National Shipbuilding Procurement Strategy in Canada

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Table of Contents

Summary
The Industrial and Technical Benefits Value Proposition
Sector Growth
Supplier Development
Research and Development
Exports
Skills Development and Training
Assessment of Current Status of the Strategy
References

Summary

Warships are incredibly sophisticated devices that demand meticulous attention to detail. A battleship must be capable of floating, maneuvering, and fighting. As elementary as they are, all of these aspects must be considered while designing a ship. The National Shipbuilding Procurement Strategy, commonly referred to as the National Shipbuilding Strategy (NSS), is a long-term initiative that aims to rebuild Canada’s shipments, notably the Canadian Coast Guard and the Royal Canadian Navy (Collins, 2021). The scheme is administered by the Public works sector and State Services and is separated into three components: the combat bundle, the non-combat shipment, and the lesser craft shipment (Collins, 2021). Although the technique began on June 3, 2010, the findings for larger packages were not made public until October 19, 2011 (Fortier, 2016, p. 102). Canada’s shipbuilding industrial base has stalled from the late twentieth century to the beginning of the twenty-first century, necessitating a new plan to revitalize the enterprise. Additionally, the country’s shipyards were deteriorating due to inadequate supply lines, machinery, and experienced labor.

As a result, an innovative method was required to help the maritime sector build vessels in the nation. The National Shipbuilding Strategy intended to design a long-term, consistent shipbuilding strategy that would contribute to the betterment of the nation in multiple ways (Collins, 2019). Canadian shipbuilding would be reinvigorated due to the concurrent building of boats for the Canadian Coast Guard and Royal Canadian Navy (Collins, 2019). The approach was initially valued at $ 38 billion, but by 2016 had risen to $ 50 billion (Ring, 2016, p. 4). As such, the NSS initiative is not only intended to construct and sustain the national fleet; it is also intended to optimize the nation’s financial opportunities, as mentioned in the value proposition section.

The Industrial and Technical Benefits Value Proposition

As previously stated, the procurement scheme was employed to foster commercial and regional development in Canada. A positioning statement is a promise made by a business to its clients regarding the value they will receive if they choose to purchase their commodities (Payne et al., 2017). Moreover, a value proposition is a commercial or promotional statement that outlines why a buyer should purchase a product or utilize a service (Payne et al., 2017). The advantages will be analyzed using a value proposition assessment approach that considers economic growth, supplier management, research and development, sales, and education and competencies.

Sector Growth

The National Shipbuilding Strategy has affected Canadian economic development both directly and indirectly. Directly, the vendors assigned to carry out this approach committed to contributing 0.5% of the worth of their NSS contracts in three primary priority areas: technological enhancement, human resource empowerment, and industrialization (Public Services and Procurement Canada, 2016). By the end of 2016, the operation’s agreements had added more than $7.7 billion to the nation’s gross domestic product (GDP). In addition, between 2012 and 2016, the initiative granted $6.1 billion in concessions, with $3,926, $585, $1,510, and $123 million allotted to big warships, small boats, replacement, refurbishment, and upkeep, and supplies, correspondingly (Public Services and Procurement Canada, 2016). This amount of funding considerably spurs economic growth both directly and indirectly, which is projected to prevail in the future years. Furthermore, the scheme is expected to generate or sustain 7,350 employment years between 2012 and 2022, both directly and indirectly (Public Services and Procurement Canada, 2018). As a result, the nation’s shipbuilding sector has grown enormously since the NSS project was implemented, supporting considerable GDP development and providing jobs for thousands of Canadians.

Supplier Development

Since the NSS program’s inception in 2010, Canadian entrepreneurs have reaped enormous benefits. The projects were given to Canadian firms, including Irving Shipbuilding Inc. and Seaspan Marine Corp. In addition, these businesses collaborated with other Canadian businesses to offer products and services for their activities. As a result, small and medium-sized businesses may join the shipyard’s distribution network and capitalize on multibillion-dollar construction. For example, Bluedrop Training & Simulation of Halifax was granted a $15 million agreement in April 2016 to develop cutting-edge simulated teaching and computation operating systems and innovations (Public Services and Procurement Canada, 2016). The purpose was to arrange and train employees for the Arctic and Offshore Patrol Ships being constructed under Canada’s National Shipbuilding Strategy. Conversely, Thordon Bearings Inc. has been approved to provide Irving Shipbuilding’s Halifax Shipyard with significant turbine machinery, saltwater, and corrosion prevention components at the cost of around $1 million (Public Services and Procurement Canada, 2016). As a result, the supply chain strategy has been used to promote indigenous firms in the nation, particularly small and medium-sized enterprises capable of providing products and services to prime contractors.

Research and Development

The NSS’s two primary construction companies have agreed to foster innovation and development of the nation through sponsoring key stakeholders. Each year, the firms pick other organizations to finance to assure continuing study into strategies to encourage growth across Canada. Irving Shipbuilding, for instance, contributes 0.5% of the cost of its contracts in research into strategies to develop a sustainable maritime economy in the nation (Public Services and Procurement Canada, 2016). As a result, this firm will have invested more than $12 million in exploration and development by the lapse of the agreement. Likewise, Halifax Shipyard joined with Nunavut Arctic College in 2016 to give $ 2 million to nine scientific studies encouraging numerous operations in Canada’s Arctic towns (Public Services and Procurement Canada, 2016). Innovative activities are critical components of the NSS venture, and the project’s continuing execution will result in multiple advantages.

