Appearance before the standing Committee on Public Accounts by Simon Kennedy, Deputy Minister at Innovation, Science and Economic Development Canada – May 25, 2020

May 25, 2021

National Shipbuilding Strategy

Key messages

• The National Shipbuilding Strategy (NSS) represents a generational opportunity for Canada and Canadian industry to support the Royal Canadian Navy (RCN) and the Canadian Coast Guard (CCG), supporting Canadian job creation and growing our domestic capabilities to serve markets both at home and internationally.
• Growth in Canada's marine industry is a result of the decision to build vessels domestically through the Buy in Canada Policy. This is further leveraged through Canada's use of key industrial policies: the NSS Value Proposition as well as the Industrial and Regional Benefits (IRB) Policy, and its successor, the Industrial and Technological Benefits (ITB) Policy.
• NSS contracts awarded between 2012 and December 2020 are estimated to contribute close to $20.1B ($1.8B annually) to GDP, and create or maintain more than 16,900 jobs annually through the marine industry, its Canadian suppliers, and consumer spending by associated employees between the project period of 2012 and estimated out to 2022.
• Economic Benefits from the NSS have resulted in a high degree of direct work done by Canadians and the expansion of the Canadian marine supply chain. It has also brought about other important investments into targeted areas such skills development, as well as innovation.

Supplementary messages

• Overall, the NSS is a generational initiative, the benefits of which will continue to be seen for decades to come.
• Moving forward, Innovation Science and Economic development (ISED) will continue to work closely with our partners: the Departments of Public Services and Procurement Canada, National Defence, and Fisheries and Oceans and the Canadian Coast Guard, as well as our NSS shipyards, to improve the overall management of the National Shipbuilding Strategy.
• This will ensure that we continue to sustain and grow our sovereign marine industry, and generate positive, long-lasting economic outcomes for Canada from the NSS.

Update

In 2010, the government made the decision to support Canada's marine industry and build vessels here in Canada. This approach, called the National Shipbuilding Strategy (NSS), is developing a sustainable, long-term shipbuilding plan that will restore our shipyards, rebuild our marine industry and create sustainable jobs in Canada while ensuring our sovereignty and protecting our interests at home and abroad.

Following a competitive, fair, open and transparent process, the government established long-term strategic relationships for the construction of large vessels with two Canadian shipyards: Seaspan's Vancouver Shipyards (VSY) in British Columbia, and Irving Shipbuilding Inc. (ISI) in Nova Scotia.

When the NSS was first announced in 2010, the identified requirements were for up to 23 vessels for the RCN and 5 vessels for the CCG split into two packages of work.  The CCG subsequently identified a requirement for a number of additional large vessels.

In 2019, the Government of Canada launched a competitive solicitation process to select a third NSS shipyard to support future shipbuilding needs, including the construction of six new icebreakers for the CCG.  In December 2019, Chantier Davie Inc. prequalified in the first stage of the process to become the third strategic partner under the NSS.

Similar to the process undertaken to select VSY and ISI, Chantier Davie will now move on to the Request for Proposal and evaluation stage.  This will include a third-party assessment of the shipyard's infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure. If successful, an NSS umbrella agreement is expected to be in place between the shipyard and Canada.

Supporting facts and figures

• To date, the shipyards' contracts have generated over $26.7 million in NSS Value Proposition obligations with a further portion of obligations being rolled over for future upcoming contracts with these yards.
• NSS contracts awarded between 2012 and December 2020 are estimated to contribute close to $20.1B ($1.8B annually) to GDP, and create or maintain more than 16,900 jobs annually through the marine industry, its Canadian suppliers, and consumer spending by associated employees between the project period of 2012 and estimated out to 2022.
• There has been significant growth across the marine industry in Canada. Between 2016 – 2018 :
  • Annual sales increased by 16% to close to $4.1 billion;
  • The number of jobs increased by nearly 11%; and
  • Investments in research and development (R&D) increased by 40% to $64 million annually.
• Approximately 80% of these R&D investments and Canadian-developed naval systems are now present on global fleets.
• From 2016 - 2018, exports in general have grown by 33% to a value of $1.1 billion.

