National Shipbuilding Procurement Strategy (NSPS) · – One shipyard will build the combat vessels package: • Arctic offshore patrol ship, ... objectives and best ... National

National Shipbuilding Procurement Strategy Secretariat Secrétariat de la stratégie nationale d’approvisionnement en matière de construction navale NATIONAL SHIPBUILDING PROCUREMENT STRATEGY STRATÉGIE NATIONALE D’APPROVISIONNEMENT EN MATIÈRE DE CONSTRUCTION NAVALE

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National Shipbuilding

Procurement Strategy

(NSPS)

NATIONAL SHIPBUILDING PROCUREMENT STRATEGY STRATÉGIE NATIONALE D’APPROVISIONNEMENT EN MATIÈRE DE CONSTRUCTION NAVALE

National Shipbuilding Procurement Strategy Secretariat Secrétariat de la stratégie nationale d’approvisionnement en matière de construction navale

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Environment

• “…it has been 14 years since the last major warship was launched in Canada. The 38-year-old, 5,100-tonne destroyer HMCS Iroquois will soon be the oldest frontline warship in the western world.”

(Gen. Walter Natynczyk, Chief of Defense Staff)

• 78% of the Canadian Coast Guard’s large vessels exceed their designed operational life, its youngest large vessels are over 20 years old and the oldest is over 45 years old

• Canada’s shipbuilding industry was not well positioned to deliver on our ambitious shipbuilding objectives

• Canadian Shipbuilding Policy states that the Government will procure, repair and refit vessels in Canada subject to operational requirements and the continued existence of a competitive domestic marketplace

• Canada’s previous approach to building ships was project-by-project with no long term strategy resulting in a “boom” and “bust” cycle

• A number of unsuccessful shipbuilding solicitations underlined the issues arising from this ad hoc approach


Vancouver Shipyards Vancouver, British Columbia

Major Canadian Shipyards

Irving Shipbuilding Inc. Halifax, Nova Scotia

Seaway Marine & Industrial Inc. St. Catharines, Ontario

Davie Yards Inc. Lévis, Québec

Kiewit Offshore Services Marystown, Newfoundland


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Economic Opportunity

• A once-in-a-generation opportunity to leverage Canada’s fleet renewal

investment to foster a stronger, more sustainable Canadian marine

industry

• The renewal of the federal fleet will support 15,000 jobs annually in

communities across Canada over the next 30 years (CADSI - Sovereignty, Security and Prosperity – Government Ships, May 2009)

• The Industrial and Regional Benefits Policy will ensure that the full

value of the resulting contracts (both shipyard and non-shipyard related

work) is leveraged back into the Canadian economy

• In exchange for long term, predictable federal shipbuilding work,

shipyards to make investments that contribute to the competitiveness,

viability and health of the marine sector over the long term



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National Shipbuilding Procurement Strategy

1. Establish a long-term strategic relationship with two Canadian

shipyards and designate them as source of supply to build

government’s large ships, where:

– One shipyard will build the combat vessels package:

• Arctic offshore patrol ship, Canadian surface combatant

– The other will build the non-combat vessels package:

• Offshore oceanographic science vessel, offshore fisheries

science vessel, polar icebreaker, joint support ship

2. Set aside smaller vessels for competition by other than the two

selected yards and their affiliates

3. Repair, maintenance and refit remains business as usual



Smaller Vessels

• Set aside designed to allow for the distribution of benefits to the greatest extent possible

• At this time only a notional list of future small ship requirements is available (116 vessels, $2B worth of work)

• It is not Canada’s intention to bundle the small ships into a single package but rather to conduct open competitions on a project by project basis when requirements arise

• Canada does not have a policy restricting the regional area of competitive shipbuilding requirements

• Companies should monitor the Government Electronic Tendering System (GETS) at www.MERX.com.


