Andrea Gunn, Herald News
6 July 2015
Upkeep costs for Canada’s fleet of Victoria-class submarines could balloon out of control within years if the government is unable to find parts to service them, warns one expert.
Since 2012, Canada has issued more than 200 requests for proposal for the aging fleet to obtain spare parts: everything from simple connectors to complex pieces of machinery. The government has spent $120 million since 2013 on parts for the fleet, according to Defence Department numbers. Nearly $39 million of that has been spent since the start of this year.
Ken Hansen, a maritime security analyst and research fellow at Dalhousie University in Halifax, said that price tag could grow significantly. Hansen said since the submarines — designed in the late 1970s — are no longer in production, there is no supply chain backing them. To replace parts as they fail, the government must find leftovers from companies that once serviced the subs, find substitutes or have them specially manufactured.
While some items are easy to find and can be bought at a fairly reasonable price from a manufacturer looking to get rid of them, Hansen said some will be nearly impossible to come by.
For parts the government can’t find or substitute, the cost will be much higher.
“I’ve seen figures where production costs for specific items, depending on what they are, (can range from) 300 per cent higher than just buying it off the shelf to as much as 1,000 per cent higher for advanced pieces of equipment,” said Hansen.
When a manufacturer is asked to make a small quantity of a part no longer in production, the buyer is not getting the advantage of economies of scale. Moreover, Hansen said, the company must sacrifice production of something lucrative to produce this one-off item for the buyer, driving costs far above off-the-shelf prices.
“Of course they’re going to charge you a premium; they’re going to take you to the cleaners. This is what happens when you go for the bargain-basement solution. There’s going to be complications down the line.”
Canada bought the fleet of four Victoria-class submarines from the British navy in 1998 at what was touted as a bargain price of $750 million, but they came with significant associated costs. In 2008, the Canadian government awarded a maintenance contract for $1.5 billion over 15 years to engineering company Babcock Inc. for the Victoria-class in-service support program. In 2014, the government began planning a $1.5-billion life-extension plan to expand functionality of the class beyond its mid-2020s end-of-life expectancy.
According to the department, all funds for the acquisition of spare parts are covered under the 2008 Victoria-class in-service support program.
Rising life-cycle costs of old equipment is not a new story in Canadian military procurement, Hansen said.
The government has run into similar problems with its Sea King helicopters, as well as the Protecteur-class oilers, which were retired in 2014 when life-cycle management and repair costs became uncontrollable.
Whether the Victoria-class subs will suffer the same fate is yet to be seen. In early 2015, all four submarines finally achieved operational status after years of maintenance, Canadianization and accident repairs. But Hansen said it’s a challenge for anyone, the Canadian military included, to predict how high costs for parts and upkeep will go.
Random malfunctions and mishaps like a fire aboard HMCS Chicoutimi in 2004 and HMCS Corner Brook’s 2011 brush with the ocean floor have driven a need for certain parts up to now, but Hansen said the government has no data to predict trends going forward.
What will be the most telling is which problems are identified during each submarines’ scheduled extended dock-work period, which are completed in cycles of six operational
years and two maintenance years. HMCS Corner Brook is undergoing its first maintenance cycle, scheduled to be completed in 2017.
“Once they start pulling everything apart and examining it carefully, they’ll have a pretty darn good idea of what the total cost is going to be,” Hansen said. “If it’s simple maintenance and normal wear and tear, it may not be so bad for the next five to 10 years, but beyond that, there’s absolutely no way to estimate how high this could go. And it will be high.”
Undoubtedly, he said, there will be equipment Canada just can’t find in a warehouse somewhere.
“(We’ll start to ask) can we substitute something without breaking the bank. If the answer is yes, it keeps the cost manageable. If the answer is no, you’re screwed.”
Canada’s fleet of Victoria-class subs have received their fair share of criticism since they were acquired. Just last month, the Centre For Policy Alternatives issued a report recommending the government axe the entire program.
While Hansen said the fleet has been problematic, ridding Canada of its submarine capabilities is not the answer.
“Submarines are part of the naval world, and when there are problems, you’ve got to be ready to deal with them.”