NSPS Secretariat Announces Results of Request for Proposals to Build Large Ships for Canada

The National Shipbuilding Procurement Strategy (NSPS) Secretariat today announced the results of a Request for Proposals to build large ships for Canada.

This strategy will create jobs and generate significant economic benefits in shipbuilding and related industries across Canada. This will involve skilled work in a variety of sectors, such as steel manufacturing, information technology, and defence systems development and integration.  Small- and medium-sized enterprises across the country will benefit through the construction of large and small vessels, as well as work related to repairing and refitting.

The National Shipbuilding Procurement Strategy is the result of extensive consultations with the Canadian marine and shipbuilding industry.  Canada is a maritime nation with the longest coastline of any country in the world. The renewal of the federal fleet is essential to sustaining Canada’s sovereignty and prosperity by safeguarding international trade, as well as enforcing Canadian law.

The combat package includes the Royal Canadian Navy’s Arctic Offshore Patrol ships and the Canadian Surface Combatants ships.  The non-combat package includes the Navy’s joint support ships, the Canadian Coast Guard’s off-shore science vessels and the new polar icebreaker. Small ship construction (116 vessels), an estimated value of $2 billion, will be set aside for competitive procurement amongst Canadian shipyards other than the yards selected to build large vessels. Regular maintenance and repair, valued at $500 million annually, will be open to all shipyards through normal procurement processes.

Irving Shipbuilding Inc. has been selected to build the combat vessel work package (21 vessels), and Vancouver Shipyards Co. Ltd. has been selected to build the non-combat vessel work package (7 vessels). The total value of both packages is $33 billion and will span 20 to 30 years.

The NSPS’s selection of the two shipyards represents the largest procurement sourcing arrangement in Canadian history. The approach and selection process are innovative and unique for the following reasons:

  • open and transparent consultations with bidders on the concept, the requirement definition, the evaluation criteria and the weighting of the criteria;
  • use of independent third parties: Fairness Monitor; First Marine International; and KPMG and PricewaterhouseCoopers to participate in and oversee the process;
  • a governance regime that resulted in merit-based decision-making; and
  • extensive transparency measures where bidders were informed of the results first and have agreed to share their own confidential reports on their capability to do the work.

As with all major defence and security procurements, the Industrial and Regional Benefits (IRB) Policy, will apply to the follow-on shipbuilding contracts. The selected shipyards will be required to identify business activities in Canada valued at 100 per cent of the contract value, ensuring a dollar-for-dollar investment into the Canadian economy.

The next step in the implementation of the NSPS is the finalization of a strategic sourcing arrangement, called an umbrella agreement (UA), with each of the selected shipyards.  Once the UAs are signed, individual ship construction contracts will be negotiated with the respective shipyards. First in line will be the Arctic Offshore Patrol Ships in the combat package and the Science Vessels for the Canadian Coast Guard in the non-combat package.

Source: gc, October 20, 2011