John Ivison: The uncontrolled military program plundering the public purse, desperate for adult attention

Canada’s defence spending is an embarrassment, yet the massively expensive Canadian Surface Combatant program appears to have next to no cost controls

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Theseus, the mythical Greek founder of Athens, is said to have rescued the children of Athens from King Minos after slaying the minotaur, and then escaped on a ship that was revered by the Greeks over many centuries.

As part of its regular maintenance, the ship was rebuilt plank by plank, resulting in the “ship of Theseus” paradox about identity over time: Is it the same vessel that existed before the replacements?

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It is a thought experiment that could just as easily be applied to the Canadian Surface Combatant (CSC) program — the 15 warships that are set to be built in Halifax but which are already years behind schedule and are massively over budget.

Informed sources suggest one reason for the delays and cost overruns is the amount of contracted changes taking place under the direction of the Canadian Navy.

The CSC program was pitched as a relatively low-cost, off-the-shelf replacement for the Halifax class of warships, with a high level of Canadian industrial content.

Yet, over time, the Navy has asked for changes that have frequently replaced Canadian-built content with U.S. technology, the net effect being the loss of hundreds of millions of dollars to Canadian industry and an increase in overall cost.

As one source put it, any naval architect will tell you that once you change more than 15 per cent of a ship, you should design a new one, “and we are well past that number.”

Are Canada’s new warships likely to be Theseus ships? It’s hard to know precisely because the military won’t say.

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It is public information that the Canadian-developed CM330 combat system, part of the original bid, was replaced by the U.S. navy’s AEGIS system and Lockheed Martin’s SPY 7 radar technology. It is known that MacDonald Dettwiler’s Electronic Warfare system was substituted with Northrop Grumman’s Surface Electronic Warfare Improvement Program.

These may be logical changes in a world where interoperability with the U.S. navy is crucial and surface ships are increasingly susceptible to anti-ship missiles, as the sinking of Russia’s Black Sea flagship, the Moskva, illustrated.

But the Canadian frigates have gone from being interoperable to being interchangeable, with the U.S. controlling the intellectual property.

In that case, why not buy the U.S. navy’s Constellation-class guided-missile frigate off the shelf, for one-third of the price the Canadian taxpayer is likely to pay?

The U.S. paid a fixed price of about US$1.66 billion a ship; using the Parliamentary Budget Office’s latest estimate, Canada will pay up to $5.6 billion per ship.

The government has just handed Irving Shipbuilding an additional $463 million to adapt its shipyard to build a frigate whose final weight is, in the words of DND, “evolving, as the design matures.”

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DND says its cost estimate remains $50-60 billion, but conceded in a statement to National Post that “given the inherent complexities … cost estimate revisions are expected.” One thing is certain, they won’t be coming down.

I asked the departments of National Defence and Public Services and Procurement Canada for a list of all the changes to the ships that have been approved or pending.

DND said the “operational requirements” of the CSC have not changed. When asked to list separate equipment changes, the military’s entire communications apparatus must have broken down, because silence was the loud reply.

Why does any of this matter? It matters because Canada’s defence spending is an embarrassment to the country, yet we have one massively expensive program where there appear to be next to no cost controls.

Jens Stoltenberg, NATO’s secretary general, made the point at the organization’s summit in Vilnius that two per cent of GDP spending on defence is the floor, not the ceiling. Canada spends about 1.3 per cent and, according to leaked Pentagon intelligence documents, Prime Minister Justin Trudeau has told this country’s allies that Canada will “never” reach two per cent — a level that would require an additional $75 billion of expenditure by the end of 2027.

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The government is in the midst of a defence policy review and has committed to buying 88 F-35 fighter jets, the 15 frigates and enhancing Norad.

But it is extremely doubtful that there is enough money in the fiscal framework to pay for it all — the 2018 20-year spending plan allocated $108 billion on an accrual basis (costed over the lifespan of the asset) or $164 billion on a cash basis, while the Parliamentary Budget Office estimates the warships alone could cost $85 billion.

The Liberal government has now asked the military to reduce its spending by $900 million over the next four years.

The chief of the defence staff, Wayne Eyre, says there’s no way to do that without it having an impact on an organization that is already stretched too thin, with around 16,000 positions still unfilled.

The new defence minister, Bill Blair, denies that defence spending is being cut, saying it has increased and will continue to increase.

But he admitted that some investments might have to be delayed to accommodate spending reductions.

Perhaps he should get a grip of the frigate program, where he might find a billion dollars just by cancelling some unnecessary changes.

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Richard Fadden, a former deputy minister of national defence and an ex-national security adviser, testified before the House defence committee last week on the procurement issue. He said that there were many cultural and bureaucratic reasons for its notorious inefficiency under Conservative and Liberal governments. He said there are often conflicting interests between politicians and the defence industry, with a risk-averse public service in the middle, trying to balance the desires of the military and industry with the political imperative of regional development. He said in specific circumstances, regional development objectives should be suspended in support of urgent defence acquisitions.

But the observation that was most pertinent to the CSC program was that the military is always pushing for “gold-plated solutions” and the civilian side rarely says no.

“One of the things that used to drive me to distraction when I was in Defence was the number of change orders across the board. And I blame myself and my civilian colleagues for not pushing back harder on the generals and admirals,” he said.

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Fadden referred to the Independent Review Panel for Defence Acquisitions within the department, which is meant to validate military purchases.

But he said within the military there is “a sort of gentleman’s understanding” that if the Air Force wants something, the Army is not going to criticize it.

“It’s very difficult to get an effective review as you work your way up the system.

“A lot of it is a desire to do good but there is a lack of discipline on the department side and on the military side in my view,” he said.

The Department of Public Services and Procurement Canada (PSPC) is the government’s central purchasing agent and is meant to balance military and industrial demands.

I asked PSPC if it is confident Canadian industrial participation levels will be maintained on the CSC program, in light of all the changes from Canadian to American technology. The economic benefits to Canada are meant to be equal to the value of the winning bid.

“Work continues in this regard, as the project progresses through its major stages,” it said in a statement. Which is not a “yes.”

I also asked PSPC if it has a veto on any changes suggested by the military? “PSPC plays an important challenge function,” it said. “Awarding and amending contracts requires the agreement of DND, ISED (Innovation, Science and Economic Development) and PSPC, as well as the shipyard.” Which, again, is not a “yes”.

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The bottom line is that we have one program that is sucking up almost the entire military capital budget, with next to no adult supervision.

At the same time, the war in Ukraine suggests warships are becoming obsolete and vulnerable to low-cost anti-ship missiles.

Would Canada’s security be better served by reducing the number of frigates on order, as Australia and the U.K. have decided to do, and then redirecting the savings to buy a new fixed-price submarine fleet off the shelf from South Korea or some other foreign supplier?

Why is Canada so convinced that it needs 15 big ships, when the price is increasingly unaffordable.

As the Irving yard in Halifax gets ready to build the first of its Theseus ships, there are lots of questions and not many answers forthcoming from a government that said it would make information open to all Canadians by default.

jivison@criffel.ca

Twitter.com/IvisonJ

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