Budget for Arctic patrol ships ‘insufficient’: PBO

WATCH: The Parliamentary Budget Office said the $3.1-billion budget for new Arctic patrol ships is only enough to build four of the ships. The whole process has taken so long, and costs keep rising. As Mike Le Couteur reports, promises have been made that will now be very expensive to break.

OTTAWA – A new report is casting doubt on the Conservative government’s plan to buy between six and eight Arctic patrol ships.

The budget of $3.1 billion is only enough to pay for four ships, according to an analysis by the Parliamentary Budget Officer. That could drop to three ships if there is a delay of more than a year.

“PBO analysis suggests that the current budget will be insufficient to procure six to eight A/OPS as planned,” the report said.

“Rather, it is more likely that, if there are no delays, the current budget will allow for four ships to be built. However, any delay over a year would mean that the budget would likely only be sufficient to build three ships.”

Last week, industry and military sources told The Canadian Press that the government has scaled back its original plan to buy between six and eight vessels, choosing instead to buy five with an option for a sixth.

But the president of Irving Shipbuilding, which was selected in 2011 to build the ships, said the federal government has not changed its mind. The deadline to sign a deal to begin constructing the vessels is the end of the year.

Defence and industry experts have said it’s not unusual for the government to scale back large procurement projects to reduce costs.

The PBO said if the government wants at least six ships, the budget would need to be increased by $470 million – which the report said would achieve a 50 per cent confidence level.

The PBO analysis produced a range of potential cost estimates, of which the midpoint is called the 50 per cent confidence level. The halfway mark is considered a minimum acceptable standard when selecting a budget.