In The Line, Philippe Lagassé outlines the Canadian Surface Combatant (CSC) program — the next-generation front-line combat ships for the Royal Canadian Navy intended to replace the current Halifax-class frigates and the already retired Iroquois-class destroyers:

Building warships is an expensive business, especially if you’re getting back into it after a few decades. Take the Canadian Surface Combatant (CSC). Fifteen CSCs will be built at Halifax’s Irving Shipbuilding to replace Canada’s current frigates and decommissioned destroyers. According to a 2022 study by the Parliamentary Budget Officer (PBO), the CSC acquisition will cost $80.2 billion. Given that defence inflation is well above regular inflation, and that regular inflation is running hot, that number isn’t going to go down.

Canada’s CSC will be a variant of the Type 26 Global Combat Ship originally designed for the Royal Navy. The Canadian variant includes significant changes to the original Type 26 design, notably to the combat systems. With the estimated per unit cost of each ship topping $5.6 billion, the National Post‘s John Ivison warns that the CSC is out of control. Ivison notes that the United States Navy (USN) acquired its Constellation-class frigates for $1.66 billion. Why, he understandably asks, is Canada paying so much for the CSC, and to what end?

The Canadian government always views major military purchases for the Canadian Armed Forces primarily as regional economic development projects and always attempts to get all or at least a major part of the construction done in Canada. To most people this sounds sensible: big military equipment acquisitions mean a lot of money being spent, so why shouldn’t most of that money be spent inside Canada? The answer, in almost every case, is that it will be significantly more expensive because Canadian industry doesn’t regularly produce these ships/planes/helicopters/tanks, so a lot of money will need to be spent to construct the factories or shipyards, import the specialized equipment, hire and train the workforce, etc., and no rational private industry will spend that kind of money unless they’re guaranteed to be repaid (plus profit).

Ordinary items for the Canadian military like clothing, food, non-specialized vehicles (cars, trucks, etc.) may carry a small extra margin over run-of-the-mill stuff, but it will generally be competitive with imported equivalents. Highly specialized items generally won’t be competitively priced exactly because of those specialized qualities. The bigger and more unusual the item to be purchased, the less economic sense it makes to buy domestically.

There are also the conflicting desires of the elected government (who generally want to target the spending to electoral districts or regions that benefit “their” voters), the permanent bureaucracy (who want to ensure that programs last a long time to ensure jobs within the civil service), and the military procurement teams (who have a tendency to over-optimistically estimate up-front and long-term costs because they want to get the procurement process underway … it’s tougher to stop something already in-process than one that still needs formal approval).

Once there’s a budget and capabilities are identified, the requirements for individual projects are prepared. It’s here that the comparison with lower cost, off-the-shelf alternatives runs into difficultly. The USN has lots of different types of ships that do lots of specific things. The above-mentioned Constellation-class is one of many different types of warships that the USN will sail, each with specific mission sets and roles. The Canadian military has only been directed to acquire fifteen CSCs, but the government expects the CAF to do a variety of missions at sea — not as many as the USN, of course, but still a good number. Canada has other military ships, including the Arctic Offshore Patrol Vessels (AOPS) also being built by Irving, but the CSC will be Royal Canadian Navy (RCN)’s primary expeditionary platform. Canadian defence planners, therefore, need those 15 ships to be capable of undertaking various missions and roles. Compounding this challenge are technological changes and the ever-evolving threat. The requirements for the CSC need to be continuously updated, and in some cases expanded, to keep pace with these developments, too.

An artist’s rendition of BAE’s Type 26 Global Combat Ship, which was selected as the Canadian Surface Combatant design in 2019, the most recent “largest single expenditure in Canadian government history” (as all major weapon systems purchases tend to be).
(BAE Systems, via Flickr)

On purely economic grounds, it would often make sense to add Canada’s order on to existing US, British, or other allied military orders to benefit from the economies of scale … but pure economic benefits don’t rank highly on the overall scale of importance. There’s also the understandable desire of the government to buy fewer items with wider capabilities as the government’s requirements for the military change with time and circumstance.

Were Canadian defence planners too cavalier in their requirements and design modifications? Maybe. Looking at it from their perspective, though, we should appreciate that they thinking about capabilities for a ship that Canada will use until the 2100s.

Doubts about the CSC are going to keep multiplying. The per unit costs can only increase so much before people start seriously discussing reducing how many of them will be built. You can be sure that some within government are already asking “Why 15? Why not 12?” Serious concerns are also being raised about whether the defence budget can afford to maintain CSC and keep them technologically up to date after the fleet is introduced. Given the CAF’s personnel recruitment troubles, moreover, it’s unclear if the RCN will have enough sailors to operate the full fleet. The first CSC that hits the water, furthermore, will have all sorts of kinks and problems that will need to be sorted out. That’s standard for first ships off the line, but you can be sure that every failing will be met with handwringing and charges of incompetence.

To address these concerns, the government must let DND/CAF better explain what the CSC is designed to do and why it needs to do it. Simply telling Canadians that it’s the right ship isn’t enough when it’s easy to point to lower-cost alternatives. As well, the government needs to be far more transparent about estimates of costs and what’s driving them. Political and public support for the CSC shouldn’t be taken for granted, and growing concerns about the program can’t be simply brushed away.