Frigate replacement program kicks off with design competition

The Trudeau government is now ready to solicit bids from defence contractors interested in designing and equipping Canada's next generation of combat ships.

And it is demanding an extraordinary amount of detail and data from those companies, some of which have waited years for the program to get underway.

Even before the ink is dry on the proposal request, there are concerns among some bidders about how much Canadian content will end up in the new surface combat ships.

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The federal cabinet has given the green light to release a long-anticipated request for proposals for an off-the-shelf warship design and combat systems.

Pre-qualified defence companies are expected to receive their packages on Thursday and the government is anticipated to follow up with a technical briefing to explain the details to the public.

The bidders have until April 27 to submit their plans to Irving Shipbuilding Inc., which was selected in 2015 as the prime contractor.

The Halifax-based company is the federal government's go-to yard for combat ships under the National Shipbuilding Strategy.

CBC News has obtained partial extracts of the draft request for proposal, which has been the subject of intense backroom debate among potential bidders.

The document — dated Oct. 9, 2016 — asks for an exceptional amount of detail and clearly displays the amount of control Irving is exercising over the bidders and potential subcontractors.

High stakes for taxpayers

The stakes for Canadian taxpayers are enormous and the Liberal government has wrestled, since coming to power a year ago, to get a handle on the project, expected to be the most expensive under the umbrella of the National Shipbuilding Strategy.

Internal estimates produced last year in the transition between the Conservative and Liberal governments suggest the construction cost for 15 warships could exceed $40 billion. In addition, another $60 billion — or more — could be added to the price tag when lifetime maintenance and staffing requirements going decades into the future are considered, as the auditor general has insisted.

Public Works Minister Judy Foote said last May the government won't release a cost estimate until there is a signed contract in the program, which is expected to be the largest procurement in Canadian history.

The cone of silence also extends to the draft request for proposals, which prohibits bidders and their subcontractors from talking to the media about the project, unless they receive written approval from Irving.

There's also an attempt to keep a lid on the cutthroat competition.

"Neither the bidders, nor any of their respective subcontractors, employees or representatives shall make any public comment, respond to questions in a public forum or carry out any activities to either criticize another bidder or any bid — or publicly advertise their qualifications," said the proposal, obtained by CBC News.

The navy is looking for a warship with the capability of hunting submarines, but also defending against enemy aircraft and missiles. It is expected to be swift enough to keep up with U.S. aircraft carrier battle groups and be armed with both a single 127-millimetre gun and surface-to-surface missiles of its own.

The new surface combatants will also carry up to 200 sailors and have the deck space available to allow for the conduct of humanitarian missions, such as the at-sea rescue of migrants. 

The Liberals, like the Conservatives before them, have also not committed to building a specific number of warships, which are not expected to enter service until the mid-2020s.

Rather than designing a replacement for the navy's patrol frigates from scratch, the government chose last spring to go with a proven warship design from another country.

Expected bidders include:

• Alion-JJMA Corp. (U.S.).
• Lockheed Martin (U.S.). 
• BAE Systems Surface Ships Ltd. (Britain). 
• DCNS (France). 
• Fincantieri (Italy). 
• Navantia (Spain). 
• Odense Maritime Technology (Denmark). 
• ThyssenKrupp Marine Systems (Germany).

Some are ship designers, while other build electronics.

Backroom battles

There have been numerous backroom brawls leading up to the release of the request for proposals, including concerns about how much high-end Canadian-made electronics — known as systems integration — will go into the new warships.

Sources, who are close to the file but only able to speak on background, tell CBC News that L-3 Communications Canada has written a letter, supported by some of the other bidders, warning the government no significant Canadian content — radar, sonar and communications — will end up in the surface combatants unless the foreign designers are forced to work with a company from this country.

The evaluation process, however, gives points to companies with higher Canadian content.

The request for proposals demands that each bidder supply an eye-watering amount of detail, including the number of "fasteners" that would be used to build each ship, including all anchors, bolts, nails, nuts, rivets and rods. The government also wants part numbers and descriptions about what tools will be used.

Some contractors see it as "an utterly incredible request," according to sources, who say "a lot of trees will die" in order to supply paper for the presentation. Some of the companies that bid on the air force's fixed-wing search and rescue plane program last January faced similar demands for detail, to the point where two bidders hired moving vans just to deliver their presentations to Public Works.

But officials working on the warship program insist — since it is an off-the-shelf design — each bidder should have all of that detailed information at their fingertips and it helps refine cost projections.

There has been a bruising fight over the federal government's demand that each contractor hand over intellectual property rights for all of the foreground and background data that goes into each design. An earlier draft of the plan said bidders would be disqualified if they failed to do so, but federal officials have agreed to a compromise.

The issue is of enormous importance because of the lucrative long-term maintenance contracts that will follow the construction.

If the government doesn't get the right deal, it could cost taxpayers untold hundreds of millions of dollars down the road in licensing fees, and might even restrict the military's ability to update and use its own equipment.