Parliamentary Budget Officer estimates New Frigates to cost $69.8 billion
The Parliamentary Budget Officer’s Report released Friday estimates a cost of $69.8 billion for 15 new frigates for the Department of National Defence.
This revised estimate 一 $8 billion more than the previously released in 2017, will fall over the next quarter-century.
In 2017, the Government of Canada revised its original 2008 program cost estimate of $26.2 billion to $56-60 billion, with costs to be revisited at the completion of the development phase.
There is a difference of $9.8-$13.8 billion between the DND and the updated PBO estimates.
In a statement released by the Department of National Defence Friday, Defence Minister Harjit Sajjan welcomed the PBO’s report says they are in close comparison to costs.
Design of the future Canadian Surface Combatant will be based on BAE’s Type 26 warship Joint Support Ship
He noted that the budget officer included taxes the federal government would pay on construction and the difference between the PBO and federal government projections is not that large.
“If you remove taxes from the PBO’s costing, our estimates are within 10% of each other. This variation is normal and expected when comparing independent cost estimates on a complex multi-decade project. Cost estimates from other allied navies building ships based on the Type 26 design are also within a similar range, which helps to validate our approach,” stated Sajjan in a statement.
The PBO noted that the increase is due to production at the Irving Shipbuilding yard in Halifax will begin later than initially planned, and the Type 26 is a bigger ship than the budget office originally anticipated.
The Type 26 ship will be new to the RCN, as this model of ship is used in other countries, including France, Norway, and the U.S.
DND’s estimate will be conducted in three phases. $5.3 billion in pre-production costs; $53.2 billion in production costs; and, $11.4 billion in project-wide costs.
Construction of the first CSC is estimated by the PBO to begin sometime in the early 2020s.
“As we work to finalize the CSC’s design, we remain focused on ensuring we provide the right ships to the Royal Canadian Navy at the right price for Canadian taxpayers,” stated Sajjan.