The Canadian Surface Combatant (CSC) Project is the largest and most complex of the projects launched through the National Shipbuilding Strategy due to the volume of ships being built and the need to carefully integrate required weapons and technologies.This procurement has been underway for several years, and the Government and its prime contractor, Irving Shipbuilding, have undertaken significant efforts to engage with industry to ensure this procurement is effectively managed.
The selection of pre-qualified potential bidders began in August 2015 with an open and competitive prequalification process, and was re-opened in July 2016 to provide a second opportunity for additional interested firms to participate when the procurement strategy was streamlined. This pre-qualification ensured that potential bidders had the experience necessary to successfully complete a large, complex warship design project. Finalized in October 2016, this process resulted in 12 prequalified bidders. Since then, the Government and Irving Shipbuilding have engaged with the pre-qualified bidders and developed a request for proposals (RFP), which includes a detailed evaluation plan, evaluation critieria and the process for submitting bids. On this basis, potential bidders worked for over a year to prepare their proposals. The bidding period for the RFP closed on November 30, 2017, at which time multiple bids were properly submitted. Ultimately, the submission of a bid is a commercial decision which must be made by each potential bidder.
Recent media coverage referenced a proposal submitted outside of the established competitive process alleging the ability to deliver CSC ships at a reduced cost. Establishing and respecting a bid and evaluation process that is consistently applied to all potential bidders is fundamental to a fair, open and transparent procurement. Without common requirements and criteria, it is impossible to consistently and effectively evaluate proposals. The submission of an unsolicited proposal at the final hour undermines the fair and competitive nature of this procurement suggesting a sole source contracting arrangement. Acceptance of such a proposal would break faith with the bidders who invested time and effort to participate in the competitive process, put at risk the Government’s ability to properly equip the Royal Canadian Navy and would establish a harmful precedent for future competitive procurements. To be clear, any proposals submitted outside of the established competitive process will not be considered. It should be noted that a fairness monitor has been engaged to oversee the procurement process, and agrees with this approach.
With respect to suggestions that significant savings could be realized through this alternative process, this is far from evident. It is important to note that a warship project budget must cover more than just delivering the ships. It must also include the costs associated with design and definition work, infrastructure, spare parts, training, ammunition, contingencies and project management. Typically, the acquisition of the ships themselves only represents about 50-60% of the project’s overall budget. As well, any prices cited without the context of applicable terms and conditions as indicated in the RFP (such as scope of work, divisions of responsibilities, intellectual property rights, warranties, limitations of liability, indemnities, etc.) are effectively meaningless.
The Government of Canada and Irving Shipbuilding Inc. will work together to evaluate the proposals in accordance with the published evaluation plan.