Canada will not be be accepting an outside offer which promised up to $32 billion in savings on the construction of the Canadian Surface Combatant fleet.
Responding to media reports about a bid proposed by French Naval Group and Italian Fincantieri, offering to build 15 frigates based on the FREMM design for a fixed price of $30 billion, the government said it would not be accepting the “unsolicited proposal at the final hour”.
Compared to current project cost estimates which sit at over $60 billion, Fincantieri-Naval Group bid offered considerable savings but the government rejected it arguing that such a move would break faith with other bidders on the project.
The government further said that any other offers submitted outside the competitive process would have been rejected.
“With respect to suggestions that significant savings could be realized through this alternative process, this is far from evident. It is important to note that a warship project budget must cover more than just delivering the ships,” the government announcement read.
“It must also include the costs associated with design and definition work, infrastructure, spare parts, training, ammunition, contingencies and project management. Typically, the acquisition of the ships themselves only represents about 50-60% of the project’s overall budget. As well, any prices cited without the context of applicable terms and conditions as indicated in the RFP (such as scope of work, divisions of responsibilities, intellectual property rights, warranties, limitations of liability, indemnities, etc.) are effectively meaningless.”
Aside from the offered FREMM frigate design, other known contenders for the CSC project include the Type 26 frigate design proposed by Lockheed Martin and BAE Systems, Dutch De Zeven Provinciën Air Defence and Command frigate-based design proposed by a team with Alion Canada at the helm and the Spanish F-105 frigate design offered by Navantia.
The procurement process for the CSC is scheduled to conclude by 2018 while the ships are expected to start construction in early 2020s. The 15 surface combatants will be replacing Canada’s Iroquois-class destroyers and Halifax-class frigates.