Strategic Approach to NSPS

Canada is embarking on an unprecedented shipbuilding program. The National Shipbuilding Procurement Strategy (NSPS) is expected to deliver to both the RCN and the Coast Guard multiple classes of ships over the next three decades. It is good news for Canada, Canadians and their Navy and Coast Guard – but there are significant challenges before success can be declared.

Economic considerations, among others, will influence how much and the timing of the financial resources available for Fleet renewal, which, in turn, will determine the capability that will be built into each class of ship. The challenge for the RCN and the CCG is to maximize and support the capability of each Class within approved budgets. Surmounting this challenge will determine the success or failure of NSPS.

Conventional wisdom assumes that an industry team will form around Seaspan Shipyards and Irving Shipyards coupled with some form of competition for the Combat Systems Integrator (CSI) for the Canadian Surface Combatant (CSC).

Regrettably, conventional wisdom will deliver to the RCN and the CCG different system solutions for each class or ship dramatically increasing demand for future resources to support training, maintenance and supply requirements. It will increase pressure on the already limited financial resources available to the RCN and the CCG. It will ultimately reduce fleet readiness and fleet capability. In essence conventional wisdom will not deliver best value for Canadians.

Recognizing that the NSPS is a solid first step in the right direction, this article argues that there is a need for a next critical strategic step to enable NSPS success, seeking a common approach to designing, delivering and sustaining the most important, the key cost driver, and the most challenging and complex part of a ship, the platform and the combat systems. While this article will focus on the RCN and in particular the combat suite and the command management system, the approach and the lessons are applicable for other complex ship systems such as integrated platform management systems or smart bridges applicable to both the RCN and the CCG. This article will argue that by engaging, early, a common Combat System Integrator (CSI) for all classes of warships, design costs will be reduced as will life cycle and support costs, while capability will be increased whereas the traditional approach will maximize design and life cycle costs to Canada.

Leveraging NSPS
A key element of the NSPS is to stop the “boom and bust” process of building federal ships and to increase productivity based on investment and experience. Essentially the government has recognized that building ships is a complex process; boom and bust does not work; specific centres of excellence need to be developed; competition is good to a point; but, to maximize value for Canadian investment, relationships need to evolve more to the level of partnerships. The arguments supporting NSPS apply, more critically, to the function of Combat Systems Integrator (CSI). For clarity, a CSI is defined as the responsible industrial authority for combat systems design, integration, platform integration, test and program management. The CSI is solution agnostic, with the exception of the command management system. Of note, one of the strategic objectives of the CPF Project was to create a CSI Centre of Excellence in Canada. A significant challenge for the RCN will be to transition from the current three-class fleet of frigates, destroyers, and supply ships, to the new fleet of surface combatants, supply ships, and arctic patrol ships, yet reducing design, support, training and life cycle costs.

Current practice and conventional wisdom transitions three independently supported classes to four, including frigates, which will increase overall design and support costs. This in turn will increase the life cycle costs of each class, which in turn equates to less capability and flexibility. Figure 1 illustrates this potential future.

In major combatant vessels, the cost of the combat suite is between 35-55% of the overall cost of the ship. Notwithstanding a belief that commercial and military off-the-shelf (COTS and MOTS) solutions reduce costs, evidence shows that single systems across multiple platforms reduces design and build costs, as well as life cycle costs.

Recognizing this challenge, the U.S. Navy has set a goal to reduce its current 15 combat system baselines to two. The situation faced by Canada’s Navy is less daunting but just as critical. NSPS has created an opportunity to reduce life cycle costs over the next few years as the RCN introduces a new fleet.

Benefits of a Common CSI
Similar to what the Government did with NSPS, a strategic decision is needed to select one CSI for all classes of ships. We in Canada could thus accomplish what the USN is trying to achieve, ensuring that planners of the new fleet can, at the design stage, plan to reduce cost and maximize capability and flexibility including the ability to upgrade through technology refresh programs.