Canadian Surface Combatant (CSC)

Key messages

• The Canadian Surface Combatant (CSC) project is one the biggest procurement in Canada's history.  A procurement of this size and scope represents an excellent opportunity to continue rebuilding our shipbuilding industry, grow the marine sector and create good quality, long-term jobs for Canadians.
• ISED officials are regularly engaging with key CSC project organizations – including the Department of National Defence (DND), Public Services and Procurement Canada (PSPC), Irving Shipbuilding Inc. (ISI), and Lockheed Martin Canada (LMC) – to ensure that the economic benefit commitments to Canada made by ISI and LMC are implemented.
• The Industrial and Technological Benefits (ITB) Policy applies to CSC, ensuring that for every dollar the government spends on CSC design, a dollar goes back into Canada's economy.  ISI and LMC have requirements to deliver significant benefits under Canada's ITB Policy, including:
  • Perform business activities in Canada equal to the value of their contracts;
  • Perform critical design and engineering work in Canada by Canadians;
  • Investments with Canadian Small and Medium-sized Businesses (SMBs);
  • Seek new opportunities to invest in innovation.

Supplementary messages

• The ITB Policy will apply in full to the construction contracts.

• We will seek to leverage work regarding Foreign Military Sales contracts related to CSC.
• We continue to support Canada/ISI/LMC efforts to improve the CSC project implementation plan and are ready to work with ISI, LMC and Canada to explore alternate opportunities for economic benefits for Canada should project delivery requirements impact existing plans.

Update

• On February 8, 2019, the then-Minister of PSPC announced that the Government of Canada had selected Lockheed Martin Canada (LMC) as major subcontractor to Irving Shipbuilding Inc. (ISI) for the design of 15 new CSC ships to be built at ISI's Halifax Shipyard.  LMC's winning bid was based on the design of BAE Systems' "Type-26" Global Combat Ship.
• The CSC project recently began the third year of Design phase activity, during which the Government of Canada and ISI are working with LMC to refine and customize the CSC ship design.
• Design phase work is expected to take approximately four years to complete, with construction set to begin in 2023/24.
• One unique aspect of the application of the ITB policy to CSC is that there are two firms with separate, non-overlapping contractual ITB obligations (ISI and LMC).  Normally, only the prime contractor for a defence procurement has a contractual ITB obligation.  In the case of CSC, it was determined that the major design subcontractor would also have an ITB obligation in order to ensure that the competitive selection of the CSC design subcontractor would leverage significant economic benefits for Canada.

Supporting facts and figures

• The Canadian Surface Combatant (CSC) procurement aims to deliver 15 new warships to the Royal Canadian Navy at an estimated cost of $56-60 billion. Irving Shipbuilding (ISI) is CSC prime contractor and shipbuilder. Lockheed Martin Canada (LMC) is the major design phase subcontractor. Ship construction is scheduled to begin in 2023/24 following a four-year design phase (currently underway).
• Under the NSS, each firm with an ITB or IRB obligation is required to invest a dollar back into the Canadian economy for each dollar it is paid.
• In 2017, the Request for Proposal closed and bids were received.
• In 2018, the Bid Evaluation process commenced and the preferred bidder was identified followed by Definition Contract award in February 2019 (in which ISI was named as Prime Contractor, and LMC as Subcontractor ).
• LMC has Value Proposition commitments to support Canadian design, engineering and integration work; to provide opportunities for Canadian systems and equipment to be included in the CSC design; and to promote investments in priority areas.
• In addition, the National Shipbuilding Strategy Value Proposition is being applied, which requires ISI to spend 0.5% of the value of the contract in support of Canada's marine sector in the three priority areas :
  • Human Resources Development
  • Technology Investment
  • Industrial Development
• For example, as part of its NSS Value Proposition obligation to Canada, Seaspan VSY recently committed to an investment of $300,000 in Let's Talk Science, a charitable organization that engages Canadian youth and educators in science, technology, engineering and math (STEM) programs. The important three-year commitment will support the development of educational programming for Kindergarten to Grade 12 students to promote careers in marine and shipbuilding industries.

