World class shipbuilding and repair Presentation to RMC Symposium – February 27, 2012
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World class shipbuilding and repair
Presentation to RMC Symposium – February 27, 2012
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October 19, 2011
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Why They’re Excited:Monumental Economic Impact
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NSPS Impact on ISI Employment
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2012 - 2035
Win Combat
FTE's
Employment Peak 2020 = 2,700 est.(AOPS and CSC production over-
lap)
Employment Ramp-Up Begins 2013/2014(MSPV and AOPS production overlap)
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NSPS Annual NS Economic Impact
Combat VesselsAverage Peak
Employment 8,453 11,495
Real GDP (Basic Prices) $661M $897MFederal Income Taxes $66M $76M Provincial Income Taxes $51M $74MCorporate Income Taxes $34M $50M Indirect Taxes (HST, etc.) $115M $169M Personal Income $447M $634M
Personal Disposable Inc. $293.0 $412.0
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6Source: Conference Board of Canada & Jupia Consultants Inc.
Consumer Spending in Nova Scotia
Personal Income will average $447 million per year over the life of the Combat Project and drive consumer spending
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7Source:Conference Board of Canada & Jupia Consultants Inc.
Significant benefits to rest of Canada especially ON, PQ and BC
National Economic Impact
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How Did We Get Here?Government & Industry Collaboration
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• Existing marine procurement for fleet renewal was high risk– Highly complex– Time consuming– Expensive
• Change required given significant government shipbuilding requirements
• Need to ensure capable, qualified strategic shipbuilding asset in Canada
• Canadian Shipbuilding Association responded with collective recommendations– COEx…The Road Map to A Sustainable
Industry
2009 - An Industry Aligned
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• Industry consultations held on July 27 & 28, 2009
• From that process, NSPS was developed
Collaboration Key to Success
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• Federal ships to be built in Canada• Finite federal demand over a 30-year
horizon• Limited number of yards involved– Recognized there would be winners and
losers– Long-term stability of industry came first
• Government will level-load Construction Schedule Requirements– Eliminating Boom-Bust cycle so damaging
to long-term industry viability
What was required by Industry
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• Award contract to 2 facilities emerging from SOI-Q process– Compete on capability, not scope of work– Use appropriate risk-reducing qualification criteria
• Use supply arrangements as basis for contracts to ensure best value
• Negotiate contracts by particularized project
• Build incentives into projects– Reward performance and share savings with
Canada
Procurement Recommendations
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• Preserve sovereign capability for Canada• Shipbuilding as strategic asset for Canada• Steady workload into future (30 years)• Retain and develop high value jobs• Provide stable facilities for cost-effective
delivery • Allow for incremental investment to keep
pace with world wide industry• Reduce industry’s cost of proposals, more
money for facility and HR investment
Benefits of COEx Approach
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• Provide basis for long term shipbuilding industrial strategy
• Expedite government procurement process
• Provide earlier delivery of vessels• Reduce Canada’s PMO office level of effort,
by:– Reducing Canada’s cost in project definition and
implementation phases– More money available for ship and project
deliverables– Reduce risk to program, contractor and Canada
Benefits of COEx Approach
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Where Do We Go From Here?Capitalizing on the NSPS Experience
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Benefits of NSPS Process
Industry’s Projected Benefits (2009) NSPS Benefits Realized (now & future)
Reduced solicitation time & cost
Significantly reduced up-front expenditure for government & industrySignificant project/program risk reductionsEarlier delivery of vessels & earlier IRB’sBest value for money for Canada
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Benefits of NSPS Process
Industry’s Projected Benefits (2009) NSPS Benefits Realized (now & future)
Reduced solicitation time & cost Eliminated approx. 18 – 24 months of traditional procurement process
Significantly reduced up-front expenditure for government & industrySignificant project/program risk reductionsEarlier delivery of vessels & earlier IRB’sBest value for money for Canada
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Benefits of NSPS Process
Industry’s Projected Benefits (2009) NSPS Benefits Realized (now & future)
Reduced solicitation time & cost Eliminated approx. 18 – 24 months of traditional procurement process
Significantly reduced up-front expenditure for government & industry
Costs associated with steps in procurement process eliminated
Significant project/program risk reductionsEarlier delivery of vessels & earlier IRB’sBest value for money for Canada
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Benefits of NSPS Process
Industry’s Projected Benefits (2009) NSPS Benefits Realized (now & future)
Reduced solicitation time & cost Eliminated approx. 18 – 24 months of traditional procurement process
Significantly reduced up-front expenditure for government & industry
Costs associated with steps in procurement process eliminated
Significant project/program risk reductions
Resulted in new way of procurement – government / shipyard relationships
Earlier delivery of vessels & earlier IRB’sBest value for money for Canada
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Benefits of NSPS Process
Industry’s Projected Benefits (2009) NSPS Benefits Realized (now & future)
Reduced solicitation time & cost Eliminated approx. 18 – 24 months of traditional procurement process
Significantly reduced up-front expenditure for government & industry
Costs associated with steps in procurement process eliminated
Significant project/program risk reductions
Resulted in new way of procurement – government / shipyard relationships
Earlier delivery of vessels & earlier IRB’s
18-24 months closer to production and delivery of vessels
Best value for money for Canada
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Benefits of NSPS Process
Industry’s Projected Benefits (2009) NSPS Benefits Realized (now & future)
Reduced solicitation time & cost Eliminated approx. 18 – 24 months of traditional procurement process
Significantly reduced up-front expenditure for government & industry
Costs associated with steps in procurement process eliminated
Significant project/program risk reductions
Resulted in new way of procurement – government / shipyard relationships
Earlier delivery of vessels & earlier IRB’s
18-24 months closer to production and delivery of vessels
Best value for money for Canada Committed to a new relationship, with complete transparency and risk rebalancing to delivery best value for money to Canada
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• Build Navy’s combat vessel fleet utilizing balanced work flow
• Provide value for $ to Canada• Meet 100% Industrial and Regional
Benefit commitments • Help build sustainable marine industry • Build World Class Shipbuilding Facility
capable of meeting all Canada’s Combat Vessel needs
ISI Long Term NSPS Goals
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World class shipbuilding and repair
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