The Canadian government has officially chosen Lockheed Martin’s [LMT] team design to build 15 new Canadian Surface Combatants, less than four months after designating the team the preferred bidder.
The team’s bid is based on the BAE Systems Type 26 Global Combat Ship (GCS). The U.K. Royal Navy previously chose the Type 26 to build eight new ships, which began construction in July 2017.
The team previously argued that since the Type 26 is already developed and being built, there is no obsolescence in its design and provides a lower risk to Canada (Defense Daily, Nov. 29, 2017).
Lockheed Martin’s team includes BAE Systems, CAE, L3 Technologies [LLL], Maxar Technologies‘ [MAXR] MDA unit, and Britain’s Ultra Electronics Maritime Systems.
Public Services and Procurement Canada (PSPC), the government’s procurement agency, said the government, Lockheed Martin, and designated shipbuilder Irving Shipbuilding will now work to customize the Type 26 variant to meet the country’s requirements and integrate Canadian equipment and systems.
The new CSC ships aim to replace the Iroquois-class destroyers and Halifax-class multi-role patrol frigates with one platform that can engage several threats.
Design work is expected to take three to four years to finish, with construction planned to start in the early 2020s.
The initial contract with Irving Shipbuilding is worth $139 million and increase as design work progresses. PSPC noted its industrial and technological benefits policy will apply to the contract, which guarantees all the money the government uses will go into the national economy through domestic suppliers.
Lockheed Martin’s team was first named the country’s preferred bidder for the CSC in October, beating out teams led by Alion Science and Technology offering the Dutch De Zeven Provincien-class frigate built by the Netherlands-based shipbuilder Damen, and a Navantia–Saab team bid a ship based on the Spanish Navy’s F-105 frigate and Australia’s destroyer HMAS Hobart (Defense Daily, Aug. Oct 22, 2018).
Announcing the preferred bidder was a milestone but not a final decision because the winner still had to go through a due diligence process before a final selection and award.
In November the Canadian International Trade Tribunal (CITT) ordered the government to halt the contract award while it reviewed a complaint from Alion, which alleged the Type 26 variant was not capable of big compliance with some mandatory requirements in the original solicitation (Defense Daily, Nov. 30, 2018).
Alion reportedly alleged the Type 26 cannot meet requirements like speed and parameters of the CSC were altered dozens of times during the process, allowing the government to choose an unproven platform. The CITT ultimately rejected the complaint on Jan. 30, finding Alion has no standing to file a complaint before the body.
PSPC affirmed on Friday the procurement process was overseen by an independent fairness monitor and the bid “met all of Canada’s mandatory compliance requirements and has satisfied the due diligence process.”
“This procurement process for Canada’s future fleet of Canadian Surface Combatants was conducted in an open, fair and transparent manner that yielded the best ship design, and design team, to meet our needs for many years to come,” Carla Qualtrough, Minister of Public Services and Procurement and Accessibility, said in a statement.
The CSC is part of a 2017 government plan to nearly double the defense budget over the next 10 years, boosting defense spending from $19 billion in 2017 to almost $33 billion in Canadian dollars in 2027. In 2019 American dollars this boosts the budget from about $14 billion to almost $25 billion (Defense Daily, June 7, 2017).
Navdeep Bains, Minister of Innovation, Science and Economic Development, noted the CSC is one of the biggest procurements in Canadian history. He highlighted the government policy “ensures that Lockheed Martin Canada will invest in Canadian companies and workers, creating more jobs and supporting innovative research.”
PSPC said the CSC is Canada’s largest military procurement program ever and has a total estimated program budget of $56 billion to $60 billion in Canadian dollars. In 2019 American dollars this translates to about $42 billion to $45 billion.
Lockheed Martin noted its partners employ 9,000 Canadians across the country and use a domestic supply chain of more than 4,000 businesses. The company also revealed it is also working with Rolls-Royce for its Canadian-designed Mission Bay Handling System.
“These highly advanced, state-of-the-art warships will enable our navy to monitor and defend our waters here at home, help us support our international allies and keep Canadians safe,” Harjit Sajjan, Minister of National Defence, said in a statement.
Finalizing this Type 26 victory comes after the original British purchase and the selection last year by Australia of a Type 26 variant in a $26 billion program to build nine next-generation anti-submarine frigates (Defense Daily, June 29, 2018).