Joint Support Ships (JSS)

Key messages

• The Joint Support Ships (JSS) project provides a substantial opportunity for Canadian industry to support the Royal Canadian Navy, supporting job creation and growth of our domestic marine sector.
• Vancouver Shipyards is successfully delivering on its economic and industrial obligations against the JSS project. The shipyard's investments are making important contributions to the sustainable growth of Canada's marine sector, as well as generating economic benefits across the country.

Supplementary messages

• Build progress is being made on the construction of the two Joint Support Ships for the Royal Canadian Navy.
• The Joint Support Ships are the right ships for the Royal Canadian Navy, and will provide the best value for the military, Canada, and the Canadian economy.

Update

The Joint Support Ships (JSS) project seeks to replace the auxiliary oiler replenishment (AOR) vessels that have reached the end of their service and enhance the Royal Canadian Navy's at-sea operations.

Early block construction on the first JSS, the HMCS Protecteur, began in June 2018. The full construction contract for the 2 vessels was awarded on June 12, 2020. Delivery of the first JSS, HMCS Protecteur, is targeted for 2023. Delivery of the second JSS, HMCS Preserver, is targeted for 2025.

Supporting facts and figures

• The Joint Support Ships (JSS) project will deliver 2 vessels to the Royal Canadian Navy at a current project budget of $4.1B. These vessels will provide increased range and endurance of naval task group missions, with the capability of delivering fuel and other vital supplies to vessels at sea; facilities for medical and dental services; and a home base for helicopter maintenance repair.
• The JSS project is included in Vancouver Shipyard's Non-Combat Work Package under the National Shipbuilding Strategy, which was awarded in 2011.
• Early block construction on the first JSS, the HMCS Protecteur, began in June 2018. The full construction contract for the 2 vessels was awarded on June 12, 2020.
• Delivery of the first JSS, HMCS Protecteur, is targeted for 2023. Delivery of the second JSS, HMCS Preserver, is targeted for 2025.
• The Industrial and Regional Benefits (IRB) Policy applies to Seaspan's Vancouver Shipyards Non-Combat Work Package. The shipyard is required to undertake business activities in Canada equal to the value of their contracts.
• Vancouver Shipyards has a current Industrial and Regional Benefits obligation of approximately $950M against the JSS project, which it is delivering on. This value will be updated as new IRB obligation values are publicly refreshed.
• The JSS project is the only large vessel construction project to be delivered by Vancouver Shipyards to the Royal Canadian Navy. Vancouver Shipyards' other large vessel construction orders are for the Canadian Coast Guard.
• In early 2019, the Government of Canada made a decision to re-sequence construction of the JSS and the Offshore Oceanographic Science Vessel (OOSV) at Vancouver Shipyards, in order to build on the momentum underway with the construction of the JSS.
• Under the revised sequencing, Vancouver Shipyards will complete construction on JSS 1, followed by construction of the OOSV and then JSS 2.
• The construction of both JSS vessels will precede the construction of a Polar Icebreaker at Vancouver Shipyards.

Arctic and offshore patrol ships

Key messages

• Progress continues on the Arctic and Offshore Patrol Vessels (AOPS) project for the Royal Canadian Navy and Canadian Coast Guard. A second AOPS is expected to be delivered to Canada in 2021, with work on remaining AOPS either ongoing or expected to start soon.
• Since the start of the National Shipbuilding Strategy, the Canadian marine sector has continued to grow into a strong and innovative industry, creating good jobs in every region. Now, with the delivery of the first Arctic and Offshore Patrol Ship, Canada is seeing the benefit of this work.
• Irving Shipbuilding Inc. is meeting its economic benefits commitments to Canada, with investments in key areas including supply chain development, research and development, skills and training, technology development and industrial development.

Supplementary messages

• The Arctic and Offshore Patrol Ships (AOPS) project seeks to deliver six ice-capable ships, designated as the Harry DeWolf Class to the Royal Canadian Navy, as well as two variants of the AOPS for the Canadian Coast Guard at a budget of over $4.3B.
• The AOPS project is included in Irving Shipbuilding's Combat Work Package under the National Shipbuilding Strategy, which was awarded in 2011.
• The Industrial and Regional Benefits Policy applies to Irving Shipbuilding's National Shipbuilding Strategy Work Package. The shipyard is required to undertake business activities in Canada equal to the value of their contracts.

