prime contractor for non-combat vessels, VSY will be responsible for the construction of all Joint Support Ships (JSS) at their shipyard in North Vancouver, British Columbia. The contract which will follow the selection process includes the sourcing by VSY of all equipment and major services from suppliers through competitive bid processes. Key requirements in VSY's supplier selection process may include aspects such as technical capability, fit for purpose, ongoing product support, timely delivery, price and supporting VSY's commitment to providing Industrial and Regional Benefits equal to 100% of the value of the purchases.
Companies interested in becoming a JSS supplier can register online at: http://www.seaspan.com/supply_chain_registration.php
Project Timelines(i)
----------------------------------------------------------------------------Project Milestone Description Estimated Date----------------------------------------------------------------------------Design Selection Selection of an Spring 2013 affordable JSS that demonstrates best value to Canada----------------------------------------------------------------------------Production Design and To mature the selected 2014 Engineering design to a production ready state----------------------------------------------------------------------------Build Contract To build and deliver the 2015/2016 JSS----------------------------------------------------------------------------IOC Initial Operational 2018 Capability of the first JSS----------------------------------------------------------------------------FOC Full operational 2019 capability with two JSS----------------------------------------------------------------------------
(i)Note that these dates are estimates for planning purposes and will develop as the project progresses through ongoing work with the shipyard.
Project Budget
The project budget of $2.6B (taxes included) was established applying the costing principles in accordance with TB guidelines and includes a 15% contingency (approximately $300M) and applies an escalation factor 2.7% for the ship construction. Following cancellation of the first JSS procurement in 2008, DND undertook an options analysis to consider how best to meet the Department's needs for Joint Support Ships. This analysis resulted in the development of a new cost estimate and a revised Statement of Operational Requirements for the acquisition of two Joint Support Ships. The budget for the relaunched JSS procurement was drawn directly from the original procurement budget, with two principal adjustments to account for escalation and tax as follows: a cost-escalation modification was applied to the ship construction costs. The escalation correction, which was intended to account for loss of purchasing power for ship construction labour and materiel, was based upon the DND Economic Model and was later validated by Treasury Board Secretariat prior to approval. The exact escalation factors varied over a wide number of distinct shipbuilding cost categories, but when averaged out the escalation rate that was applied was approximately 2.7% per year. In addition to the adjustment to account for escalation of costs, a second modification to the JSS procurement budget was made to account for changes in the application of national tax requirements.
Life Cycle Costing
As part of the procurement process, DND provides estimates of in-service support costing, as well as personnel and operating costs of the fleet over its defined life. These estimates are informed by work conducted during the definition process and are regularly refined to reflect the most accurate information available.
In-service support includes equipment activities such as engineering modification, obsolescence management, maintenance, repair, testing, upgrading, supplying or sourcing of spare parts, maintaining documentation, and training.
ISS cost estimates are refined as projects develop through design, into production and as they enter service, with the fidelity in these cost estimates increasing over time. For the Joint Support Ships project, our preliminary estimates indicate that:
-- The total cost estimate for the acquisition of two ships is $2.6 billion.-- The estimated cost of 30 years of in-service support is approximately $1.9 billion for two ships. This estimate is subject to refinement once the JSS equipment selections are finalized and ISS contract development and negotiations are conducted.-- The estimated costs associated with 30 years of Personnel and Operating are approximately $2.6 billion. This is based on current DND estimating methodology and a notional operational profile and target crew sizes.
Thus, the preliminary estimated life cycle cost for the Joint Support Ships is $7.1 billion.
Life-cycle cost estimates will be adjusted as the design matures, equipment is selected and the ships are constructed.
---------------------------------------------------------------------------- Estimated Life-Cycle Costs----------------------------------------------------------------------------Total indicative cost for two ships $2.6B (incl. GST)----------------------------------------------------------------------------In-Service Support (30 yrs) $1.9B----------------------------------------------------------------------------Personnel & Operating Costs (30 yrs) $2.6B----------------------------------------------------------------------------TOTAL $7.1B----------------------------------------------------------------------------
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