Cost of Canadian Frigate Increased By C$10 Bn in Two Years, PBO Reports

From C$26 billion in 2008, when the program was first proposed, the estimated cost of Canada’s future frigates, known as Canadian Surface Combatants, jumped to C$58-60 billion in 2017 and now to over C$70 billion, or over €3bn per ship. (BAE image)

This report provides an updated cost estimate of the Canadian Surface Combatant (CSC) program from the 2017 PBO report, “The Cost of Canada’s Surface Combatants.” At the time of the previous cost analysis, the government had not yet selected a design for the new generation of warships.

This update considers characteristics specific to the Type 26 design chosen by the government while incorporating updated information on the project’s timeline.

Our estimate of the total cost of the CSC program is $69.8 billion over 26 years, consisting of: $5.3 billion in pre-production costs; $53.2 billion in production costs; and, $11.4 billion in project-wide costs (all in nominal dollars).

In comparison, the 2017 PBO report estimated a total program cost of $61.8 billion, $8 billion less than the updated estimation.

The difference in these estimates is due to new information on project specifications provided by the Department of National Defence (DND); in particular, ship construction will begin later (increasing inflation costs), the ship will be larger than assumed in the previous report (increasing real construction costs), and we exclude the cost of spares beyond the initial two years (reducing real program costs).

In 2017, the Government of Canada revised their 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 therefore a difference of $9.8-$13.8 billion between the DND and the updated PBO estimates.

Click here for the full report (25 PDF pages) on the PBO website.

(EDITOR’S NOTE: As we reported a fortnight ago, Canada was already paying well over 2.5 times as much as the UK to build its own Type 26 frigates.
Now, with the cost increasing by over C$9.8 billion in just two years, it will end up paying an additional C$666 million per ship.
This raises the cost of the Canadian CSC program to over €3 billion per ship, while the UK’s Royal Navy is paying €1.42 billion – less than half -- for the same basic design.)

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