Navy could get converted Davie supply ships at fraction of price of building new: PBO

Ottawa could buy two converted civilian vessels from a Quebec shipyard to serve as support ships for the Royal Canadian Navy for a fraction of the cost of building brand new ones, according to Parliament’s budget watchdog.

In a new report released Nov. 17, parliamentary budget officer Yves Giroux estimates that the price of buying the two converted container ships from Chantier Davie would be around $1.4 billion.

That compares to around $4.1 billion to build two brand-new joint support ships, the first of which is already under construction in Vancouver and slated for delivery in 2023.

The findings follow years of heavy lobbying from Davie, which has been leasing one of the two converted civilian vessels to the Navy since 2018 and wants Ottawa to move ahead with the second. The first is known as MV Asterix and the second as MV Obelix.

The federal government has been resisting those calls despite pressure from the shipyard, opposition parties and the Quebec government, and instead pressed ahead with work on the new joint support ships.

Giroux estimates the government has so far spent $1 billion on the new vessels, which are being built by Seaspan Marine.

Navy commanders have previously defended the planned new vessels as being more capable than the converted ships from Davie, saying they have more powerful self-defence systems and communications equipment than the converted ships.

Davie has pushed back against such assertions, as MV Asterix has been sailing alongside and providing support to numerous Canadian warships around the world over the past two years.

Giroux could not comment on whether the two joint support ships to be built in Vancouver are more capable than the MV Asterix and MV Obelix, saying such comparisons were outside the scope of his review. The study was requested by a parliamentary committee.

Instead, Giroux said it is up to the Department of National Defence and government to explain why spending more money to build two new ships makes more sense than buying the two converted vessels from Davie.

“It may well be that it totally makes sense,” Giroux told reporters on Nov. 17 during a technical briefing. “But the experts at DND would presumably be in a good position or should be in a good position to make that point with parliamentarians and the Canadian public.”

At the same time, Giroux acknowledged it is unlikely the government will cancel plans to build the two new ships in Vancouver, given the amount of time and money already invested in the project. The second ship is due to be finished around 2025.

Plans to build new joint support ships for the Navy first started in 2004, with the aim of having three new vessels in the water by 2012. However, the project ran into numerous delays and cost overruns before being restarted about 10 years ago.

The resulting competition for the contract to build the two new vessels as well as a series of new ships for the Canadian Coast Guard saw Seaspan beat out Davie in October 2011.

In the meantime, the Navy was forced to retire its two previous support ships earlier than expected due to excessive corrosion on one and a fire on the other, leaving the military with a major gap in its ability to resupply vessels at sea.

To fill the gap, former prime minister Stephen Harper’s Conservative government awarded Davie a sole-source contract worth $700 million in 2015 to convert the MV Asterix into an interim support ship.

That contract, which was at the heart of the failed prosecution of retired vice-admiral Mark Norman, was finalized by the newly elected Trudeau government in 2016.