Anticipated Cost of Canada’s Frigates Increases

The anticipated cost of the Royal Canadian Navy's new surface combatant ships has increased because of delays and an increase in the size of the ship. 

According to a new report from the Parliamentary Budget Officer's latest estimate, released last week, the frigates will cost $69.8 billion over 26 years, $8 billion more than estimated two years ago. At the time of the previous cost analysis, the government had not yet selected a design for the new generation of warships, so this new report considered characteristics specific to the Type 26 design chosen by the government while incorporating updated information on the project’s timeline.

The $69.8 billion includes $5.3 billion in pre-production costs, $53.2 billion in production costs and $11.4 billion in project-wide costs.

In 2017, the Government of Canada revised their original 2008 program cost estimate of $26.2 billion to $56-60 billion, with costs to be revisited at the completion of the development phase. 

In October last year, the Canadian government announced that BAE Type 26 design has been chosen for the project to replace the navy's aging fleet of frigates. The new 150-meter (492-foot) vessels will replace the Iroquois and Halifax-class warships and provide air defense, anti-submarine warfare and anti-shipping capability. Lockheed Martin Canada is partnering with BAE Systems, and Irving Shipbuilding has been nominated as shipbuilder.

Construction is expected to commence in the next few years, and the The Parliamentary Budget Officer  warns that any delays in building the first ship will be costly. A delay of one year could increase costs by almost $2.2 billion.

The Canadian Surface Combatant project is the largest, most complex procurement ever undertaken by the Government of Canada.