News Column

Harper Government's Ship Strategy Bolstering Canada's Economy

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HALIFAX, NOVA SCOTIA -- (Marketwire) -- 03/07/13 -- The Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, along with the Honourable Peter MacKay, Minister of National Defence, and the Honourable Kerry-Lynne D. Findlay, Associate Minister of National Defence, today welcomed the signing of the definition contract with Irving Shipbuilding Inc. for the Arctic/Offshore patrol ships project through the National Shipbuilding Procurement Strategy (NSPS).

"The Harper Government created the National Shipbuilding Procurement Strategy to end the boom and bust cycle in Canadian shipbuilding, deliver much needed equipment to the Royal Canadian Navy and Canadian Coast Guard, and support the Canadian economy by building ships right here in Canada," said Minister Ambrose. "Industry analysts have estimated that our shipbuilding strategy will contribute 15,000 jobs from coast to coast to coast and over $2 billion in annual economic benefits over the next 30 years."

"Our Government made the decision to build ships in Canada, while ensuring that the Royal Canadian Navy and the Canadian Coast Guard have the equipment they need to defend and assert our Northern sovereignty," said Minister MacKay. "Our Government is steadfast in its commitment, and these new ships will help us achieve just that."

"The Arctic/Offshore patrol ships represent a new capability for the Royal Canadian Navy that will help them achieve success in their missions-patrolling our three coastlines and protecting our sovereignty," said Minister Findlay. "We are committed to the complex work of rebuilding our Navy's surface fleet, to creating high-quality marine sector jobs, and to getting the job done right."

This is the next contract signed after the ancillary one announced in July 2012 and it will be followed by a construction contract in 2015. This definition contract is a task-based contract divided into seven work packages (or tasks) that could be awarded. With this contract, Irving Shipbuilding Inc. will refine and complete the Arctic/Offshore patrol ships design to production level prior to construction in 2015. The total potential value of the contract is an estimated $288 million and it will support up to 200 jobs.

Once completed, the definition contract will enable Irving Shipbuilding Inc. to know exactly what to build and how to build it. It will ensure that once the build contract is signed, construction of the ships will begin. At the same time, work will begin on improving and upgrading the Irving Shipyard to begin full ship construction in 2015.

The Harper Government's Atlantic Shipbuilding Action Plan is designed to help businesses address challenges such as innovation capacity, certifications and workforce skills so they can prepare themselves to compete as suppliers or sub-contractors. Through the Atlantic Shipbuilding Action Plan, the Government will continue to work to encourage and support the region's businesses in growing their capacity to become part of the supply chain for the work to be undertaken by Irving Shipbuilding in Halifax, as well as for other marine and defence initiatives.

The Harper Government is following through on its commitment to build ships in Canada. The NSPS will mean long-term jobs and economic growth for the country, stability for the industry, and vital equipment for our men and women in the Royal Canadian Navy and the Canadian Coast Guard.

"Our Government remains focused on four priorities, as outlined by the Prime Minister, that Canadians care most about: their families, the safety of our streets and communities, their pride in being a citizen of this country, and of course, their personal financial security," added Minister Ambrose.

For more information on the NSPS, please visit http://www.tpsgc-pwgsc.gc.ca/app-acq/sam-mps/snacn-nsps-eng.html.

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BACKGROUNDER

Arctic/Offshore patrol ships design and build approach

The National Shipbuilding Procurement Strategy (NSPS) spans 20 to 30 years and encompasses six types of ships, each with its own set of design and production elements. As we develop the approaches for each type of ship, we continue to employ the principles that have proven successful and delivered results to date, including the continued ongoing engagement of industry, the use of third-party expertise, and the establishment and employment of a robust governance structure.

By applying these principles, we will move along a proven approach of negotiating contracts that will allow us to first understand the designs, then refine them to a production-ready state before entering into contracts to build and deliver these ships. This approach will allow us to fully define and understand the costs of these programs and reduce the risks and ultimately the cost to Canadians.

The definition contract signed with Irving Shipbuilding Inc. is a task-based contract divided into the following seven work packages (or tasks) that could be awarded. With this contract, Irving Shipbuilding Inc. will refine and complete the Arctic/Offshore patrol ships design to production level prior to construction in 2015.

1. Project Management - This task will include all work required to ensure effective planning, management, execution, monitoring and control, and reporting of the definition contract work.

2. Engineering Design Phase 1 - This task will include the system engineering activities, integrated logistical support analysis and supplier engagement activities that are necessary to demonstrate that the preliminary Arctic/Offshore patrol ship design meets all of the contract design specification requirements with acceptable risk and within the cost and schedule constraints.

