National Shipbuilding Strategy
Opening Statement to the Standing Committee on Public Accounts
National Shipbuilding Strategy
(Report 2—2021 Reports of the Auditor General of Canada)
25 May 2021
Assistant Auditor General
Madam Chair, thank you for this opportunity to present the results of our audit of the National Shipbuilding Strategy. Joining me is Nicholas Swales, the principal responsible for the audit, and Chantal Thibaudeau, the director who led the audit team.
The Royal Canadian Navy and the Canadian Coast Guard operate fleets of large vessels to support Canada’s participation in security operations around the world, to support marine science, and to ensure that Canada’s waterways are safe and accessible. This audit examined whether these vessels were being renewed in a timely manner.
Timely renewal is important because of the need to replace aging fleets and introduce new capabilities. In 2010, the government launched the National Shipbuilding Strategy to renew these fleets in a timely and affordable manner, as well as to create and support a sustainable marine sector and generate economic benefits for Canada. The strategy also calls for the building of at least 50 large vessels over about 30 years.
Overall, we found that the strategy was slow to deliver the combat and non-combat ships that Canada needs. We found that only 2 of 4 ships scheduled for delivery by January 2020 were delivered, and both were late. We also found that the delivery schedules for many ships were getting longer.
We identified 3 areas of management weaknesses that contributed to the delays.
First, we found that schedules were often not effective at managing projects’ timelines. For several projects, government officials relied on production schedules to understand expected progress and monitor performance. These schedules underestimated the time needed to accomplish different tasks and were not provided in a timely manner by the shipyards.
Second, we found that the risk management tools were inadequate to properly assess, mitigate, and monitor the risks of the strategy.
Third, Public Services and Procurement Canada had not confirmed whether the shipyards had met target state. Target state refers to the facilities, people, and practices needed to enable the shipyards to efficiently build vessels at the required rate. This expectation was part of the agreements that the department signed with the shipyards in 2012.
During the audit, government organizations made key decisions that improved the prospect of timeliness in future deliveries. For example, in 2019, the government changed the order in which ships would be built at Vancouver Shipyards in an effort to improve the shipyard’s efficiency.
Nonetheless, navy and coast guard vessels are aging. When the strategy was launched, several ships had already reached their expected service lives. Measures have been implemented to extend the service lives of vessels, and other ships were chartered or leased to maintain some capabilities. However, interim capabilities are limited and cannot be extended indefinitely. Further delays could result in several vessels being retired before new vessels are operational.
Most ships to be built under the strategy are yet to be built. This means that the federal government has an opportunity to further improve how it manages risks and contingencies so that future shipbuilding projects are delivered in a timely manner.
We made 3 recommendations as a result of this audit. Public Services and Procurement Canada, National Defence, and Fisheries and Oceans Canada agreed with these recommendations.
Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.