Update

The contract to design the six AOPS vessels for the Royal Canadian Navy was awarded to Irving Shipbuilding Inc. on March 7, 2013, and AOPS #1 HMCS Harry DeWolf was delivered to the Royal Canadian Navy in July 2020. AOPS #2, HMCS Margaret Brooke, is expected to be delivered in 2021. Irving Shipbuilding has a current Industrial and Regional Benefits (IRB) obligation of approximately $3Bagainst the AOPS project, which it is delivering on. This value will be updated as new IRB obligation values are publicly refreshed.

In May 2019, the Government of Canada announced that, as part of an investment to renew the Canadian Coast Guard fleet, Irving Shipbuilding Inc. will build 2 additional AOPS vessels that will be adapted for the Canadian Coast Guard. On November 1, 2019, the design contract for the Canadian Coast Guard variant project was awarded to Irving Shipbuilding Inc. This work is currently ongoing.

Supporting facts and figures

• The Arctic and Offshore Patrol Vessel (AOPS) project will deliver a total of 8 vessels: 6 to the Royal Canadian Navy and 2 to the Canadian Coast Guard at a current project budget in excess of $4.3B.
• The AOPS Variant for the Royal Canadian Navy will conduct armed sea-borne surveillance in Canada's waters, including in the Arctic, and will enforce and enhance Canada's sovereignty.
• The AOPS for the Canadian Coast Guard will replace existing Coast Guard offshore patrol vessels and will conduct a range of critical missions, including : patrol capability into the low Arctic as well as fisheries patrol, conservation protection and enforcement on Canada's east coast.
• Work is ongoing to complete the Nanisivik Naval Facility in Nunavut, which will support operations of the new AOPS and other government maritime vessels. This new facility is expected to be completed in 2022.

Offshore Fisheries Science Vessels (OFSV)

Key messages

• The Offshore Fisheries Science Vessels (OFSV) project provides a significant opportunity for Canadian industry to support the Canadian Coast Guard, supporting job creation and growth of our domestic marine sector.
• Vancouver Shipyards has successfully completed its economic and industrial obligations against the OFSV project. The shipyard's investments are making important contributions to the sustainable growth of Canada's marine sector, as well as generating economic benefits across the country.

Supplementary messages

All three Offshore Fisheries Science Vessels have now been constructed and delivered to the Canadian Coast Guard.

These vessels provide an important platform for scientific research and ecosystem-based management and contribute to Canada's stewardship of fishery and ocean resources.

Update

The Offshore Fisheries and Science Vessels (OFSV) project seeks to replace the Canadian Coast Guard Ship (CCGS) Teleost, CCGS Alfred Needler and the CCGS W.E. Ricker on Canada's west and east coasts.

Construction on the OFSVs began in September 2015. As of October 2020, all 3 vessels have been delivered to the Canadian Coast Guard :

• CCGS John Franklin, delivered June 27, 2019
• CCGS Capt. Jacques Cartier, delivered November 29, 2019
• CCGS John Cabot, delivered October 9, 2019