As the combat suite is the raison d’être of a warship, and is the single biggest cost to design, build and sustain it, any planned savings can be invested in increased capability. Seeking a common solution reduces training demand yet increases personnel flexibility, which in turn increases fleet readiness and capability.

The benefit to the Navy and for Canada would be an overall increase in fleet capability resulting in increased fleet and national capability to provide security for Canadians.

Early selection would also facilitate the development of a long term partnership. Likewise, early involvement in the development of solutions to meet urgent and emerging requirements would thus reduce overall costs. Figure 2 below provides a comparison of the two approaches.

Strategic Capability
Arguments can be made that only the Surface Combatants require a CSI. On the surface this may seem logical but does not recognize the need for growth in each class nor the opportunities to reduce training costs and increase personnel flexibility.

Aerial view of Seaspan’s Vancouver drydock.

Every naval ship has, as its heart, a command management system and a core of C4ISR systems. By ensuring all platforms have this same core (scaled to the platform’s mission) it would permit future modifications to be made far more readily (flexibility), significantly reduce the challenge of maintaining highly complex technical systems (resources, training) and assure solid interoperability among fleet units. Thus, by scaling the “core”, a single CSI will reduce the cost of delivering each class with needed systems tailored for their mission and increase cross-platform adaptability, flexibility and scalability for mission assignment. This would create, in Canada, a strategic resource to compliment the strategic shipyards created under NSPS.

Other nations have developed these relationships (such as Terma and the Royal Danish Navy; DCNS and the French Navy; BAE and the Royal Navy; and Thales with the Dutch Navy). All of these nations have single non-competitive relationships with their national CSI which are recognized as national strategic capabilities – so should Canada. One requirement for both the CPF and Trump projects was that the command management system be Canadian.

It will be argued that selecting a single CSI for all surface warships could reduce innovation and increase costs by holding the Crown ransom due to the lack of a competitive environment, however, these arguments are refutable. The success of the sole-sourced Virginia Class USN submarine project proved that, rather than creating a costly false sense of competition just to reduce bureaucratic risk, a smart customer, in this case the USN, created a non-competitive structure and environment which led to innovation, efficiencies and cost savings by devising an acquisition strategy that delivered best value capability with ever increasing efficiencies.

NSPS is the right decision for Canada and the Canadian shipbuilding industry and its multitude of large and small suppliers. It not only boosts the economy, it is also the right approach for the renewal of the RCN. For many of the same reasons that led to the creation of the NSPS, the government needs to, as it did for the CPF Project and as other countries have done, invest trust and responsibility into one CSI, a CSI that can truly be a Canadian Centre of Excellence. This approach would, at a minimum, reduce costs related to: non-recurring engineering; schedule risk; performance risk; personnel; maintenance and support; as well as facilities and trainers. Additionally, technology refresh costs would be reduced. The benefit to the Navy will be: commonality across the fleet; increased resources available to invest in capability; readiness; and flexibility. Essentially greater value!
For the Canadian taxpayer, this would create and keep high quality jobs in Canada rather than in other countries. Insisting on project by project competition or indeed not taking the strategic step to select a preferred provider will not support the creation of Canadian expertise. The end result will be the importation of foreign expertise and systems, nullifying a national strategic capability forcing Canada to rely on foreign solutions.

A Strategic Opportunity
NSPS is a Government strategy to renew Canada’s vital federal fleets. However, it only addresses shipyards. It is time for Canada, as other countries have done, to recognize the need for a national Combat Systems Integrator. By doing so, and by selecting one common CSI for all naval platforms, Canadians will reap great value for the investment. Not to do so will fail to fully deliver on the potential strategic success of NSPS.

Ian Parker, a retired naval officer with 37 years in the Canadian Navy, is currently a defence and strategic analysis consultant. The views expressed here are solely those of the author.
© FrontLine Defence 2012