The Cost of Canada’s Surface Combatants: 2019 Update

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The Cost of Canada’s Surface Combatants: 2019 Update.pdf

Summary
This report provides an updated cost estimate of the Canadian Surface Combatant (CSC) program from the 2017 PBO report, “The Cost of Canada’s Surface Combatants.” At the time of the previous cost analysis, the government had not yet selected a design for the new generation of warships. This update considers characteristics specific to the Type 26 design chosen by the government while incorporating updated information on the project’s timeline.

Our estimate of the total cost of the CSC program is $69.8 billion over 26 years, consisting of: $5.3 billion in pre-production costs; $53.2 billion in production costs; and, $11.4 billion in project-wide costs (all in nominal dollars).

In comparison, the 2017 PBO report estimated a total program cost of $61.8 billion, $8 billion less than the updated estimation. The difference in these estimates is due to new information on project specifications provided by the Department of National Defence (DND); in particular, ship construction will begin later (increasing inflation costs), the ship will be larger than assumed in the previous report (increasing real construction costs), and we exclude the cost of spares beyond the initial two years (reducing real program costs).

In 2017, the Government of Canada revised their original 2008 program cost estimate of $26.2 billion to $56-60 billion, with costs to be revisited at the completion of the development phase. There is therefore a difference of $9.8-$13.8 billion between the DND and the updated PBO estimates.

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