In a low-key announcement this past Saturday, the Government of Canada disclosed that Halifax-based Irving Shipbuilding had been awarded a $5.57 billion ($8 billion CAD) contract for the full rate production of the first three new River-class destroyers for the Royal Canadian Navy (RCN). Originally designated as the Canadian Surface Combatant, and before that the Single Class Surface Combatant Project, the RCN plans to procure 15 of the new destroyers to replace 4 already retired Iroquois-class destroyers & 12 in-service Halifax-class frigates. The Government announced last summer that early construction activities for the first three warships, His Majesty’s Canadian Ships (HMCS) Fraser, Saint-Laurent, and Mackenzie had begun. The River-class is based on the Royal Navy’s Type 26 frigate, and was the submission of Lockheed Martin Canada & BAE Systems, beating out 3 rival bids in 2018.
The $5.57 billion award has a performance period of 6 years and in addition to initiating full rate production for the first three ships, also provides for the procurement of long lead time items for the second batch of three ships. The government’s new estimate of the total cost to deliver the first three ships is $15.46 billion ($22.2 billion CAD), which is inclusive of expected additional awards to Irving for the completion of the construction, and “costs associated with the delivery of equipment, systems and ammunition that Canada will be acquiring to bring the first three ships into service.” Though the Government suggested that subsequent production lots will see costs decrease, the price for the first lot casts doubt on the government’s prior estimate of $39 billion ($56 billion CAD) to $41.78 billion ($60 billion CAD) for all 15 warships. In 2021, Canada’s Parliamentary Budget Officer estimated that the total program would end up costing between $53.83 billion ($77.3 billion CAD) and $57.17 billion ($82.1billion CAD).
There is still plenty of uncertainty in the program that can further increase costs too. The first ship is not expected to be delivered until 2032, with full operational capability in 2035. The final ship is not expected until 2050, and senior officials stated that they expect that the final lots would include capabilities that the first lots do not. Not all systems and weapons requirements are fully defined yet. Canada already has active cases through the United States’ Foreign Military Sales (FMS) program for the procurement of the Aegis Combat System and up to 100 Standard Missile 2 (SM-2) Block IIIC missiles. The Aegis Combat System is used by the US Navy and numerous other allied fleets, including Australia, Japan, Korea, Norway and Spain. During an embargoed media briefing on Friday afternoon, in response to a question raising concerns about procuring Aegis and other systems from the United States, a Senior Military Official stated: “We don’t see any issues with the FMS component of River-class.”
Realistically, there is no practical alternative that could be integrated into the design without massive escalations in cost & timeline. Much of River-class’ armament will be acquired from the US via the FMS program, including its 24 Mark 41 Vertical Launch System Cells, SM-2s, Evolved Sea Sparrow Missiles, Tomahawk cruise missiles, Mark 54 Lightweight Torpedos, Rolling Airframe Missiles, and Naval Strike Missiles. Vice-Admiral Angus Topshee, Commander, Royal Canadian Navy also confirmed back in January that Standard Missile 6 (SM-6) would also likely be procured to provide River-class with the ability to intercept ballistic missiles in the terminal phase. Its SPY-7 radar allows ballistic threats to be detected and tracked, but none of the currently announced weapons on River-class are ballistic missile defense capable.