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Posted: August 18, 2017 4:40 PM

Canada Awards Fleet Maintenance Contract Worth Billions

By DAVID PUGLIESE, Special Correspondent

VICTORIA, British Columbia — The Canadian government has awarded Thales the country’s largest naval long-term maintenance contract in history, giving the firm responsibility for supporting new fleets of Arctic patrol vessels and resupply ships.

The deal, worth an estimated 5.2 billion Canadian dollars ($4.1 billion) would see Thales Canada and Thales Australia responsible for the in-service support for the Royal Canadian Navy’s new Arctic Offshore patrol ships and its fleet of Joint Support Ships. The initial contract is for eight years but in total the deal would eventually cover 35 years of in-service support (ISS) for the two fleets.

The first Arctic Offshore Patrol Ship is being constructed by Irving Shipbuilding in Nova Scotia and is expected in 2018. Six vessels are to be built. Construction has yet to start on the two new Joint Support Ships. The first of those supply ships, to be built by Seaspan Shipyards in Vancouver, British Columbia, is expected in 2021.

Defence Minister Harjit Sajjan will be in Vancouver on Aug. 20 to highlight the contact and its value to the country’s shipbuilding industry. Sajjan said in a statement that the contract with Thales would ensure that the ships are continually supported over the decades. “The Arctic and Offshore Patrol Ships and Joint Support Ships are essential to our fleet,” he noted.

At a news conference Aug. 17 to announce the contract, Jim Carr, the Canadian government’s acting procurement minister, emphasized that the deal will strengthen the country’s shipbuilding industry. But unions representing federal government employees already conducting maintenance on Royal Canadian Navy ships warn that the deal will undercut existing capabilities.

Much of the ongoing maintenance on vessels is done by federal employees but with some support of contractors from private firms.

John MacLennan, president of the Union of National Defence Employees, said once private contractors take on significant roles in maintaining the ships, the knowledge and skills built up over the decades among the federal government workforce will gradually decrease. That, in turn, will prompt the government to hire more contractors.

In addition, he warned that putting maintenance of key naval assets under the control of private industry could undermine national security by giving one company too much power.

In April 2012, the Department of National Defence raised questions about hiring one single firm to provide in-service support for the two fleets. “A single ISS provider may assume a ‘take it or leave it’ attitude at the time of contract option renewal, forcing prices up,” then-Deputy Minister Robert Fonberg was told.

However, department officials ultimately decided that cost savings and other positive aspects of the contract outweighed any risks.

Rear Adm. John Newton, commander of Maritime Forces Atlantic, told journalists Aug. 17 that the Royal Canadian Navy continues to balance its maintenance needs by using federal government workers and the services of private industry. “We are constantly migrating our in-house capability very slowly to keep a balance between what industry can provide, readiness of ships when we demand it, international deployments, and what we can provide with specialized teams and specialized operational equipment, weapons and sensors,” he said.

In a statement, Thales noted it has provided ISS to navies in Singapore, New Zealand, the U.S., Saudi Arabia, the UAE, Bahrain, Papua and New Guinea, and Tonga.

With over 16 years of performance-based ISS experience with the Royal Australian Navy in a relational contracting model, Thales will also transfer knowledge of existing and innovative ISS-ready solutions from Australia to Canada,” it added.

The Royal Australian Navy has used Thales to manage, maintain and upgrade its naval assets at the key ship repair facility in Sydney.



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