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A national competition to select 2 Canadian shipyards:

Issue a Solicitation of Interest and Qualification to all Canadian shipyards to establish a short list of potential shipyards for the competitive RFP (Sept 2010)

Issue a Request for Proposals to the short-listed shipyards (Issued Feb 7, 2011, Closed July 21, 2011)

• Five Proposals from 3 Bidders: 2 Combat, 3 Non-Combat

Evaluation of Proposals and select 2 shipyards (Selection announced October 19, 2012)

Finalize an Umbrella Agreement with each selected shipyard (Signed February 2012)

Negotiate Contracts for the first project in each work package

NSPS Process - What Did We Do


NSPS Attributes • Engagement

– Regular meetings with stakeholders

– Canada in “lead, but listen” mode

– Stakeholders contribute to development of RFPs, evaluation criteria and

methodology and procurement schedule

• Leadership, Governance & Decision-Making

– Arms-length from political considerations

– Dispute resolution process in place

– Timely, key decisions made openly and transparently by committee of DMs

and communicated instantly on the website

• Use of Reputable 3rd Parties

– To validate processes and provide credibility

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Timeliness

Can

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ian

Va

lue

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How NSPS addressed challenges

Governance

+ + =

Clarifying roles and

responsibilities

Engagement

Improving

industry/client

relationship

• Consultation

sessions

• Industry days

Transparency

Independent Third

Parties

• Use of fairness

monitor

• Third party

assessments from

independent experts

• Creation of the NSPS

website

Innovative and

outcome based

procurement,

meeting client needs,

while respecting

socio-economic

objectives and best

value for Canadians.

By : By : By :

• Innovative

interdepartmental

governance structure

• Robust dispute

resolution process

• NSPS Secretariat

supporting the

governance

NSPS Winner - Public Policy Environment

• Overwhelming positive commentary on the process and the results

from media, industry associations, parliamentarians, academia and

international observers

• Restored public confidence in government procurement and the

federal bureaucracy as a whole

• Provided a blueprint for future major procurements

• Keeping the process at arms-length from politicians was lauded

• The web site provided up to date and detailed communications with

the public and media and eliminated time-wasting rumours and

information power-brokers

• Maintaining the security / secrecy of the results until the formal

announcement was unprecedented

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• “We strongly support the government’s decision to build its naval and coast guard fleets in Canada and to manage their production in a way that mitigates the boom-and-bust cycles normally associated with ship fleet construction.”

Canadian Association of Defence and Security Industries (CADSI)

• “It’s a great day, I can’t remember a day like this in the industry and I’ve been in it a long, long time.”

Shipyard General Workers Federation

• “Beyond the benefits for the winning companies and their workers, the shipbuilding contracts will have profound benefits for the entire economy, coast-to-coast. We congratulate the government on a fair and transparent process that will maximize opportunity for participation and growth throughout all regions of Canada to address the subject matter.”

Canadian Manufacturers and Exporters (CME)

• "That's competition for you. And in this case no one can complain that the competition for the contracts was unfair."

Yves-Thomas Dorval of Quebec's Conseil du patronat

NSPS Process – Feedback



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• Negotiate ship project contracts for the first projects in each package

– Combat: Arctic Offshore Patrol Ships

– Non-Combat: Coast Guard Science Vessels

• Use NSPS best practices, and governance and engagement models to foster and maintain a values and results-based culture throughout the GC procurement system

NSPS Process – What’s Next


New Approach to Procurement


• Listen to those with a stake in the process - clients and suppliers in equal

measure

– Suppliers often have valuable ideas about how to efficiently supply the

government with what it needs

• Adopt a governance or decision-making process that allows for real

business choices to be made by both clients and procurement staff with

direct input from suppliers

– Make sure there is a robust dispute-resolution process to address any

concerns and manage risks in a timely manner

• Seek advice and input from those who are knowledgeable or expert but

do not have a stake in the process

These three simple attributes, applied with judgement, will allow Canada to buy smarter,

achieve better results, save taxpayers’ money, expand Canadian business and other,

yet-to-be determined positive outcomes

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Questions …?

Documents

National Shipbuilding Procurement Strategy (NSPS) · – One shipyard will build the combat vessels package: • Arctic offshore patrol ship, ... objectives and best ... National