Lockheed Martin Canada getting first crack at $60B national warships contract

Type26
A mock-up of the Type 26 frigate Lockheed Martin has pitched for the next generation of Canadian warships.
Editor's Note

The article was updated to reflect that Rosemary Chapdelaine had moved on from her role at Lockheed Martin Canada.

Lockheed Martin Canada has been named the preferred bidder to design the country’s next fleet of warships, a potential $60-billion deal that could make waves in Ottawa if the enormous defence firm is successful.

The government of Canada announced Friday that Lockheed Martin Canada, which leads a consortium of Canadian and international firms in a bid to replace the country’s aging ship fleet, will now go through due diligence to assess its full capabilities to deliver next-generation surface combatants and negotiate the finer points of the deal. The group must convince the feds and Halifax-based Irving Shipbuilding, the government’s partner in the procurement process.

If successful, the bid would see Lockheed Martin Canada’s Kanata outpost build out and install the combat systems integrator for the Type 26 warship, loosely understood as the “brain of the ship.” The firm’s local operations have implemented its flagship CMS 330 product in projects such as Canada’s Halifax class modernization and its Arctic-Offshore Patrol Ships, as well as in contracts with a few international naval forces.

The large U.S.-based defence firm says it’s not the only company in Ottawa that would benefit if it wins the massive contract. Rosemary Chapdelaine, previously the vice-president and general manager of LMC’s Rotary and Mission Systems division, told OBJ last year that a successful bid would warrant a “hiring initiative” and would tap the firm’s large network of suppliers and subcontractors, many of which are located in the National Capital Region. Chapdelaine has since become general manager for Lockheed Martin in Baltimore.

Lockheed's design was up against a pitch by U.S.-based defence company Alion, which proposed a design based on a Dutch frigate, and Spanish firm Navantia's proposal, which was modelled on a frigate used by the Spanish navy.

One of the big questions heading into the negotiations will be how much of Lockheed's design will need to be changed to reflect the navy's needs and how much the navy will have to shift its requirements because changing the design will take more time and money.

Government negotiators are also facing a potential battle over the amount of intellectual property that Lockheed will be required to hand over, which Ottawa wants so it can operate and maintain the vessels on its own after they are built.

Companies had originally been told that the winner would be required to turn over the full blueprints, but after significant resistance the two sides agreed the matter would be negotiated before a contract is awarded.

Officials remain focused on getting “the intellectual property access and rights that we need to not only build the ship but also to operate and maintain it for its entire life cycle,” said Andre Fillion, who oversees military and naval projects with Public Services and Procurement Canada.

The federal government says it expects the contract to be awarded this winter with construction starting “in the early 2020s.”

– With reporting from the Canadian Press