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Military Industrial Boondoggle

Today in my defence policy course my students and I shall be spending some time discussing defence procurement. As luck would have it, as I was munching on my morning bread and marmalade, a highly relevant article swan into view in the op-ed page of my local rag, The Ottawa Citizen, after which I then discovered a new US report on a similar topic.

The Citizen article concerns Canada’s shockingly badly managed naval shipbuilding program. Written by a former Assistant Deputy Minister of Defence, Alan Williams, the article declares that ‘Canada’s Warship Program is Sinking Fast.’ In this Williams reports that Canada’s plan to build 15 new surface combatants originally had

an estimated cost of $26 billion, with deliveries to begin in the early 2020s. Today, the forecasted costs to build these ships is far beyond that. Deliveries are to start in the early 2030s, a decade later than scheduled … [The Parliamentary Budget Office] estimates that it will cost $77.3 billion … to maintain these ships over their expected total life-cycle would amount to an additional $208 billion, for a total life-cycle cost of $286 billion. In comparison, the funds available in DND’s [Department of National Defence] budget over the next 30 years to acquire and maintain its capital goods for the army, navy and air force combined is only $240 billion. This program alone would bankrupt the department’s capital and maintenance accounts for the next 30 years.

Despite this, DND insists that, ‘It will neither entertain a new design nor undertake a new procurement process.’ Williams adds that the United States is building very similar ships for about one-third of the price of the Canadian ones, and also that DND rejected an offer by the Italian company Fincantieri to build the ships in Canada ‘at a fixed cost of $30 billion’, less than half what DND is now paying. ‘As currently planned, these ships will likely never be built. They are simply unaffordable,’ concludes Williams.

But could the government cancel such a project after throwing so much money at it? That’s where the US report comes in. Published by the American Enterprise Institute, and entitled The 2020s Tri-Service Modernization Crunch, the report mentions how the shift in priorities during the War on Terror led the USA to cancel a whole series of projects originally designed for fighting wars of a different type. You can see the details in this chart, showing cancelled projects from 2002 to 2012 alone.

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