Resetting the CFDS?
Jan 15, 2013

Considered financially unrealistic in the current economic climate, the 2008 Canada First Defence Strategy (CFDS) definitely needs a ‘reset’. However, a new strategy could leave the Royal Canadian Navy with a smaller, less capable fleet. Back in 2008, the CFDS promised “predictable, long-term funding” and a “detailed plan for the replacement of key equipment fleets,” but today, in a dramatically different economic ­environment, the Department of National Defence (DND), along with the rest of the government, must reduce spending. By 2014-2015, DND will have lost up to $2.5 billion of its $21 billion budget.

The original CFDS called for 15 destroyer and frigate replacements, 6-8 Arctic Offshore Patrol Ships (AOPS) and up to 3 replenishment ships. However, in today’s new world of reduced budgets, a renewed fleet of 26 ships looks highly unlikely.

Shortly after he became Chief of the Defence Staff this fall, General Tom Lawson was quoted explaining how the future fleet and platform purchases outlined in the Canada First Defence Strategy will be affected. “There’s a range of numbers, and it may mean we’re at the low end of those ranges,” he said. That probably means a maximum of 6 AOPS and 2 replenishment ships. The timing of ship projects has already been ‘pushed to the right’, and dates when shipyards actually begin to ‘cut steel’ are still somewhere off in the future. In fact, Nova Scotia Premier Darrell Dexter recently expressed to the Prime Minister, his concern that skilled shipbuilding labourers may have to move elsewhere for work while everyone waits for the final go ahead. “Frankly, I think we’re all a little impatient because things are taking much longer than was anticipated,” Dexter told reporters.

The Navy offers a big target for budget cuts, and is in the unfortunate position of having most of its important ships – destroyers, frigates and replenishment vessels – at, near, or beyond the end of their economic operational lives. The Royal Canadian Air Force may need to replace its CF-18 Hornets and buy some Fixed Wing Search and Rescue Aircraft, but it has already received its complements of C-17s and C-130Js, and the Chinooks are on the way. The Canadian Army is in the middle of its recapitalization program, and Afghanistan showed that it could procure new equipment quickly as Urgent Operational Requirements. But the navy is different in many ways; its timelines are much longer; government policy calls for hulls to be built and assembly to take place in Canada; and its designs are not ‘off the shelf’ but either domestically developed or heavily customized to unique Canadian requirements.

There is media outcry over the cost of the Joint Strike Fighter, but the National Shipbuilding Procurement Strategy offers more points of vulnerability to cuts.

The simple fact is, there is not enough money to buy everything on the Canada First Defence Strategy shopping list. While it may be interesting to know how long the government has realized that and failed to publicize the knowledge, or amusing to quote government ministers in years past saying that the CFDS is fully funded, the budget squeeze is more than a political embarrassment to the Canadian Forces.

The last defence strategy said a 21st century military rests on four pillars: Personnel, Equipment, Readiness and Infrastructure. The government has made it clear that it will not reduce personnel and it will press ahead with equipment acquisitions. That leaves two of the four pillars to offer up all of the savings: Infrastructure is $40 billion or 8% over the 20 years of the CFDS, but the big ‘savings’ will probably have to come from Readiness at $140 billion or 29% of the defence budget.

In his paper for the Canadian Defence and Foreign Affairs Institute, “Defence After The Recession”, David Perry notes that: “the bulk of these cuts will fall to the operations and maintenance, or readiness, budget, which provides the ‘resources needed to maintain equipment, conduct training, and prepare units for operations.’” In previous defence cuts, he writes, when the money went down, so did capital budgets and personnel levels, but this time is different. “The Harper government is breaking new ground by devolving a majority of its defence spending reduction to the operations and maintenance pillar.”

In effect, the cost of keeping all the people and buying all the equipment will be paid for with their ability to carry out their missions. As Senator Colin Kenny wrote in FrontLine in 2008, “If the government does not introduce significant budget increases in the coming years, whatever equipment it purchases up front is only going to drain its capacity to recruit, train, maintain and deploy down the road.”

Even if the government accepted a reduced capability and simply cut the number of ships to be purchased, it would lose economies of scale, especially in the CSC – the last ship of a class is typically much less expensive than the first. Across the fleet, new ships could be built on a very long schedule; they could have much less than the full range of capabilities a modern navy might want; some or all of the Maritime Coastal Defence Vessels could be taken out of service and their training role assigned to shore stations and other ships; to keep costs down across the board, everything could be done at the very lowest cost possible, but that would probably mean off shore designs and strict controls on the Canadianization of off-the shelf equipment.

Beginning work on the new Canadian Surface Combatants (CSC) can only be delayed so long before rust claims the ships they should replace, and Canada loses the operational capability the CFDS claims as an invaluable strategic asset. As each day goes by, the navy has less money to buy the ships and the capabilities they need to meet their assigned missions: budgets are not indexed to inflation, and inflation in the defence industry has been estimated at seven percent a year. Meanwhile, the costs of project management offices come out of the assigned budgets. At a certain point, it does not make sense to build the full complement of vessels. Senior naval leadership may already be resigned to fewer ships, reduced capabilities for those ships, or both.

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Richard Bray is the Senior Writer at FrontLine Defence.
© FrontLine Defence 2013