Canada privatizes maintenance of new navy ships

Photo: Irving Shipbuilding

The Canadian government on Thursday awarded a CAD$5.2 billion deal for the maintenance of two new ship classes over the next eight years to the Canadian subsidiary of French defense contractor Thales.

The joint venture of Thales Canada and Thales Australia will be providing in‑service support, including refit, repair and maintenance and training for the Arctic and Offshore Patrol Ships (AOPS) and Joint Support Ships (JSS).

The government made this decision despite repeated warnings from both unions and the department of national defense (DND) that such a decision could be detrimental for both defense capability and the taxpayers.

Unions argued that awarding the maintenance contract to a single entity would result in loss of expertise with the federal workforce which would eventually prompt the government to hire more contractors.

According to an Ottawa Citizen report, the DND earlier warned that this option could cost the government more in the long run in addition to the risk of a dispute between the government and the contractor which could have an adverse impact on Canadian Navy fleet readiness.

The contract that the Canadian government awarded today is for an initial service period of 8 years, estimated at $800 million (excluding taxes), with options to extend services for up to 35 years, for an estimated total of $5.2 billion (excluding taxes) for the life cycle of the vessels.

Under this contract, Thales is required to compete this work amongst subcontractors. For ships delivered in the East, work will be conducted in the Atlantic provinces, Quebec or Ontario, resulting in regional economic benefits. For ships delivered in the West, work will be conducted in the Western provinces and Territories, according to a government announcement.

Construction of Arctic and Offshore Patrol Ships (AOPS) has already started with lead ship, the future HMCS Harry DeWolf, scheduled for launch in 2018 while the Joint Support Ships are set to start construction in 2021

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