3. Engineering Design Phase 2 - This task will include the system engineering activities, integrated logistical support analysis and supplier engagement activities that are necessary to demonstrate that the Arctic/Offshore patrol ship design is a complete and integrated solution that meets all the contract design specification requirements with acceptable risk and within the cost and schedule constraints.

4. Engineering Design Phase 3 - This task will include the system engineering activities, integrated logistic support analysis and supplier engagement activities that are necessary to demonstrate that the Arctic/Offshore patrol ship design is a complete and integrated solution that meets all of the contract design specification requirements and is ready for the start of vessel construction.

5. Project Implementation Proposal Development - This task will encompass all the procurement, engineering, production and estimating activities required to develop the detailed project implementation proposal, including the required plans and a substantive cost for the implementation contract.

6. Test Production Module- This task will include all the work required to establish and verify production processes and produce a test module prior to beginning vessel construction.

7. Long Lead Items Procurement- This task will encompass all of the procurement and supply chain activities required to procure long lead items, which must be purchased prior to the start of vessel construction.

Once completed, the definition contract will enable Irving Shipbuilding Inc. to know exactly what to build and how to build it. It will ensure that once the build contract is signed, construction of the ships will begin.

For more information on the NSPS, please visit http://www.tpsgc-pwgsc.gc.ca/app-acq/sam-mps/snacn-nsps-eng.html.

Harper Government signs contract with Irving

Background on Arctic/Offshore patrol ships

The Harper Government is committed to supporting the Canadian shipbuilding industry, to revitalizing Canadian shipyards, and to building ships for the Royal Canadian Navy and Canadian Coast Guard here in Canada. The National Shipbuilding Procurement Strategy (NSPS)-the largest procurement sourcing arrangement in Canadian history-is expected to create thousands of high-value jobs from coast to coast to coast and will have significant economic benefits in shipbuilding and related industries across Canada.

On October 19, 2011, the Harper Government announced that Irving Shipbuilding Inc. had been selected to build the combat vessel work package, and Vancouver Shipyards Co. Ltd. had been selected to build the non-combat vessel work package under the NSPS. The total value of the projects in both packages is $33 billion and the projects will span 20 to 30 years, creating 15,000 direct and indirect jobs for the Canadian shipbuilding industry.

To date, Canada has negotiated and awarded a number of contracts with the shipyards and progress continues. The NSPS is continuing to make progress.

Both Irving Shipbuilding Inc. and Vancouver Shipyards Co. Ltd. are undertaking significant infrastructure upgrades valued at some $300 million and $200 million respectively. These upgrades are being undertaken at no cost to Canada.

Construction is on track for Arctic/Offshore patrol ships in 2015

During the initial discussions regarding the Navy's Arctic/Offshore patrol ships, Canada and Irving Shipbuilding Inc. agreed that the first contract should be a smaller preliminary contract, followed by a larger definition contract to complete the Arctic/Offshore patrol ships design to production level, and subsequently an implementation contract to build and deliver the ships.

This "design-then-build" approach will mitigate both technical and cost risks by reducing unknowns, and therefore risks, for the building phase. Once completed, the definition contract will enable Irving Shipbuilding Inc. to know exactly what to build and how to build it. It will ensure that once the build contract is signed, construction of the ships will begin immediately. This approach is also aligned with the NSPS, which is built upon a more collaborative and risk-sharing relationship.

On July 10, 2012, the Government announced the awarding of a $9.3-million (HST included) preliminary contract to Irving Shipbuilding Inc. Within this preliminary contract, Irving Shipbuilding Inc. reviewed the existing Canadian-developed Arctic/Offshore patrol ships design and specifications, prepared an execution strategy and delivered a proposal detailing the scope and cost of the subsequent definition contract.

Finally, on March 7, a definition contract with Irving Shipbuilding Inc. was signed. The total potential value of the contract is an estimated $288 million (taxes included). The definition contract is a task-based contract divided into seven work packages (or tasks) that could be awarded. The first two tasks have been authorized and their total value is approximately $136 million.

The definition contract will last 30 months and we are on track to start cutting steel in 2015.

The Arctic/Offshore patrol ships will be used by National Defence to conduct armed seaborne surveillance in Canada's economic exclusion zone, including in the Arctic.

For more information on the NSPS, please visit http://www.tpsgc-pwgsc.gc.ca/app-acq/sam-mps/snacn-nsps-eng.html.



Contacts:
Amber Irwin
Office of the Honourable Rona Ambrose
819-997-5421

Media Relations
Public Works and Government Services Canada
819-956-2315



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