The Mistral-class helicopter carrier Sevastopol, is seen at the STX Les Chantiers de l'Atlantique shipyard site in Saint-Nazaire, western France, May 15, 2014. The Sevastopol is one of two Mistral-class warships ordered by the Russian Navy. REUTERS/S
The Mistral-class helicopter carrier Sevastopol, is seen at the STX Les Chantiers de l'Atlantique shipyard site in Saint-Nazaire, western France, May 15, 2014. The Sevastopol is one of two Mistral-class warships ordered by the Russian Navy. Reuters/Stephane Mahe

Canada has finally signed a contract to fulfill the long-standing promise of the Conservative government to build Arctic patrol ships with an increased outlay by $400 million. The deal in the election year was announced by officials from Public Works and National Defence, along with Irving Shipbuilding company's President Kevin McCoy.

Rebuilding Military

There is a cost overrun in the project with the new costs estimated to be $3.5 billion. In 2007, the projected cost was $3.1 billion when the ships were first announced, as part of the Conservative government's plan to rebuild the military. The costs of the ships will be $2.3 billion and the rest of the allocation will cost including jetty improvements, equipment and ammunition, reported Huffington Post.

Accordingly, six light icebreakers will be built for the Navy's use. There will be a cap on the budget and the number of ships can slip to five if the programme runs into problems. "If costs increase due to unforeseen factors, the contract will still guarantee the delivery of five ships within the same ceiling price," explained a government official at a technical background briefing.

At the same time, the ship building company Irving will be offered incentives to keep the costs down to encourage it to deliver all the six ships on time. There is a benchmark cost to be met. If that is not met, Irving's fee will go down. If it manages to beat the benchmark, then the fee will go up.

"It's a fairly simple formula," McCoy said. "As we drive our costs down, both Canada and Irving will share the benefit of the reduced cost."

The report said the increase in the budget will go to the project's contingency fund, which is built into every programme as a cushion against inflation and unforeseen circumstances. McCoy said his company has an exhaustive planning process backed by computer modeling and three-dimensional imaging to accurately predict the costs. Irving hopes to deliver six ships by the end of the programme in 2022.

From September

Liberal defence critic Joyce Murray wondered what has changed from the initial promise of eight ships. The initial work on ship making will begin in September, with Irving Shipbuilding planning to cut steel on the patrol ships by September. The work is expected to go on until 2022, when the last ship is expected to be ready. Irving sources stated the vessels will be constructed in three mega blocks comprising a total of 62 building blocks. Each mega block then will consist of a centre mega block, a bow mega block and an aft mega block, reported Ottawa Times.

The writer can be reached with feedback at kalyanaussie@gmail.com.