Budget officer takes aim at Tories' handling of long-delayed navy supply ships

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Canadian Navy supply ship HMCS Protecteur, commissioned in 1969, stands by off the coast of Dili, East Timor in this November 9, 1999 photo. THE CANADIAN PRESS/AP, Ed Wray

OTTAWA - The Harper government moved to blunt looming criticism of the navy's long-delayed supply ship program and its marquee shipbuilding strategy by leap-frogging ahead of a critical report scheduled to be released Thursday by the parliamentary budget officer.

Senior officials at Public Works, who oversee the National Shipbuilding Strategy, held a technical briefing Wednesday ahead of the release of a report that will declare the program to replace the navy's 45-year-old supply ships as unaffordable given the inadequate $2.6 billion set aside by government for the purchase.

The shipbuilding bidding process was seen as a model for future procurements when it was unveiled last year. Problems with affordability of the ships could add to the political embarrassment the government suffered over the purchase of new fighter jets.

A report by Parliamentary Budget Officer Kevin Page will underscore the higher cost associated with building ships in Canada, as the government acknowledged, but senior Public Works officials, who spoke on background, insisted the program remains on track to deliver two ships by 2018-19.

Those officials conceded in the briefing that the vessels, which are still being designed, will be reviewed to see if they are affordable and raised the possibility that some capabilities could be scaled back.

It was Page's stinging criticism of the F-35 stealth fighter that ignited a political controversy which ultimately resulted in the Conservatives' re-examination of the multibillion-dollar program. Page accused National Defence of low-balling the multi-purpose jet's purchase and maintenance costs. That criticism that was backed up by the auditor general.

Background material released Wednesday as part of the briefing shows the government may have learned its accounting lesson. Estimates for the full cycle cost of the new supply ships at $7.1 billion.

Liberal defence critic John McKay dismissed the briefing as recognition that the government's plans will not live up to the political hype.

"They're just trying to head off negative publicity," he said Wednesday.

The shipbuilding plans have been held up as an example of success, but over one year after the framework deal was announced there has been growing concern because no actual construction contracts have been signed and there are questions about the program's ability to deliver the same number of ships as initially promised.

The government trumpeted that 21 combat and seven civilian ships would be built.

But officials acknowledged that the number is up for discussion and it will depend on the capabilities that both the navy and coast guard require.

"It's not really the number of hulls that will define capability, it's each actual ship (and) what each actual ship will contribute to the fleet," said one official.

When the government announced it was proceeding with the support ship program, it said it hoped to build two, possibly three vessels. That was quietly dialled back in Wednesday's briefing to a firm two ships.

The supply ships, meant to replace HMCS Preserver and HMCS Protecteur, were first ordered by the Paul Martin government in 2004, but initial proposals by shipyards were deemed too expensive by the Harper government in 2008.

The program was forced to go back to square one with a drastic scaling back of the capabilities the navy wanted for the ships.

Page's report is expected to show that when inflation is factored in, the new less capable ships will cost more than if the better equipped vessels scrapped by the Conservative government in the original plan.

McKay was incredulous.

"If they would have stuck with the original plan, sucked it up, they would be six years ahead of themselves, and navy would already have its ships," he said. "The consequence now is we don't know what we're getting, when we're getting it and how much it's going to cost."

When the budget officer took aim at the F-35, the Conservatives counter-attacked by questioning his numbers and methodology.

Government officials said they haven't seen an advanced copy of Page's latest report, but insisted their own calculations are sound.

The budget officer's report used the existing supply ships and their capabilities as a jumping off point for their analysis and drew on documents at National Defence, the shipbuilding industry as well as a team of experts including naval specialists at the U.S. Government Accountability Office in Washington.