Economic Benefits from the Canadian Surface Combatant Project

From: Public Services and Procurement Canada

Backgrounder

February 8, 2019 - The Canadian Surface Combatant (CSC) project is the largest, most complex procurement undertaken by the Government of Canada. A procurement of this size and scope represents an excellent opportunity to support the ongoing development of our shipbuilding industry, and create good jobs for Canadians.

Through the Industrial and Technological Benefits (ITB) Policy, both Irving Shipbuilding Inc. and Lockheed Martin Canada (LMC) will invest an amount equal to their contract value back into Canada’s economy. They can do this by engaging Canadian firms on the CSC project, or indirectly through approved investments in other projects such as innovation, supplier development and exports.

Irving Shipbuilding Inc.

As part of its ITB obligation, Irving has committed to do a minimum of half of its design-phase work in Canada and enhance its relationships with Small and Medium Business (SMB). Irving will also look to make innovation-related investments which will help grow and sustain Canada’s marine industry.

In addition, through the National Shipbuilding Strategy Value Proposition, Irving has committed to reinvest 0.5 percent of the contract value to benefit the greater Canadian marine industry over the long term. These investments will be made into the three priority areas of skills (e.g. human resources development), technology investment and industrial development.

Lockheed Martin Canada

Under the CSC evaluation framework, bidders were incentivized to submit a Value Proposition which maximizes Canadian participation in CSC design-phase engineering/integration services, and which will seek to incorporate high-technology Canadian systems and equipment in to CSC ships.

LMC’s Value Proposition commits to performing at least 58 percent of the design-phase engineering/integration services work in Canada. Through the design work, LMC will incorporate dozens of Canadian systems and equipment into the CSC design involving leading Canadian enterprises.

Examples of the firms on Lockheed’s bid team include L-3 Communications (Montreal, Quebec and Burlington, Ontario), MDA Inc. (Richmond, British Columbia and Halifax, Nova Scotia) Ultra Electronics Maritime Systems (Halifax, Nova Scotia) and CAE (Montreal, Quebec). By providing their products, services and technologies for the CSC ships, Canadian companies such as these will be able to demonstrate their world-class technology and compete for international export opportunities. As part of its commitment to work with Canadian firms, LMC will also invest 10 percent of the total subcontract value into Canadian SMB.

In alignment with the Innovation and Skills Plan, LMC will also make investments in Canada into innovation, supplier development and export opportunities with a particular focus on the priority areas of cyber security, clean technology and the marine sector. These commitments will extend into the build phase of the CSC, resulting in ongoing 20-year investments in Canada’s economy.

Finally, LMC has also committed to over $150 million in advanced manufacturing investments, including a major project by IBM Canada to invest in its software development labs across Canada and in its nanotechnology centre.

The economic commitments made by Irving and LMC as part of the CSC project will support the growth of Key Industrial Capabilities in Canada as work will continue over the lifespan of the CSC ships, from design, to build and eventually into in-service support. All told, this procurement will ensure that billions of dollars will flow into Canada’s economy, supporting innovation and creating good jobs for Canadians for many years to come.