PBO s latest estimate puts says warships will cost $77B as estimated price jumps $17B

PBO s latest estimate puts says warships will cost $77B as estimated price jumps $17B
Parliamentary budget officer Yves Giroux s than the government s stated price for the 15 warships, which are to be built in Halifax over the next two decades and form the navy s backbone for most of the century.

Giroux s estimate is in a highly anticipated report released Wednesday that is likely to set the stage for some tough discussions -- and heavy industry lobbying -- on whether Canada should push ahead on the project or change tack.

To that end, the budget officer s report includes a number of potential scenarios designed to provide a clearer picture of what options are available to the government should it decide to go in a different direction -- and how much each would cost.

That includes scrapping the existing plan to base the 15 warships on the British-designed model called the Type-26, which Canadian defence officials have repeatedly described as the right ship for Canada, and choosing a different design for the fleet.

Giroux and his team also looked at the idea of a hybrid fleet, in which Canada builds three Type-26 ships and supplements them with 12 other vessels. That would mimic how the Navy was previously built, with three Iroquois-class destroyers and 12 Halifax-class frigates.

To that end, the PBO found that the government could save $40 billion if it built only three Type-26 frigates and supplemented them with 12 smaller, less capable Type-31s, which is similar to what Britain has decided to do.

Canada could also save $50 billion if it scrapped plans to build any Type-26s and went with an entire fleet of Type-31s, according to the report, though the PBO notes that the Type-31 was "designed to operate alongside the `higher-end Type-26."

The PBO also looked at the potential cost to switch to a type of warship called the FREMM that is currently being built for the United States and which Giroux described as on par with the Type-26 in its capabilities.

Restarting the entire project could also result in a four-year delay to the start of construction.

The budget officer found a revised project would cost around $71 billion whether the government decided to build an entire fleet of FREMMs or three Type-26s and 12 FREMMs.

The warship project was launched in earnest nearly a decade ago when Irving Shipbuilding in Halifax was selected in October 2011 to build the fleet, with the total cost estimated at around $26 billion and the first ship to be delivered in the mid-2020s.

That vague schedule remained largely unchanged, at least on paper, even as the estimated price tag ballooned to $60 billion and Ottawa ordered several smaller ships so Irving would have work until the surface combatants were ready for construction.

The new warships are based on the Type-26 frigate, which is also being built by the United Kingdom and Australia, but Canadian officials have been making numerous changes to the design to meet Canada s unique military and industrial requirements.

Those changes have been made more complicated by the government s attempts to pack all the capabilities from the Navy s now-retired Iroquois-class destroyers and existing Halifax-class frigates into one type of ship.
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