New $531-million submarine contract protects 200 jobs at Esquimalt

B.C.’s shipbuilding and repair industry will get a shot of good news Thursday when the Harper government announces a five-year, $531-million contract extension to repair and upgrade Canada’s fleet of four diesel-electric submarines, The Vancouver Sun has learned.

The contract, following a similar agreement struck in 2008, will protect roughly 200 jobs at the department of national defence’s Fleet Maintenance Facility in Esquimalt, according to a federal official.

Another 200 jobs will be protected at locations elsewhere in Canada, he said.

“This significant federal investment will support more than 400 high-quality jobs, improve the long-term sustainability of B.C.’s shipbuilding industry and provide the best tools for Canada’s sailors,” he said in a prepared statement.

The contract was won in a competitive bid by Babcock Canada Inc., a subsidiary of the British multinational firm Babcock International Group PLC.

Babcock International won the original contract in 2008 after it teamed up with Weir Canada Inc. of Mississauga, Ont., to create a consortium called the Canadian Submarine Management Group.

However, Babcock announced in 2011 that CSMG would be renamed Babcock Canada Inc. after Weir’s share of the joint venture was transferred to Babcock.

The original contract award caused a political flap because Babcock beat out Irving Shipbuilding, which wanted to keep the repair work in Halifax.

One of the critics was Green party leader Elizabeth May, who at the time was planning her run against Defence Minister Peter MacKay in his Nova Scotia riding.

May, who accused the government of an “anti-Atlantic bias,” is now the MP for the Vancouver Island riding of Saanich-Gulf Islands.

The original five-year contract in 2008 was worth $370 million over five years, but if CSMG met performance targets the contract was to be extended over 15 years, for a total value of up to $1.5 billion.

Thursday’s announcement gives a clear indication that Babcock has met those targets.

The fleet of four Victoria-class diesel-electric submarines has had a rocky history after the Liberal government made what appeared to be the bargain-basement purchase of the mothballed subs from the Royal Navy for $750 million in 1998.

It took far longer and was costlier than expected to make the vessels seaworthy, and in 2004 the HMCS suffered a fire that left one officer dead. In 2011, HMCS Corner Brook ran aground near Vancouver Island during manoeuvres.

There are now two subs, HMCS Victoria and HMCS Windsor, that are fully operational.

HMCS Chicoutimi is currently being serviced at Esquimalt but is expected to be ready for sea trials later this year.

The HMCS Corner Brook is also in Esquimalt for both repairs and a refit.

The fleet is “at the highest state of readiness that they’ve ever been,” the source said.

HMCS Victoria (SSK 876) at Canada Place

Gotcha! HMCS Victoria torpedoes US navy ship

The USNS Concord went to the bottom of the Pacific Ocean in minutes after being hit by a torpedo fired from the submarine HMCS Victoria.

Two weeks ago the Royal Canadian Navy achieved something that, as recently as a year ago, many thought impossible: One of its submarines fired a fully armed torpedo.

Not only that, it hit the mark and sank a decommissioned U.S. navy ship in less than 15 minutes.

The submarine was HMCS Victoria and it fired a heavyweight MK48 torpedo as part of RIMPAC naval exercises off the island of Kauai, Hawaii.

Vice-Admiral Paul Maddison, Commander RCN, was there to see it for himself. He left nobody in any doubt about the significance of the event.

“This is a clear demonstration of the full weapons capability of the Victoria-class and marks a significant achievement in HMCS Victoria’s return to operations,” said Vice-Admiral Maddison.

“This platform provides Canada with a unique strategic capability unrivalled in stealth, persistence and lethality that can act decisively on and below the surface of the sea at a time and place of the government’s choosing.”

It’s not recorded if he added a sigh of relief, but it would have been understandable if he did.

The sinking of the USNS Concord means Canada’s troubled four-boat submarine fleet may be finally approaching full operational capability, thus ending one of the most troubled defence procurement projects in Canadian military history.

The story began in the 1990s when Canada wanted to replace its 1960s-era diesel-electric Oberon class subs. The boats were reliable, quiet, well crewed and operated but were simply too old to put back in the water.

New submarines seemed an impossible fiscal and strategic dream, because the cost of replacement would have been upwards of half a billion dollars each.

Step forward Britain. The Royal Navy had four slightly used Upholder class diesel-electric subs that it was willing to part with for a mere $188 million each.

Britain launched these boats in the late 1980s, commissioned them between 1990 and 1993, but then mothballed the fleet as the Cold War drew to an end and the RN went solely with nuclear submarines.

So the deal was made in 1998, with delivery of the Upholders to begin in 2000.

Canada decommissioned its Oberons before discovering that the British boats needed more work (removing rust, fixing electrical flaws, installing Canadian compatible equipment and repairing key welds) than anticipated.

The reason for the massive works program was simple. The British had chosen to retire the Upholders rather than upgrade them, so the submarines’ first deep refit work was left to Canada.

Canada also wanted compatibility with its Oberon-legacy MK48 torpedoes rather than replacing them with the British Spearfish torpedoes that the subs had been built for.

Added to the basic refit work was the task of replacing some Upholder systems with fire control devices from the Oberons, a decision that was meant to be economical.

It wasn’t. Canada learnt a multi-million dollar lesson that any other non-nuclear submarine operating country like South Korea, Australia, Germany, Israel or Japan could have told them for free.

Submarine fleets are expensive to buy (even second hand) and even more expensive to run in the long term.

Unsurprisingly, final refit and refurbishment costs for Canada’s renamed Victoria Class soared well past the initial $750-million estimate. This was on top of the initial purchase price.

There was plenty of political flack along the way and a near catastrophic fire aboard HMCS Chicoutimi that combined to have some experts predicting in mid-2011 the program would be wound up.

That was then and this is now.

The RCN remains confident it will have three submarines fully operational by 2013. The final one, HMCS Chicoutimi, is expected to be ready by 2016.

That will be good news for Canadian taxpayers, politicians, the RCN and, interestingly enough, our neighbours south of the border.

The U.S. Navy needs to train against diesel-electric subs, but doesn’t operate any. Canada’s next-door fleet will be a much sought after partner for joint naval exercises.

It will also bring back a few memories for the U.S. Navy — maybe not all of them good.

During the 1981 NATO exercise Ocean Venture, an unnamed RCN Oberon class submarine infiltrated one of two U.S. aircraft carrier battle groups.

It evaded the screening destroyers and “sank” the carrier USS America without once being itself detected.

Later in the same North Atlantic exercise a second unidentified diesel sub “sank” the carrier USS Forrestal.

This is the experience that RCN submariners are rebuilding with the Victoria class — one torpedo at a time.