Prime Minister Mark Carney said Tuesday that Canada won't split its submarine contract between two suppliers.
Carney told reporters in New York City that there's "nothing I see that would suggest that we would have a mix fleet in submarines."
"You just get too many efficiencies in economies of having one fleet," Carney said, adding that the efficiency of being able to cycle the same type of submarine if one is being tuned up is "just overwhelming."
Ottawa has narrowed the field of contenders for the submarine contract from the initial five. The two finalists are South Korea's Hanwha and its KSS-III subs and ThyssenKrupp Marine Systems and its Type 212CD subs, which are now being built for Germany and Norway.
"When the decision is made by the right people, it will be made on the basis of one or the other after deliberation," Carney said.
The prime minister said the process of procuring submarines is a "major decision" for the navy and the Canadian government.
"We've moved quickly to those two options," Carney said. "Both of them fulfil the requirements, the very high requirements for the Canadian Navy."
Carney said there's some "further technical review" that happens and that questions go to how and where they're built, as well as what the industrial benefits are to Canada.
Multiple defence experts have warned that splitting Canada's submarine contract between two suppliers would create risks for the navy — and likely would weaken Ottawa's negotiating position.
Paul Mitchell, a professor of defence studies at Canadian Forces College, said modern submarines are as complex as spacecraft or F1 racers — and that's a good reason to avoid complicating the purchase by setting up two separate supply lines and parts inventories.
"You're subject to butterfly effects … You have a small input create very, very large impacts, and you would be encouraging that kind of behaviour within the system that you're designing," Mitchell told The Canadian Press.
"This is a country that historically has not funded the sustainment and logistics side of military procurement. We're always short parts, we're always short expertise.
"And so, having those two separate things would introduce a level of additional complexity that might ultimately make the entire thing fail."
Vice-Admiral Angus Topshee said in a recent interview with The Canadian Press that the Royal Canadian Navy could support submarines supplied by both companies vying for the sub contract — and there could be advantages to diversifying the fleet.
Topshee also said the "simplest solution" would be to buy 12 submarines from just one supplier, ensuring all the parts and weapons systems are the same.
Topshee did not express a preference for either option and said the decision is ultimately up to the federal government.
"Bottom line, anything that adds up to 12 submarines for Canada sounds like a fantastic decision to me," he said.
Topshee noted that, whether Ottawa chooses one contract or two, it will have to duplicate its submarine infrastructure on both coasts due to the vast distance between Victoria and Halifax.
An industry source who asked not to be named due to the private nature of government meetings told The Canadian Press senior officials have floated the idea of splitting the contract for months behind the scenes. The source said it's not immediately clear how seriously Canada is considering this.
"Could we buy six of the Type 212 from Germany and Norway and six of the KSS-III from Korea? Yeah, we could," Topshee said.
"In 10 to 15 years, the auditor general is going to write a report going on about how much duplication there is. Fair enough. But in the military terms, sometimes redundancy provides resilience and that can be incredibly powerful."
But David Perry, president of the Canadian Global Affairs Institute, said splitting the fleet would undermine Canada's bargaining position.
"It would be, in one sense, a quintessentially Canadian thing to just not actually have to pick a loser, but I think it's far from ideal," he said.
"If Canada bought 12, we'd potentially be the largest customer for that specific variant of the submarine. And if you're the largest consumer, I think you've got a different degree of influence over things like choices about design requirements, firm participation in supply chains — those kinds of things.
"If you're the second or third-largest purchaser, I think that's a bit of a different conversation."
Philippe Lagassé, an associate professor at Carleton University who studies defence policy, said splitting the fleet also would require two separate training streams for crews and technicians — and those crews couldn't be transferred from one type of boat to another without retraining.
"As with fighter aircraft, most defence analysts will tell you that this is crazy for a mid-sized country like Canada," he wrote in his defence newsletter on Tuesday. "The duplication, inefficiencies and personnel challenges involved are significant."
Daniel Kerry is a director in finance transformation at Deloitte who worked on the U.K.'s submarine program. He said this is not a decision Ottawa will take lightly, since it's likely to be its most expensive military purchase ever.
Kerry said choosing both bidders would diversify the fleet and could speed up delivery timelines. It could also minimize the risk of service disruptions in the event a submarine supplier's home country gets into a war of its own, he added.
But Ottawa will want to consider costs, the potential for spinoff industrial benefits, the effects on alliances and similarities in the equipment before it makes a final call, Kerry said.
"Where you see certain countries, including Canada, diversify a portfolio by one type of asset is they have different roles and requirements," he said. "Both these submarines are attack-hunter submarines. They're not ballistic missile submarines. So they kind of do the same role."
When The Canadian Press asked Defence Minister David McGuinty about the idea of splitting the procurement last week, he said he is "not managing the details of the procurement of that important decision."
"That will be looked at by (Public Services and Procurement Canada), be looked at by our defence officials, by our operational needs, by our navy folks," McGuinty said.
After The Canadian Press asked whether Ottawa is considering a split contract, a spokesperson for Stephen Fuhr, the secretary of state for defence procurement, said the government is "committed to ensuring it advances the best interests of our Navy" and expects to award a contract by 2028 at the latest.
"We are carefully considering all options to strengthen the Royal Canadian Navy’s ability to protect Canadian sovereignty, while creating good jobs for Canadian workers and supporting the growth of Canada’s defence industry," said press secretary Mujtaba Hussain.
Canada is in a race against time to replace its four aging Victoria-class submarines, which are expected to retire from service by 2035.
Mitchell said problems related to supporting the half-century-old Victoria subs will start to emerge, such as shortages of replacement parts as manufacturers cease production.
"Right down to the little twisty button that's on the control panel, (say) nobody makes that thing any more. When it breaks, how do you fix that? Do you stick a screwdriver in to turn the handle?" he said. "There's issues like that that are going to become increasingly prevalent with the Victoria class as it begins to age.
"At that point, they're going to become really serious limitations where we might start having to cannibalize the remaining boats in order to keep maybe one available for training. So, the faster that we can get these boats in the water means the sooner we can stop relying on the Victorias."
Picture Courtesy: THE CANADIAN PRESS/Christinne Muschi
