OTTAWA — The federal government awarded two contracts Tuesday totalling $1 billion to keep a dozen warships running for another 20 years as part of Canada's decades-long, multibillion-dollar national shipbuilding strategy.
It also announced that a third contract for similar work, worth $500 million, is on the way.
What is the national shipbuilding strategy?
The strategy, launched in 2010 by the then-Conservative government, is to supply new vessels — for both combat and non-combat — to the navy and the coast guard.
The plan includes the construction of new warships for the navy as well as icebreakers, patrol ships and search-and-rescue ships for the coast guard.
The investments have also been covering upgrades and maintenance for existing, aging fleets.
In addition, the strategy was to help encourage shipyards to make regular investments in their operations thanks to a predictable flow of procurement opportunities.
Another goal of the strategy was to create jobs near the west and east coasts, and to lift the national economy.
So is it a strategy to build ships or to promote industry?
Both. According to the government, the strategy was partly a response to a decade-long slowdown in orders for new Canadian-made ships, which had led the country's shipyards to decay. The companies that ran them weren't willing to expand or modernize them to catch the boom phases of a regular boom-and-bust cycle.
The promise of regular business is supposed to lead to steady private spending and reliable employment.
How big is the price tag?
In 2010, the national shipbuilding strategy was initially estimated to cost at least $35 billion over 30 years.
Government spending towards the plan has already been significant. And Canada will be making more commitments that are expected to bring total investments well beyond the estimate.
For example, a government plan from 2017 said one component of the strategy — the purchase of 15 new warships — is expected to cost between $56 billion and $60 billion. Last month, an analysis by the parliamentary budget watchdog predicted the price will reach almost $70 billion over the next quarter-century.
The plan includes smaller purchases as well.
Earlier this year, the government announced it would spend $15.7 billion on 18 new ships for the coast guard.
Tuesday's maintenance announcement was part of a $7.5-billion project to keep Canada's 12 Halifax-class frigates running for the rest of their operational lives — expected to be another two decades.
Which companies have benefited from contracts under the strategy?
Seaspan’s shipyards in Vancouver and Victoria, Irving Shipbuilding of Halifax and the Davie shipyard just outside Quebec City. Seaspan and Irving were selected as the main builders of new large ships. Last November, the government announced all three would share the maintenance work for the Halifax-class frigates.
What is a Halifax-class frigate?
Canada has a dozen of the patrol frigates, named after cities from Vancouver to St. John's, and they are considered the backbone of the navy, according to a government website. The were originally designed primarily for operations on the open seas, including anti-submarine warfare.
The navy says the ships now have to be equipped to address newer maritime threats closer to shore, which are "faster, stealthier, more manoeuvrable."