Public Services and Procurement Canada

Public Services and Procurement Canada

November 30, 2015 15:12 ET

Equipping the Navy with an Interim Auxiliary Oil Replenishment Capacity

Statement from Minister of Public Services and Procurement Judy M. Foote and Minister of National Defence Harjit Singh Sajjan

OTTAWA, ONTARIO--(Marketwired - Nov. 30, 2015) - The Government of Canada was recently briefed on the interim auxiliary oil replenishment file. We know that this process commenced as a result of an expression of interest by Chantier Davie Canada Inc. We also know that the previous government made a decision to proceed with this proposal through a sole-source rather than a competitive process. The previous government also modified the long-standing procurement rules governing contracts for interim defence requirements.

We have taken time to assess all these facts and have also taken the following into consideration:

  • The process is at an advanced stage. If we restarted this initiative by launching a competition, we would lose precious time in providing the Navy with a critical refuelling and naval support capability.
  • The ship has been purchased by Chantier Davie Canada Inc. and is in the yard undergoing conversion.
  • According to public reports, several hundred employees have already been hired.
  • Due to the structure of the agreement entered into by the previous government, we will be required to pay up to $89 million in expenses should we not proceed with this initiative.

After amassing the facts and carefully deliberating, The Government of Canada determined that proceeding with Project Resolve is the most viable course of action to provide the Navy's at-sea oil replenishment capability until the Joint Support Ships, to be built by Seaspan's Vancouver Shipyards, are operational. The Government of Canada is committed to ensuring that competitions for major military procurements stand up to the highest standards of openness and transparency.

Furthermore, The Government of Canada will undertake a review of the process for sole-source contracts for military procurements, including looking at current regulations and policies and those regulations amended by the previous government.

BACKGROUNDER

Auxiliary Oiler Replenishment Capability

The Government is fully committed to strengthening the Royal Canadian Navy (RCN). The RCN is in the midst of the most intensive and comprehensive period of fleet modernization and renewal in its peacetime history, touching upon all elements of the fleet.

This period of transition includes the modernization of its 12 Halifax-class frigates, the retirement of two Protecteur-class replenishment ships and two Iroquois-class destroyers and the procurement of three new classes of ships, including the Joint Support Ships (JSS), the Arctic/Offshore Patrol Ships and the Canadian Surface Combatants, as well as the integration of new maritime helicopters into fleet service.

Auxiliary Oiler Replenishment (AOR) vessels, such as the JSS, are a critical component of the RCN's routine operations and they directly impact the ability of its fleet to operate as an effective, agile, responsive 'Blue Water' navy. They allow at-sea replenishment (logistic support) capability and permit fleets to autonomously operate for extended periods at home and abroad

Retirement of HMCS Protecteur and HMCS Preserver

On September 19, 2014, Vice-Admiral Mark Norman, Commander of the RCN, announced the retirement of the Navy's legacy refueling fleet. HMCS Protecteur was an AOR ship based in Esquimalt, British Columbia, and the lead ship of the Protecteur-class. Its sister ship, HMCS Preserver, was based in Halifax, Nova Scotia.

HMCS Protecteur was retired after sustaining serious damage in a fire in February 2014. An extensive assessment concluded that the ship was damaged beyond economical repair. Considering the relatively short service life remaining for HMCS Protecteur, which was scheduled to be retired in 2017, the cost to re-instate the ship to full operational capability did not represent the best use of public funds.

HMCS Preserver was scheduled for retirement in 2016, but engineering surveys done in 2014 identified levels of corrosion that had degraded the structural integrity of the ship below acceptable limits. As a result, the cost to reinstate the ship to full operational capability also did not represent a responsible use of public funds.

These unexpected circumstances created an urgent need for Canada to obtain refueling capacity in the short term to bridge the gap until the second JSS is operational. The Government will sign a contract valued at up to $587 million (exclusive of taxes) with Project Resolve Inc. to ensure the Navy has the assets it needs to do its job.

Interim Auxiliary Oiler Replenishment Capability

In order to help bridge the gap until the second JSS is anticipated to be operational in late 2021, an interim AOR capability was required to allow the Halifax-class frigates to continue to operate for extended periods away from home port, without relying on foreign ships or port visits for frequently required support/resupply.

