EXCLUSIVE Bidder urges overhaul of design
tender in $60B navy frigate program
Documents show a ship designer says no
company likely to meet Canada's requirements for new ships
By Murray Brewster, CBC News Posted: Jun 28,
2017 3:32 PM ET Last Updated: Jun 28, 2017 3:32 PM ET
Canada's plan to buy an off-the-shelf design for the
navy's new frigates faces a "very high risk of failure" unless the
Liberal government rewrites its proposed requirements, one of the bidders has
told the shipyard running the competition.
Documents obtained by CBC News show the unidentified
company, which is bidding to supply the design and help with the $60-billion
construction program, has warned the plan is more complex than initially
advertised by the government.
In a written submission last month, the company told
Irving Shipbuilding the government's request for proposals needs a major
overhaul.
But Irving dismissed the bidder's concerns, according to
an exchange contained in a collection of questions and answers with prospective
bidders that were circulated to all bidders by Irving on May 12, 2017, a copy
of which was obtained by CBC News.
When the Liberals retooled the national shipbuilding
strategy last year, they made a point of saying they want a proven warship
design, rather than something done from scratch.
They said it would be faster and cheaper.
Given all of the conditions in the request for proposals,
the bidder said that expectations are too high.
"To the best of our knowledge, neither we, nor any
other prequalified bidder, possesses an off-the-shelf ship design which could
be modified to meet all of the [request for proposal] requirements without, in
effect, becoming a new design with all of the risks that would stem from a
massive redesign effort," said documents.
Risk of failure
The unidentified bidder did not mince words.
"Not only will we not be in a position to make a
proposal, which we believe will best meet Canada's objectives, but we have
reason to believe that most, if not all, other prequalified bidders with an
existing ship design will be in a similar situation," said the documents.
"In such an event, a failure to respond positively
to our enquiries might put the (request for proposal) process at a very high
risk of failure, either because an insufficient number of bids are received or
because the bids which are received do not meet Canada's value for money
objectives."
Irving responded: "This has been considered and no
change to the [request for proposals] will be made."
The government has already extended the deadline for
submitting ship design bids until August — or perhaps later.
Irving Shipbuilding said in a written statement that it
has conducted multiple rounds of industry engagement on the project. It said
each question has been carefully considered and answered and it is the
government that decides what kind of warship it wants.
"Delivering the right [Canadian surface combatant]
capabilities to the Royal Canadian Navy, on time and on budget, is a priority
for Irving Shipbuilding," said spokesperson Sean Lewis.
"In doing so, we will work closely in partnership
with the government of Canada in selecting a design that is most suitable for
Canada and the requirements of the Royal Canadian Navy. These requirements are
set by the Canadian government."
Complex process
In the past, Irving officials have expressed concern
publicly that too many design changes will mean lengthy delays.
Retired vice-admiral Bruce MacLean said the process of
designing and building a modern warship is complex and requires give-and-take
from all sides.
"You have to be sufficiently flexible to make
change, whether it's a cost issue or a capability issue," Maclean told CBC
News.
He noted that the navy's first attempt to replace its
supply ships was scuttled in 2008 because the navy's requirements exceeded the
hard budget cap imposed by the former Conservative government.
The Liberals intend to build 15 frigate replacements and
recently acknowledged the cost will be in the range of $56 billion to $60
billion — a huge increase from the initial $26-billion forecast made almost a
decade ago.
And MacLean said that underscores the importance of the
unfolding backroom debate.
"Is it really an off-the-shelf design? Or are the
modifications so extensive [that] it will turn it into something else? There's
the rub," he said.
Intellectual property debate
Bidders have also quietly expressed concern that the
initial order will only involve three warships, which are meant to replace the
navy's command and control destroyers.
The government intends to build a total of 15 surface
combat ships, but they will be constructed in batches in a manner similar to
the frigates they will eventually replace.
There is also an indication that a key behind-the-scenes
battle over intellectual property rights, which has been raging since last
year, has not been resolved.
National Defence and Public Works has demanded that ship
designers hand over virtually all their intellectual property data for the
high-tech electronic combat systems that would be installed on the new
warships.
They asked bidders for all their foreground and
background data necessary to maintain equipment such as radar and combat
management suites. The problem is many of Canada's allies, including the U.S.,
Britain and France, paid for the development of those essential electronics
individually and don't want to share the data for their own national security
reasons.
But some of the bidders look at it from a competitive
point of view.
"The grant required by the [request for proposals]
would permit Canada and [Irving Shipbuilding Inc.] to use 'background'
intellectual property supplied pursuant to the [request for proposals] to
compete with the bidder supplying the intellectual property for subsequent
military procurement contracts with other nations," said the documents.
Source: cbc.ca
As for the warship designer, Alion-JJMA, BAE Systems,
DCNS, Fincantieri, Navantia, Odense Maritime Technology and ThyssenKrupp Marine
Systems were pre-qualified. Source:
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