Canada commits to 8-year $800 M shipbuilding investment
- August 17, 2017
The Government of Canada has committed to supporting the country's shipbuilding industry with an eight-year, $800 million contract for Thales Canada Inc. and Thales Australia Ltd. that will help support the Arctic and Offshore Patrol Ships and Joint Support Ships. The investment means shipbuilding companies such as Irving Shipbuilding and Seaspan's Vancover Shipyards will be building ships in Canada to support the commitment.
The federal government says its commitment delivers on a promise to renew the Royal Canadian Navy's fleet through the National Shipbuilding Strategy (NSS).
The investment ensures that the Royal Canadian Navy can operate as a true blue-water force, creating and maintaining more than 2,000 middle-class jobs across Canada over a 35-year period, growing the Canadian economy.
Jim Carr, Acting Minister of Public Services and Procurement, announced the award of a contract to the joint venture of Thales Canada Inc. and Thales Australia Ltd. for in‑service support, including refit, repair and maintenance and training for the Arctic and Offshore Patrol Ships (AOPS) and Joint Support Ships (JSS).
"The government is revitalizing the shipbuilding industry, bringing middle-class jobs and prosperity to many communities across the country, states Carr. "We are giving our navy the ships it needs, and we are taking steps to make sure that we have solid, cost-effective support in place to keep our fleet in full operational readiness."
The contract award follows an open and transparent procurement process that employed many modern approaches including regular and ongoing engagement with industry. Today's announcement will ensure Canada is ready to support the vessels once they are delivered, while supporting the long-term growth of the marine sector in Canada.
The contract is for an initial service period of eight years, estimated at $800 million (excluding taxes), with options to extend services for up to 35 years, for an estimated total of $5.2 billion (excluding taxes) for the life cycle of the vessels.
Under this contract, Thales is required to compete this work amongst subcontractors. For ships delivered in the East, work will be conducted in the Atlantic provinces, Quebec or Ontario, resulting in regional economic benefits. For ships delivered in the West, work will be conducted in the Western provinces and Territories, resulting in regional economic benefits. It is anticipated that more than 2,000 jobs will be created or maintained across Canada over this 35-year period.
"Thales Canada's best-in-class in-service support solution will drive Canadian innovation, create growth and ensure that ships are mission-ready, where and when they are needed," says Mark Halinaty, president and CEO of Thales Canada Inc. "As the selected in-service support provider, Thales is committed to empowering Canadian industry to support the AJISS program for decades to come."
The in-service support work required to support and maintain the AOPS and JSS under this contract is to be carried out in Canada, unless a ship requires work maintenance while overseas. Under the Industrial and Technological Benefits Policy, an amount equal to the amount of this contract will be invested in Canada.
The AJISS contract will benefit Canadian workers and industry by offering job stability and investments in skills development and innovation, and benefit Canadians by reducing costs through economies of scale. This best practice in shipbuilding and in-service support demonstrates the good planning that is in place under the NSS.
Up to 6 AOPS are being built by Irving Shipbuilding. The delivery of the first vessel to the Royal Canadian Navy is scheduled for 2018.
There will be 2 JSS built by Seaspan's Vancouver Shipyards. The delivery of the first vessel to the Royal Canadian Navy is scheduled for 2021.
The Industrial and Technological Benefits Policy, including the Value Proposition, applies to this contract. The policy requires companies that are awarded defence procurement contracts to undertake business activity in Canada equal to the value of the contract.
The in-service support of these vessels will be performed in Canada, and Thales will make investments in skills development and innovation, contributing to the long-term stability and growth of Canada's marine industry.