Tortoise beats hare
Slow and grumpy wins the submarine race
Germany’s TKMS is reportedly Canada’s preferred submarine bidder. Canada will, in all likelihood, be joining Germany and Norway in building and operating the Type 212CD submarine.
As previously noted, TKMS was confident going into this competition. They’re a leading submarine exporter, and Germany and Norway are Canada’s NATO allies. TKMS refused to engage in the publicity blitz that South Korea’s Hanwha Ocean undertook from the outset of the competition. As the Germans often repeated, they weren’t going to participate in a procurement popularity contest. The Germans were also slower to set up a presence in Ottawa and were selective about the agreements and partnerships they signed with Canadian firms. They believed that their submarine, their record, and their more guarded attitude would carry the day. Seems they were right.
South Korea will be more than disappointed. They gave it their all, politically, diplomatically, and economically. Their boat is already operational. And their construction and delivery timelines are far more aggressive. In recent weeks, though, it emerged that the German bid promised more investment in the Canadian economy. Despite being more conservative and muted, TKMS has been successfully wheeling and dealing. Once the evaluation scores are published, we’ll have a better sense of what clinched it for them, but my guess is technical requirements and economic benefits. A Europe-oriented Canadian Prime Minister probably didn’t hurt, either.
I’m not sure what this means for the future of South Korea’s defence relationship with Canada. Maybe the South Koreans will look forward to other opportunities. Maybe they’ll feel burnt. Either way, I don’t expect the same level of enthusiasm from them when it comes to future Canadian procurement projects.
Selecting a preferred submarine bidder was the easy part. Ironing out the contract and getting the boats built and delivered, setting up infrastructure and training regimes, and preparing the navy and country to take on twelve submarines will be the much, much bigger challenge. The champagne bottles will be popping tonight, but the wine will go flat real fast.
We often compare defence procurement to buying a car, but it’s more akin to renovating a house. Contractors will promise you the moon to get you to sign with them. Once you’ve done so, the contractors often don’t show up or finish when they said they would, they become surly and dismissive, and any change you make to the original plan costs far more than should be morally permitted.
From the contractor’s perspective, the homeowner is often indecisive, wants extras for free, and is unreasonable about deliverables and expectations. It’s not always like this (I know a good Ottawa contractor for those who are interested), but it often is.
Accordingly, we shouldn’t be surprised if the next decade is a bit bumpy on the submarine front. These are tomorrow’s problems, though. For today, congratulations to TKMS and godspeed to the Canadian government and navy.
Having deployed soldiers to Afghanistan in green camouflage and Iltis jeeps, we should never forget that whenever the world gets awful, the Government necessarily sends the military into harms way with whatever it has.
The RCN concluded that either of the submarines on offer meets its minimum mandatory requirements. That’s not to say they’re equal.
The Government’s social contract with the military is that it should leverage its defence procurement processes to extract best value with the military first in mind. A strong, Canadian defence industrial base is an enabler for achieving that outcome over the long term, but let’s hope it wasn’t the overriding consideration.
Not shocked. The South Korean bid offered a lot of MOUs while the German bid had more supply chain integration. Sections of the submarines will be made by Marmen in Canada - this will be key to speeding up production, Valbruna Steel in Welland making high tech non magnetic submarine steel, Finkl Steel will be making stainless steel, there will be torpedo production in Canada, etc.
The TKMS bid was also less risky, with a long list of export customers and NATO integration. As well, South Koreans announcing recently that they want to launch a nuclear sub by 2035 added risk to their bid as resources would have to be allocated between the new nuclear fleet and the KSS III they wanted to sell to us.