Supporting facts and figures

• The Offshore Fisheries Science Vessels project delivered 3 vessels for the Canadian Coast Guard at a budget of $788.5M.
• The OFSV project is included in Vancouver Shipyard's Non-Combat Work Package under the National Shipbuilding Strategy, which was awarded in 2011.
• Construction on the OFSVs began in September 2015. As of October 2020, all 3 vessels have been delivered to the Canadian Coast Guard :
  • CCGS John Franklin, delivered June 27, 2019
  • CCGS Capt. Jacques Cartier, delivered November 29, 2019
  • CCGS John Cabot, delivered October 9, 2019
• The Industrial and Regional Benefits (IRB) Policy applies to Seaspan's Vancouver Shipyards' Non-Combat Work Package. The shipyard is required to undertake business activities in Canada equal to the value of their contracts.
• Vancouver Shipyards has a current Industrial and Regional Benefits obligation of approximately $634M against the OFSV project, which it has successfully met. This value will be updated as new IRB obligation values are publicly refreshed.
• Examples of Industrial and Regional Benefit investments under the OFSV project include :
  • Genoa Design International Ltd. (Newfoundland), a Canadian SMB, for design work on the OFSV and OOSV, including 3D modelling work;
  • Bronswerk Marine Inc. (Quebec) for the provision of important HVAC systems; as well as
  • Camosun College (British Columbia) to support the development of modern marine engineering programs.
• The 3 OFSVs are the first of their kind built in Canada. They are also the first vessels to be completed at Vancouver Shipyard's new facility and the first vessels to be delivered under the National Shipbuilding Strategy.
• Lastly, Vancouver Shipyards have been successfully fulfilling its National Shipbuilding Strategy Value Proposition obligations to re-invest 0.5% of the value of their NSS resultant contracts in three priority areas :
  • Human Resources Development,
  • Technology Investment, and
  • Industrial Development.
• For example, in meeting its OFSV-related National Shipbuilding Strategy Value Proposition obligations, Seaspan committed to invest $2 million to support two faculty chair positions in Naval Architecture and Marine Systems Engineering within the University of British Columbia's Naval Architecture and Marine Engineering graduate program. The positions have supported a continuous pipeline of qualified personnel specialized in the marine industry, capable of supporting research initiatives and driving post-graduate curricula.

Offshore Oceanographic Science Vessel (OOSV)

Key messages

• The Offshore Oceanographic Science Vessel (OOSV) project provides significant opportunity for Canadian industry to support the Canadian Coast Guard, supporting job creation and growth of our domestic marine sector.
• Vancouver Shipyards is successfully delivering on its economic and industrial obligations against the OOSV project. The shipyard's investments are making important contributions to the sustainable growth of Canada's marine sector, as well as generating economic benefits across the country.

Supplementary messages

• Progress is being made towards delivering the Offshore Oceanographic Science Vessel to the Canadian Coast Guard. The start of construction in March 2021 is a notable milestone for this project.
• The Offshore Oceanographic Science Vessel will support critical research, in addition to supporting the mission of the Canadian Coast Guard.

Update

The Offshore Oceanographic Science Vessel (OOSV) project seeks to replace the Canadian Coast Guard Ship (CCGS) Hudson as the Canadian Coast Guard's primary East Coast ocean science research vessel.

Construction on the OOSV began on March 29, 2021. Delivery of the vessel is anticipated in 2024, between the delivery of the first and second Joint Support Ships for the Royal Canadian Navy.

Supporting facts and figures

• The OOSV project will deliver 1 vessel to the Canadian Coast Guard at a current project budget of $966.5M.
• In addition to supporting science missions, the OOSV will support search and rescue and environmental response operations to ensure safer waters for Canadians.
• The OOSV project is included in Vancouver Shipyard's Non-Combat Work Package under the National Shipbuilding Strategy, which was awarded in 2011.
• Construction on the OOSV began on March 29, 2021. Delivery of the vessel is anticipated in 2024, between the delivery of the first and second Joint Support Ships for the Royal Canadian Navy.
• Vancouver Shipyards has a current Industrial and Regional Benefits (IRB) obligation of approximately $162M against the OOSV project, which it is successfully delivering on. This value will be updated as new IRB obligations values are publicly refreshed.
• The OOSV is the first of its kind built in Canada. A 2019 decision to re-sequence the delivery schedule of the OOSV and Joint Support Ship (JSS) projects will result in the first JSS vessel being delivered before the OOSV.
• Lastly, the National Shipbuilding Strategy Value Proposition, which is 0.5% of the value of the contract, is being applied to Vancouver Shipyards. The shipyard has agreed to re-invest 0.5% of the value of their NSS resulting contracts in three priority areas :
  • Human Resources Development,
  • Technology Investment,
  • Industrial Development

Multi-Purpose Vessels (MPV)

Key messages

• Through the National Shipbuilding Strategy (NSS), this long-term project provides a significant opportunity for Canadian industry to support the Canadian Coast Guard, supporting job creation and growth of our domestic marine sector.
• Awarded to Vancouver Shipyards under the National Shipbuilding Strategy, the MPV contracts are subject to the full application of the Buy in Canada policy, the Industrial and Regional Benefits policy, as well as the NSS Value Proposition. Currently Vancouver Shipyards is undertaking early concept design for the vessels to explore options and analysis for advancing its design.

