Wednesday, August 06, 2008

Conservative government contract-awarding blues: the Coast Guard case

Buying votes with shipbuilding contracts, and having an industry actually capable of making the required vessels for the money available, seem to be two goals effectively impossible to reconcile. First there's the case of Joint Support Ships for the Navy.

Then there's the case of Mid-Shore Patrol Vessels for the Canadian Coast Guard, whose acquisition the government was trumpeting in April 2007:

This is what Fisheries and Oceans was planning in March 2007 for FY 2007-2008 (the CCG is under DFO):
Major Milestones Date

Preliminary Project Approval (PPA) August 2005
Price and Availability September 2005
Letter of Interest to Pre-qualified Suppliers October 2005
Effective Project Approval (EPA) June 2006
Requisition from CCG June 2006
Issue Request for Proposal November 2006
Contract Award May 2007 [emphasis added]
Commence Construction of First Vessel May 2007
First Vessel Delivery August 2009
Delivery of 4 Maritime Security Vessels and 4 Fleet Renewal Vessels May 2011
Big announcement in April and contract awarded in May? Good luck. In July 2007 the procurement process was cancelled--yet a Public Works spokesperson said "It is anticipated that a contract will be awarded in early 2008." Really?

This what Fisheries and Oceans said in November 2007:
Progress Report and Explanations of Variance: An RFP for MSPV detailed design and construction was issued 8 Nov 2006. Federal Budget 2007 approved funding for 4 additional vessels for C&P, for a total of 12 vessels. Proposals from Industry have been received and are under evaluation. Delays have been caused by the extended period required for evaluation due to clarifications required by the evaluation team [no mention of July 2007 process cancellation!].
Yet the same page says this under "Major Milestones":
Issue Request for Proposal November 2006
Contract Award Oct 2007 [emphasis added]
Commence Construction of First Vessel April 2008
First Vessel Delivery Oct 2009
Despite the fact that the contract had not been awarded.

Then DFO said in February 2008 ("Canadian Coast Guard Rejuvenation...Priority 3 — Fleet Renewal", near end of link):
Despite some procurement process difficulties in 2007-2008 [that's understatement for you!], a new Request for Proposal was issued in December 2007 [emphasis added] for the eight mid-shore patrol vessels approved in Budget 2006. The Coast Guard will finalize procurement strategies for the new vessels approved in Budget 2007 (four additional mid-shore patrol vessels, one offshore fisheries science vessel and one offshore oceanographic science vessel) and begin the procurement process in 2008-2009. The delivery of the first mid-shore patrol vessel is targeted for 2009-2010. Similarly, the first new offshore fisheries science vessel is expected to be delivered in 2011.
So a new RFP has been issued. Meanwhile first vessel delivery has slipped from August 2009, to October 2009, to 2009-2010. And a partridge in a pear tree since, as far as I can see, no contract has yet been awarded.

The government, for all its loudly proclaimed major defence and ship acquisition plans, has since it took office in February 2006 only awarded two contracts: for C-17s and for C-130Js (see here for the CH-47F situation and keep your fingers crossed). That's in over two and a half years.

A major reason for the slowness: divvying up the porc, pork, pork and pork. Another: insisting vessels be built in Canada.

Update: A good comment by Babbling notes the problem caused by a shortage of skilled CF personnel to manage procurements.


Blogger Babbling Brooks said...

You missed a third reason for delays, Mark: a very limited pool of procurement talent and experience at DND, given the long and skinny years that preceded this government. Last I heard, they were still having to rotate them from project to project one at a time in order to make things happen.

10:57 a.m., August 06, 2008  
Anonymous Anonymous said...

Anyone have a handle on our domestic ship building capacity ?

I'm wondering if/when ALL these contracts would simply overwhelm the capacity here and force an off-shore or partial off-shore solution.

BC just bought 3 new super ferries and had them built in Germany. The Unions went ballistic until it was finally pointed out ALL the ship building capacity in BC was already booked solid for years building smaller vessels for BCFC.

12:57 p.m., August 06, 2008  
Blogger Babbling Brooks said...

I'm not sure all of the "buy in Canada" provisions can be attributed solely to pork-barreling. I'm not as harsh a critic of the policy, because I believe maintaining a Canadian capacity to do these things is useful.

But it has to be prioritized: getting the right gear is the number one priority, maintaining a Canadian defence industry to provide our own needs is should be a secondary one.

In other words, we should use our own industrial capacity to provide for our own defence needs as much as possible, unless there's a compelling reason not to. In this case, there may or may not be one - I don't pretend to be a shipbuilding expert.

1:07 p.m., August 06, 2008  
Blogger Iron Oxide said...

In my experience part of the problem is Public Works Canada. They are supposed to be contracting experts who facilitate major capital purchases however they have so little knowledge of the subject matter that all they ever succeed in doing is slowing down and screwing up contracts. They are an unnecessary level of bureaucracy and their fingerprints are all over the recent DND contracting and purchasing problems.

9:11 a.m., August 07, 2008  
Anonymous Anonymous said...

Babbling hit the nail on the head regarding the shortage of experienced staff to man project offices by BOTH DND and PWGSC. However, both departments are their own worst enemies, they over staff their teams and under-utilize them or write huge demands on the contractors for Deliverables to justify their PMO overstaffing. For example, the JSS RFP mandates 24 DND/PWGSC staff be accomodated in the shipyard. A typical commercial ship construction contract would allow for two owner's reps in the yard.

10:43 p.m., August 07, 2008  
Anonymous Anonymous said...

Fred and Babbling

The issue of build in Canada is not really the initial build but the servicing and upgrading the ships over their 40 year lifetime. These ships require special skils that have to be maintained current in our domestic yards and commercial R&O yards do not have the skillsets. Canada needs planned long term programs, not build the Frigates in a state of the art Saint John yard and then shut it down and lay off all its highly skilled staff.

10:51 p.m., August 07, 2008  

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