Cost of Polar-class Icebreakers on the rise

The potential cost of the highly-anticipated but long-delayed federal plan to enhance Canada’s presence and capabilities in the Arctic with one and then two polar-class icebreakers seems to be far from frozen. Moreover, the convoluted political mechanics of choosing where to build them has remained mired in political controversy.

The federal government’s professed desire for year-round operations in the Northwest Passage dates to the early 1970s when the Canadian Coast Guard (CCG) announced that it needed to acquire two icebreakers.

The first of those Coast Guard ships, in the Polar 7 class capable of sustained movement through seven feet of ice, would have been conventional diesel-electric. The second, a Polar 10, would have been nuclear-powered. The latter eventually morphed into a hybrid design, but when that idea was effectively snubbed by industry. the government retrenched to a conventionally-powered Polar 8 design and the debate dragged on.

Things reheated politically in mid-1985, when the U.S. Coast Guard Polar Sea, transited the Northwest Passage. The Conservative administration of Prime Minister Stephen Harper almost immediately announced a Polar 8 Project for one icebreaker at a projected cost of $680 million. But it was cancelled in 1988 while still in the design stage.

Now, new analysis published Dec. 16 by the Parliamentary Budget Office (PBO) suggests that the cost of acquiring two icebreakers for the Canadian Coast Guard could be as much as $7.25 billion if completed on time. A one-year delay could push that to $7.48 billion and a two-year delay could mean the government would have to spend $7.72 billion.

When the Harper government first announced its plan for one icebreaker to be built at Seaspan Shipyards in Vancouver, the estimated cost was $1.3 billion. Inflation since then, as confirmed by Statistics Canada, has compounded at 19.31 percent, which would boost the cost of that one ship if built today at $1.44 billion. Divide the PBO’s estimated cost for two and it works out to $3.625 billion each. And that’s assuming no delays, which are more common than not in the shipbuilding sector.

When the Liberals announced last May, four months ahead of the general election, that they would double the order, they provided no cost figures. Nova Scotia MP Bernadette Jordan, the cabinet minister responsible for the CCG at the time, said that would be published once contracts had been negotiated with Vancouver Shipyards in British Columbia and Davie Shipbuilding in Lévis, Quebec.

Davie’s involvement at the time was questionable in that the company was not part of the National Shipbuilding Strategy (NSS). However, in October 2019, Anita Anand, then Minister of Public Services and Procurement Canada, who has recently been shuffled into the National Defence portfolio, confirmed Davie's participation in the NSS.

Ontario-based Heddle Marine, which also sought to be the third yard, had complained from the outset that the qualification criteria were skewed in favour of Davie.

As for the PBO’s new report, it says that, based on the government’s latest shipbuilding procurement initiatives – the Arctic Offshore Patrol Ship (AOPS) and the Joint Support Ship (JSS) – as well as competing priorities at the shipyards, it assumes that construction of the first of the two ships will begin in the 2023-2024 fiscal year, and the second to follow in 2024-2025. Deliveries to the CCG likely would be in 2029-2030 and 2030-2031.

Since the new Polar Icebreaker Project is in the development phase, the PBO says the timelines, project specifications and, to a lesser extent, ship characteristics, remain subject to change. Moreover, compared with naval vessels, estimate costs for large icebreakers presents “an additional challenge” because there aren’t many vessels with similar specifications and capacities.

“Those that are currently in service tend to be legacy vessels due to be replaced in the near future,” the PBO says. Those include Canadian Coast Guard Ship Louis S. St-Laurent, built in the 1960s, and U.S. Coast Guard icebreakers from the mid-1970s. The USCG is currently developing replacements, but its efforts also have been politically contentious.

___
Ken Pole