Supplementary messages

• Early concept design work for the Multi-Purpose Vessels is underway with Seaspan to advance the design of the vessels.
• The Multi-Purpose Vessels will enable the Canadian Coast Guard to carry out multiple missions, including: icebreaking in moderate conditions, search and rescue, emergency response, security and protection and maintaining aids to navigation.

Update

The Government of Canada is planning to acquire up to 16 MPVs to support a variety of missions, including light icebreaking, environmental response, and offshore search and rescue. The project budget is currently under review.

An MPV Ancillary Contract was awarded to Seaspan's Vancouver Shipyards (VSY) on August 20, 2020 : this contract is supporting early concept design work and will advance the design of the vessels.

Supporting facts and figures

• The Government of Canada is planning to acquire up to 16 MPVs to support a variety of missions, including light icebreaking, environmental response, and offshore search and rescue. The project budget is currently under review.
• The MPVs will enable the Canadian Coast Guard (CCG) to carry out multiple missions, including :
  • icebreaking in moderate ice conditions and assisting in shipping and spring time flood control in the St. Lawrence waterway and Great Lakes region;
  • search and rescue, emergency response, and security and protection missions;
  • maintaining Canada's marine navigation system composed of approximately 17,000 aids to navigation.
• On May 22, 2019, the Prime Minister announced the initial renewal of the CCG fleet including investment for up to 18 new large vessels to be built at Canadian shipyards, which included :
  • Up to 16 MPVs to be built at Seaspan's Vancouver Shipyards (VSY).
• An MPV Ancillary Contract was awarded to VSY on August 20, 2020.
  • This contract is supporting early concept design work and advancing the design of the vessels.
• The Industrial and Regional Benefits Policy applies to Seaspan's Vancouver Shipyards Non-Combat Work Package. The shipyard is required to undertake business activities in Canada equal to the value of their contracts.
• Vancouver Shipyards' Industrial and Regional Benefits (IRB) obligation against the MPV project will be updated as additional contracts are awarded new IRB obligation values.
• Lastly, the National Shipbuilding Strategy Value Proposition was applied to Vancouver Shipyards. The shipyard has agreed to re-invest 0.5% of the value of their NSS resulting contracts in three priority areas :
  • Human Resources Development;
  • Technology Investment; and
  • Industrial Development.

Program Icebreakers (PIBs)

Key messages

• The Program Icebreakers (PIBs) Project will be included as a package of work to be completed by the National Shipbuilding Strategy (NSS) under an Umbrella Agreement (UA) with a Third Yard.
• The Industrial and Technological Benefits Policy and the NSS Value Proposition will be applied in full force to the Program Icebreakers.
• The investments on PIBs will support many small and medium-sized Canadian businesses across the country, ensuring that the construction of these ships will be a historic, cross-country effort to help drive Canada's economic recovery from the COVID-19 pandemic.

Supplementary messages

• To support additional shipbuilding requirements, Canada launched a competitive process to identify a third Canadian shipyard as a partner under the National Shipbuilding Strategy (NSS).
• In August 2019, a competitive process was launched to select a third Canadian shipyard under the NSS to build six Program Icebreakers for the Canadian Coast Guard.
• In December 2019, Chantier Davie pre-qualified to become the third strategic partner under the NSS.
• Once the selection process is complete, the PIBs Project would be completed by the NSS Third Yard.

Update

Chantier Davie will now move to the next stage in the selection process, the Request for Proposal and evaluation stage. Once this phase is completed, the Government of Canada will begin negotiations for an umbrella agreement, which is expected to be put in place within the 2021 timeframe.

Supporting facts and figures

• The Program Icebreakers will be used as part of Canada's increasingly rigorous security regime in Arctic waters, which are becoming more accessible due to global warming. The vessels will have the capability to operate in severe ice conditions to enable all missions during ice season.
• As a Government of Canada assets, the PIBs will support programs by using a "modular mission payload" approach. The vessels will conduct searches on the water, respond to marine distress calls, provide assistance to disabled vessels and maintain critical services in Canada's northern regions.