To fulfill this requirement, the Government of Canada, on November 30, 2015, announced it had signed a contract with Project Resolve Inc. to develop an interim AOR capability.

This contract entails the conversion of a commercial container ship (MV Asterix) into an AOR ship. This interim supply ship will provide a more modest capability through supporting military operations in non-threat environments. The interim supply ship will provide capabilities such as at-sea oiler replenishment (NATO STREAM-type liquid and solid replenishment for alongside replenishment on both sides of the ship simultaneously with four stations), aviation support (with a helicopter deck and two hangars designed for Cyclone CH-148, capable of accommodating up to Chinook-size), medical and humanitarian assistance or disaster relief (large medical facilities and emergency accommodation for up to 350 passengers).

As per the contract, Chantier Davie Canada Inc. is to provide at-sea service by fall 2017. The initial period of service delivery will be five years, with options to extend the period of service by up to five additional one-year periods. The exercise of the options will be at Canada's sole discretion.

Conversion work will meet Transport Canada Regulations, and will be done at the Chantier Davie Canada Inc.'s facility in Lévis, Quebec. The project will also see economic benefits across the country.

Chantier Davie Canada Inc. estimates 1 100 jobs will be created at Chantier Davie Canada Inc. and 400 at various Canadian subcontractors during the ship conversion period, and at least 85 jobs will be sustained during the service delivery period.

The Current Capability - Mutual Logistics Support Arrangements with Allied Nations

Until interim AOR services can begin to be delivered by Project Resolve, smart scheduling and Mutual Logistics Support Arrangements (MLSAs) with partner nations have and will continue to provide limited relief to the capability gap currently facing the RCN.

The RCN has entered into a MLSA with Chile. This initial step in addressing this capability gap was a formal arrangement with the Chilean Navy (Armada de Chile) for the use of one of its replenishment ships, AO-52 Almirante Montt, for a dedicated period of 40 sea days, operating in the Canadian Pacific region in support to RCN requirements. This short-term arrangement ended in late-August.

The RCN is currently in the process of completing an agreement with the Spanish Navy for the Atlantic region, though these arrangements have not yet been finalized.

These mitigation strategies do not, however, fully address the significant constraints placed on Canada's flexibility to conduct independent maritime operations, and they do present limits to the RCN's ability to train and retain key skill sets that will be required to operate Queenston-class ships.

The future Joint Support Ships

The Government of Canada remains committed to the Joint Support Ships (JSS) to be built under the Government's Shipbuilding program. The JSS project is designed to increase the range and endurance of the Canadian Armed Forces (CAF) by enabling naval task groups to stay at sea for long periods without obtaining provisions from ashore. The JSS will supply deployed Naval Task Groups with fuel, ammunition, spare parts, food and water. They will also provide an at-sea platform for maintenance and operation of helicopters, a limited sealift capability, and support to operations ashore.

As the selected shipyard for non-combat vessels, Seaspan's Vancouver Shipyards will be responsible for the construction of both JSS at their shipyard in North Vancouver, British Columbia.

The two JSS will replace the RCN's AOR vessels. The new ships will provide core replenishment, sealift capabilities, and support to operations ashore. The JSS will be capable of operating across a full spectrum of threat environments providing a robust warfighting capability with all military crewing and contain the capacity to be continuously upgraded over the next 30 to 40 years to meet the Navy's evolving operational requirements.

The JSS are a critical component for achieving success in both international and domestic CAF missions. The ships constitute a vital and strategic national asset. The presence of replenishment ships increases the range and endurance of a Naval Task Group, permitting it to remain at sea for significant periods of time without going to shore for replenishment.

The first Joint Support Ship, Queenston, is scheduled for delivery in 2020. Queenston is expected to be operational in late 2020 and the second ship, Châteauguay, will be delivered a year later and operational in late 2021.

Conclusion

The RCN will continue to be able to support missions asked of it by the Government of Canada. As seen over the past decade, RCN ships have been operating around the world, from the Caribbean Sea to the Indian Ocean, in support of international operations.

The availability of RCN ships has increased in the immediate term with the completion of the first modernized frigates and now that the Victoria-class submarines have achieved a steady state level of readiness, and will further increase in the short-term with interim AOR capability and in the medium-to-longer term with the Joint Support Ships, Arctic/Offshore Patrol Ships, and Canadian Surface Combatants that will be delivered as part of Government shipbuilding.

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