Canada selects Irving, Seaspan to build C$33 billion of ships under NSPS

Under the largest procurement in Canadian shipbuilding history, Irving Shipbuilding Inc. and Seaspan’s Vancouver Shipyards Co. Ltd. emerged as the winners today of Canada’s National Shipbuilding Procurement Strategy. Irving Shipbuilding was selected to build 21 combatant vessels under the program, and Vancouver Shipyards Co. Ltd. will build seven non-combatant vessels. The total value of both packages is C$33 billion and will span 20 to 30 years.

The National Shipbuilding Procurement Strategy (NSPS) will create jobs and generate significant economic benefits in shipbuilding and related industries across Canada. This will involve skilled work in a variety of sectors, such as steel manufacturing, information technology, and defence systems development and integration.  Small- and medium-sized enterprises across the country will benefit through the construction of large and small vessels, as well as work related to repairing and refitting.

The National Shipbuilding Procurement Strategy is the result of extensive consultations with the Canadian marine and shipbuilding industry.  The renewal of the federal fleet is essential to sustaining Canada’s sovereignty and prosperity by safeguarding international trade, as well as enforcing Canadian law.

The combatant package includes the Royal Canadian Navy’s Arctic Offshore Patrol ships and the Canadian Surface Combatants ships.  The non-combatant package includes the Navy’s joint support ships, the Canadian Coast Guard’s off-shore science vessels and the new polar icebreaker. Small ship construction (116 vessels), an estimated value of C$2 billion, will be set aside for competitive procurement amongst Canadian shipyards other than the yards selected to build large vessels. Regular maintenance and repair, valued at C$500 million annually, will be open to all shipyards through normal procurement processes.

According to Seaspan Shipyards, the C$8 billion program will not only inject billions into the local economy, but it will create an average of 4,000 jobs over the next  8 years. In addition, the Federal Government has plans for a further 17 vessels which should fall under the non-combatant package.

“While we felt we were more than capable of building the combat ships, we are honoured to have been chosen to provide non-combat vessels for the men and women of the Royal Canadian Navy and Coast Guard,” said Jonathan Whitworth, Seaspan CEO. “We have a long and established track record of working with the Canadian Navy and Coast Guard in building ships on time and on budget. Seaspan is committed to returning BC’s shipbuilding industry to its once-thriving roots. This award is a direct result of that commitment. We will deliver world-class ships to Canada.”

The next step in the implementation of the NSPS is the finalization of a strategic sourcing arrangement, called an umbrella agreement (UA), with each of the selected shipyards.  Once the UAs are signed, individual ship construction contracts will be negotiated with the respective shipyards. First in line will be the Arctic Offshore Patrol Ships in the combat package and the Science Vessels for the Canadian Coast Guard in the non-combatant package.

October 19, 2011