Polar Icebreakers

Key messages

• The Polar Icebreakers are high-value and visible shipbuilding contracts for the Canadian Coast Guard (CCG) under the National Shipbuilding Strategy, and their importance to CCG's mandate cannot be overstated.
• By building these vessels in Canada, we are reaffirming our commitment to the National Shipbuilding Strategy and demonstrating our confidence in the capabilities of the Canadian marine sector, a sector which has begun to realize real success.
• With respect to the large vessel projects under the National Shipbuilding Strategy (NSS), Innovation, Science and Economic Development Canada administers the Buy in Canada Policy, the Industrial and Technological Benefits Policy and the NSS Value Proposition. All of these tools will be applied in full force to the Polar Icebreakers project.
• Both shipyards are expected to be supported by many small and medium-sized Canadian businesses across the country, ensuring that the construction of these ships will be a historic, cross-country effort to help drive Canada's economic recovery from the COVID-19 pandemic.

Supplementary messages

• Polar Icebreakers will enable the Coast Guard to operate in the Canadian Arctic throughout the year to fulfill Government of Canada missions in support of Indigenous Peoples and other Northerners, Arctic sovereignty and security, high Arctic research, and to help respond to emergency situations.
• A Polar Icebreaker will be awarded to Seaspan's Vancouver Shipyards under the National Shipbuilding Strategy (NSS), as well as Chantier Davie under the condition of successfully completing the Third NSS Shipyard selection process.

Update

The Polar Icebreaker project seeks to replace the Canadian Coast Guard Ship (CCGS) Louis S. St- Laurent and CCGS Terry Fox with two Polar Icebreakers that will become Canada's most powerful conventional icebreakers.

On May 6, 2021, it was announced that the two Polar icebreakers are being built under the Government of Canada's National Shipbuilding Strategy and in accordance with the Canadian Coast Guard's fleet renewal plan. At least one Polar icebreaker is expected to be in service by 2030.

Supporting facts and figures

• These first of their class Polar Icebreakers will be larger and more powerful than the Coast Guard's current heavy icebreakers, the CCGS Louis S. St-Laurent and CCGS Terry Fox. The increased power and endurance of these ships will allow them to operate in more challenging ice conditions at higher latitudes in Canada's Arctic where the Coast Guard cannot regularly operate.
• In addition to the technological advantages provided by these new ships, having two in operation will allow the Coast Guard to maintain a year-round presence in the Arctic.
• The Polar Icebreaker project budget is currently under review. Additional costing information will become available as contracts are negotiated.
• On May 6, 2021, it was announced that the two Polar icebreakers are being built under the Government of Canada's National Shipbuilding Strategy and in accordance with the Canadian Coast Guard's fleet renewal plan. At least one Polar icebreaker is expected to be in service by 2030.
• One Polar Icebreaker will be constructed by Seaspan's Vancouver Shipyards as part of its Non-Combat Work Package, while a second Polar Icebreaker will be constructed by Chantier Davie, pending its successful admission as the third National Shipbuilding Strategy large vessel construction shipyard.
• Through the National Shipbuilding Strategy, the Polar Icebreaker project provides a significant opportunity for Canadian industry to support the Canadian Coast Guard, supporting job creation and growth of our domestic marine sector.
• A fully domestic build of the two Polar Icebreakers will contribute billions of dollars to Canada's GDP and support over 3,000 well-paying jobs per year across the industry.

Mid-Shore Multi-Mission Vessels

Key messages

• The Mid-Shore Multi-Mission (MSMM) Vessels project seeks to deliver a new class of vessels (up to 6 ships), to the Canadian Coast Guard (CCG) in order to fulfil its core mandate.
• The vessels will provide a wide range of program delivery capabilities while maximizing mission modularity, innovation, green technologies, and an effective return on investment to Canadians.
• By building these vessels in Canada, we are reaffirming our commitment to the National Shipbuilding Strategy and demonstrating our confidence in the capabilities of the Canadian marine sector, a sector which has begun to realize real success.

