Building a New Allied Frigate: The Case of the Type 26

The origin of the Type 26 ship design began in 1998 with the UK’s Future Surface Combatant programme. In March 2010, BAE Systems won the four-year, £127 million design contract, which then become known as the Global Combat Ship (GCS) programme. The GCS project had been created by the UK Ministry of Defence (MoD) with two main goals – to create a ship platform for export potential that would also replace the Royal Navy’s thirteen Type 23 frigates. The GCS was envisioned as a multi-mission warship for general purpose operations, anti-submarine warfare, and air defence. This new ship for Britain’s Royal Navy became known as the Type 26frigate or City-class frigate, with the first of the class being named HMS (Her Majesty’s Ship) Glasgow.

Canada, meanwhile, was looking to replace the Royal Canadian Navy’s (RCN) decommissioned Iroquois-class destroyers and ageing Halifax-class frigates with 15 new ships beginning in the early 2020s. The project is part of the National Shipbuilding Strategy(NSS) announced in June 2010. A long-term government plan to provide both the RCN and the Canadian Coast Guard(CGG) with new and advanced maritime platforms, the NSS has two clear objectives: to “renew Canada’s federal fleet of combat and non-combat vessels” while reinvigorating the shipbuilding industry to “create jobs, generate economic growth for Canada, and help build a sustainable Canadian marine sector.”

To begin this multi-faceted planof creating jobs, the government pre-selected two Canadian shipyards to handle construction of the new ships, and separated its intended contracts into two categories. At the time, there were only two financially viable shipyards with capacity to build the size of vessels required. The government chose them both. Seaspan Shipyards, on the West Coast, would build the non-combatants, and Irving Shipbuilding, on the East Coast, would build the combatant vessels. The 15 Canadian Surface Combatants (CSC) comprise the largest single procurement contract in Canadian history.

Almost immediately there was controversy over the Canadian procurement process. On 31 January 2011, during debate in the British House of Commons, it was noted that Canada was very interestedin working with the UK on the Global Combat Ship project. This attention, combined with union pressure about potential jobs losses, and an election on the horizon, saw the Harper Government lose interest in the Type 26, stating “Canada will not be pursuing collaboration with the United Kingdom on our new surface combatant fleet“.

Nonetheless, while the 2016 CANSEC tradeshow was going on in Ottawa, it was reported that Canada was still lookingat the Global Combat Ship platform. The result was a last minute submission by a Lockheed Martin-led consortiumputting forward the BAE Systems’ Type 26 GCS design. A critical part of the proposal was the use of the Canadian-developed Combat Management System (CMS 330) – an advanced version of the systems integration framework that had been created by Lockheed for the RCN’s Halifax Class frigates.

Three bid proposals were received in December of 2017 and the evaluation stagelasted nearly a year, amid continued controversy. The Lockheed Martin Canada-BAE Systems consortiumhad offered the British Type 26 Frigate; Alion Canada and Damen Grouphad offered the Dutch De Zeven Provinciën Air Defence and Command (LCF-class) frigate; and Navantia/Saab/CEA Technologiesput forth the Spanish Álvaro de Bazán F-105 class air defence frigate. A fourth bid, from the French Naval Group and Italian Fincantieri, based on the FREMM (“European multi-purpose frigate”) design was rejected by the Canadian government, which was not willing to accept the “unsolicited proposal at the final hour”, despite the risk-free fixed priceoffered in the proposal (a whopping savings of some $32B for Canada).

On 19 October 2018, the Lockheed Martin-BAE Systems consortium bid was selected as the “preferred design”and the procurement moved into the negotiation phase for confirmationthat the winning bidder could deliver the Type 26 Frigates as per the original proposal.

Alion Canada quickly challenged the decision, temporarily halting the process. The Canadian International Trade Tribunal (CITT) began investigating Alion’s claim that the unproven BAE design would require major changes, and therefore, did not meet the Royal Canadian Navy’s (RCN) requirements as outlined in the original tender.Some key issues raised were the bid specifications that had been modified some 88 times over 22 months, which “effectively diluted the [warship] requirements” and allowed for “an unproven design platform” to be selected. It is relevant to note that at the time, the first of the Type 26 frigates for the RN was still being built. Questions about the bid process and the issues over the changes had been raised previously, and there was a perception of built-in bias given that Irving Shipbuilding had a say in who could be selected as the winning bidder – and Irving already had well-established relationships with both BAE Systems and Lockheed Martin Canada.

The Government and Irving Shipbuildingresponded immediately, stating that (a) the CITT did not have jurisdiction as the project fell under a “national security exception” and that (b) Alion could not file a complaint as it was not a Canadian company, which is a requirement for the CITT to review complaints. Moreover, Andre Fillion, Assistant Deputy Minister at Public Services and Procurement Canada, argued to the CITT in a written response to the Alion challenge that “the procurement of goods and services to which the Alion Complaint pertains is urgent, and that a delay in awarding contracts would be contrary to the public interest.” While the CITT continued its investigation, it allowed the Government to continue with the Lockheed contract.

Despite the political and legal wrangling, the case was dismissedby the CITTon 31 January 2019, on the basis that neither Alion nor its Canadian subsidiary had “standing to file a complaint.” On 8 February 2019, the Canadian Government signed the $60 billion contract with the Lockheed Martin consortium.

Immediately, the project’s prime contractor, Irving Shipbuilding, awarded a sub-contract to Lockheed Martin Canada to finalize the ‘Canadianization’ of the ship design, thus allowing Canada’s largest ever military procurement project to go ahead.

All eyes will be on the CSC progress in the coming years.

Sunil V. Ram, international defense and security analyst; CEO RAM Military Consulting; Director of Intelligence, Pelikan Capital; Military and Security Advisor, Evertz Microsystems.

This article was published by our partner Front Line Defence in vol. 16, No. 3