Report: Canada's New Frigates Will Cost $4B Each, Including Taxes

Canada's parliamentary budget expert has completed a new estimate of the cost of the Royal Canadian Navy's future series of frigates, pegging the likely total at roughly US$62 billion for 15 hulls - about $14 billion more than the service's most recent public estimate and about three times the estimate in 2015. 

Parliamentary budget officer Yves Giroux delivered the much-anticipated new estimate for the Canadian Surface Combatant (CSC) along with a range of alternative scenarios. If Canada scrapped its Type 26-based design altogether and built a warship based on Fincantieri's FREMM frigate, then the unit cost would remain roughly the same at about $4 billion each - but the production timeline would likely be pushed back by about four years, Giroux estimated. (The United States will likely pay about $1.2 billion each for its own FREMM-based frigates, according to the U.S. Congressional Budget Office.)

If the Royal Canadian Navy truncated the production of the CSC to three units, then substituted a dozen less-capable vessels based on the UK's Type 31 frigate, it could shave about $32 billion off the program cost. The UK Royal Navy has taken a similar approach. 

At the lowest end, if the RCN eliminated the CSC altogether and built a series of Type 31-based vessels instead, it could reduce the program cost by $40 billion - but Canada's surface navy would have limited capabilities for decades to come. 

In a response, Canada's Department of National Defence (DND) said that the $14 billion difference in project cost calculations stemmed primarily from the PBO's inclusion of provincial sales tax and its extra emphasis on "weight-related costing." It defended the CSC as the best available option and ruled out starting over with a new design. 

"As the PBO noted the other design options that they examined would have 'more limited' and 'modest' capabilities than our selected design. These reductions would impede the RCN’s ability to execute its assigned roles and missions to keep Canadians safe both at home and abroad," wrote DND. 

The department said that it is confident in its cost estimates (before taxes) and promised that it is working to expedite delivery of the CSC, including through the use of concurrent design and construction - the practice of building portions of a vessel before the rest of the detailed design has been completed.