Exports

Canadian firms can now accommodate local and global markets due to the NSS program’s revitalization of shipyards. The scheme provides a framework for local businesses to grow their professionalism as vendors of products and services. As SMEs remain involved in the project, their expertise and public image grow substantially, enabling them to compete in worldwide shipbuilding marketplaces. For example, in 2014, one of Irving Shipbuilding’s subcontractors, Lockheed Martin Canada, won a bid to modernize the weapons on New Zealand’s ANZAC-class vessels predicated on its considerable knowledge of the NSS software system (Public Services and Procurement Canada, 2016). Other businesses, including DRS, Ultra Electronics, Hepburn Engineering, and AutoNav, are capitalizing on the method’s expertise to undertake worldwide possibilities. The NSS program has helped local firms obtain the required knowledge and prestige to engage with international counterparts for various projects.

Skills Development and Training

The two primary construction companies involved in the NSS plan are committed to continual employee development through instruction and economic development initiatives. The firms utilize on-site simulators to replicate the vessel-building process, ensuring that personnel get relevant information about operating the system. This technique enables businesses to have highly skilled employees who are capable of achieving the NSS requirements. These typical activities are expert training, internship and mentoring initiative, safety and well-being standards, managerial and administrative training, talent exchange, and recruit assessment. Moreover, Irving Shipbuilding developed an Innovation center at Nova Scotia State University to promote marginalized populations in the shipbuilding sector through two education courses.

Assessment of Current Status of the Strategy

Current Status of NSPS

The NSPS has solidified Canada’s military and defense objectives by compelling prolific bidders to attain an intended outcome. At that time, they will have the competence to manufacture warships at recognized worldwide standard production efficiency. The present state of the NSPS includes the Arctic Offshore Patrol Ships (AOPS) that consists of 6 warships (Public Services and Procurement Canada, 2016). Irving Shipbuilding is the project leader of the AOPS cruisers and manufactures them at its Halifax facilities. BMT Fleet Solutions has finished the preliminary conceptual design. The Offshore Oceanographic Science Vessel (OOSV) has one vessel (Public Services and Procurement Canada, 2016). According to Public Works and Government Services Canada design specifications, this program purchased a single container of 90-100 meters in length designed to transport 30 staff and 37 researchers (Public Services and Procurement Canada, 2016). The first phase of the procurement procedure for OOSV was announced in 2009, together with three OFSV boats. In addition, the government published a Solicitation of Interest and Qualification to seek competent designers.

Additionally, the Joint Support Ship (JSS) features three vessels performing the first concept development agreement. Thus, this will enable Vancouver Shipyards Co. Ltd. to fully assess the Berlin class, off-the-shelf ship design from ThyssenKrupp Marine Systems Canada (Public Services and Procurement Canada, 2016). Finally, the Polar Icebreaker with one submarine is one of Canada’s Northern Initiative cornerstones, which focuses on enhancing Canada’s Arctic independence, northern socioeconomic development, and conserving the North’s ecological legacy.

Issues and Challenges

A major issue affecting the NSPS was a power imbalance between the National Defense and the PWGSC. PWGSC handled the demand for propositions due to the importance of the issue. NSPS components were negatively affected, and lower staff mediators were under pressure due to personality incompatibility with the other party involved. In the course of the procurement process, there were various shocks and inadequacies. Many people are perplexed why the specifics of how and when NSPS will take place were so vague. However, they contend that NSPS emerged once the shipyards were chosen rather than resulting from an agreed-upon master plan. Some argue that before the commencement of NSPS, decisions on the order of priority should have been made concerning the construction of the Coast Guard Polar Icebreaker and the Navy’s Joint Support Ships. Both clients wished to get their ships as quickly as possible, but no conclusions were drawn until after the NSPS had been put into place. When it comes to efficiency and effectiveness, they both suffer – ships were not completed promptly, and projects’ early success was less than conciliatory.

Is the Strategy Meeting Its Original Objectives?

The NSPS has met its initially stated objectives through the accomplishments of those goals as discussed herein. First, no documentation has been offered to support the claim that the governmental boats can be manufactured more cheaply anywhere globally than they are being reconstructed in Canada by the NSPS. As a result, Canada’s loss of wider economic advantages may probably outweigh any potential cost reductions from offshore construction. Second, Canadian shipbuilding has been revitalized by NSPS due to increased employment and economic advantages that will persist for some time in Canada’s future. Lastly, the revenue for taxpayers has been maximized, while growth opportunities are fostered. The fulfillment of this aim is one of the most problematic aspects of the NSPS because it implies that the state accepts compensation for manufacturing ships in Canada.

References

Collins, J. F. (2019). Overcoming’ boom and bust’? Analyzing national shipbuilding plans in Canada and Australia. Canadian Global Affairs Institute.

Collins, J. F. (2021). Defense procurement and Canadian foreign policy. In The Palgrave Handbook of Canada in International Affairs (pp. 275-295). Palgrave Macmillan, Cham.

Fortier, G. (2016). What’s the deal with shipbuilding?-A review of Canada’s national shipbuilding procurement strategy.Carleton Perspectives on Public Policy, 3, 93-113. Web.

Payne, A., Frow, P., & Eggert, A. (2017). The customer value proposition: Evolution, development, and application in marketing.Journal of the Academy of Marketing Science, 45(4), 467-489. Web.

Public Services and Procurement Canada. (2016). Generating economic benefits: National shipbuilding strategy: 2016 annual report. Web.

Ring, T. (2016). The national shipbuilding procurement strategy: How did we get to where we are now? Canadian Global Affairs Institute.

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