Supplementary messages

• The Mid-Shore Multi-Mission Vessel project seeks 6 vessels for the Canadian Coast Guard. The primary mission of these vessels is to aid in core functions of the Canadian Coast Guard, including: navigation, ice-breaking capability, ecosystems and marine science activities, hydrographic missions, in addition to search and rescue services.
• This will offer opportunities for investments in critical growth areas of the Canadian economy, including clean technologies and the marine sector.

Update

A Request for Information was publicly released in February 2021, and closes on June 30, 2021. The MSMM Procurement Strategy is currently being developed based on industry interest and responses on proposed procurement options.

A design contract is expected to be awarded in 2022 and the delivery of the first MSMM is targeted for 2029, followed by one vessel delivery every 12 months thereafter for the duration of the contract.

The design contract will be competed internationally, however, through the Buy-in-Canada Policy Framework, these vessels are intended to be constructed within Canada and are currently planned under the third pillar of the National Shipbuilding Strategy (NSS), which provides the provisions necessary to procure vessels under 1,000 tonnes.

Supporting facts and figures

• The design objectives and considerations for the MSMM vessel class include the use of green technologies and energy efficiency, innovation, leading-edge technologies and life-cycle management.
• The MSMM vessel class has many competing design drivers, requiring thorough engineering evaluations and trade-off analyses throughout the development phases. These activities will focus on optimizing energy efficiency, innovation against lifecycle costs and weight in order to deliver the most efficient and capable platform under the 1,000 tonne lightship displacement limit.

Shipbuilding COVID impact

Key messages

• ISED conducts regular analysis of the Canadian shipbuilding and repair sector utilizing employment data from Statistics Canada.
• A monthly index has been developed to track the recovery of the sector relative to pre-pandemic levels and to compare sector performance to the manufacturing average in Canada.
• The sector was deemed essential by provincial authorities and was not subjected to lockdown requirements.
• The analysis to date shows that while there was an initial slight negative impact to the sector employment in Spring 2020 the sector has recovered to pre-pandemic levels by the end of 2020, faring better than other manufacturing sectors.
• This demonstrates that receiving economic benefits from contracts awarded under the Strategy not only supports the growth of a sustainable marine sector in Canada but develops resiliency during times of economic challenges.

National Shipbuilding Strategy Economic impact

Overall economic impact

Key messages

• The National Shipbuilding Strategy (NSS) is revitalizing the domestic shipbuilding and greater marine industry, creating and sustaining jobs, and generating socio-economic benefits and prosperity in communities across Canada.
• NSS contracts issued between 2012 and December 2020 are estimated to contribute close to $20.1 billion ($1.8 billion annually) to gross domestic product, and create or maintain more than 16,900 jobs annually, through the marine industry and its Canadian suppliers from 2012 estimated out to 2022.
• Since 2012, over $17.49 billion in contracts have been awarded to Canadian companies. Of these contracts, $975 million went to small businesses with less than 250 full-time employees.
• Overall, the Canadian marine industry is innovative, and supports skilled workers, with a 2.5 times higher share of employment in science, technology, engineering and mathematics fields (such as engineers, scientists and researchers) than total manufacturing.
• Statistics Canada data released in 2020 indicated that between 2016 and 2018 marine sector sales increased by 16% to $4.1B, with export growth of 33% to a value of $1.1B in 2018. Canadian companies are having demonstrable success in the global market, with market analysis showing that over 80% of Canadian developed naval systems are present on global fleets.
• Irving Shipbuilding has an IRB obligation of nearly $4.1 billion, of which $2.6 billion has been completed to date and another $396 million is underway for the Arctic and Offshore Patrol Ships project, modernizations to the Halifax-class frigates, and the Canadian Surface Combatant definition contract.
• Seaspan Vancouver Shipyards has completed approximately $1.0 billion in IRBs, with $251 million in activities currently underway as part of its total IRB obligation of $1.8 billion across Offshore Fisheries Science Vessels, the Offshore Oceanographic Science Vessel and the Joint Support Ships.
• As of December 31, 2020, NSS shipyards had accrued over $26.7 million in NSS VP obligations. The value of approved investments at the end of 2020, including completed investment activities and approved future activities, exceeded $29.4 million.