OTTAWA - It's unlikely the Royal Canadian Navy will be able to buy comparable replacements for its aging supply ships with the amount of money set aside by the Harper government, the parliamentary budget officer warned on Thursday.
The $2.6-billion joint support ship program is severely underfunded in light of escalating costs and all of the uncertainty associated with the design and required capabilities, Kevin Page warns in his latest report.
At least $4.13 billion should be set aside, perhaps more, Page estimates.
The report uses the capabilities and dimensions of the existing two supply ships -- HMCS Protecteur and HMCS Preserver -- as the baseline to calculate what a replacement would cost in today's terms.
The government is faced with two choices -- either scale back the ship's requirements, or put more money into the program.
"We think it's a very, very low probability that they'll get anything near the replacement of the Protecteur for anything like $2.6 (billion)," Page said.
"If I had to guess, this looks like a budget constraint. You make the requirements fit within the budget constraint."
Page's latest report on military procurement could spell more political trouble for the Conservatives, who've been hammered over delays and cost overruns in a series of military equipment projects.
Nonetheless, Public Works Minister Rona Ambrose remained steadfast Thursday as she defended the government's estimate and said appropriate safeguards have been put in place to ensure affordability.
"Let's remember, these ships are in the design phase, but as we move forward we have the independent oversight and expertise in place to protect taxpayers," Ambrose told the House of Commons.
Government officials conceded on Wednesday that the final design must be reviewed for cost before the program proceeds to the construction stage.
Both the NDP and the Liberals demanded to know from Ambrose whether the government would either choose to reduce the scope of what the ships can do or add more cash, but Ambrose signalled the budget is fixed.
"If any adjustments need to be made, they will be made with the Navy and the coast guard," she said.
The budget officer's staff say they used a couple of different models in their calculations and cut government officials some slack in terms of delivery dates, but essentially came up with the same numbers.
The analysis says $3.2 billion would be needed to replace the navy's 45-year-old replenishment ships.
But it adds that a contingency cushion of almost $900 million should be added in, given the engineering complexity of the project and the fact that shipyards haven't built such vessels in decades.
That's an idea backed by American naval construction experts at the Government Accountability Office in Washington.
Building in such a buffer for decision-makers "conveys the level of confidence in achieving the most likely cost and also informs them on cost, schedule, and technical risks," U.S. officials were quoted as saying in the budget officer's report.
The support ship program has travelled a long, convoluted path.
It was first proposed in 1994, but the Liberal government didn't get around to ordering replacements until 2004.
The shipyard proposals were deemed too expensive by the Harper government in 2008 and the project went back to square one, with a drastic scaling back of the capabilities the navy wanted.
The program is now not expected to deliver replacement ships until 2018.
Page's analysis shows that had the government stuck with the original plan, it would have delivered more capable ships to the navy at less cost than what is now projected.
The budget officer's report says one of the factors driving the higher cost is the insistence that the ships be built entirely in Canada, something that runs contrary to the defence practices of many other nations.
Among Canada's major allies, only the United States and Britain design, build and launch their own warships. Britain, however, is expected to use foreign sources for some future construction.
European countries, notably France and the Netherlands, outsource some of their naval construction to lower-cost builders such as Romania and South Korea.
Building in Canada will come with a cost, one that the government doesn't seem willing to acknowledge, the report suggests.
Both the NDP and the Liberals said the report draws into question the Harper's often-celebrated national shipbuilding strategy, which promised to deliver at total of 28 warships and coast guard vessels.
Government officials acknowledged in the background briefing that the number of hulls is not fixed.
