The contract will likely create up to 1,000 skilled jobs in and around Vancouver, where the vessels will be built by Vancouver Shipyards group, officials said.
Industry sources said the contract award was expected and its final allocation to Vancouver Shipyards didn't surprise anyone, but the news cheered the city amid a tough economic climate.
Canada has embarked on a major naval regeneration program, driven in part by concern over a growing Russian and north European presence in the Arctic region.
Canada's national procurement strategy is in its fourth phase, with infrastructure upgrades already in an advanced stage. Another $25-billion contract to construct 21 combat vessels went in 2011 to Irving Shipbuilding of Halifax, Nova Scotia.
Seaspan Shipyards President Brian Carter said the company would spend $185 million to modernize its North Vancouver shipyard, which lies midway between the Lions Gate Bridge and Lonsdale Quay, to accommodate the new orders, the Vancouver Sun reported.
Carter hailed the announcement as "exciting for us because it adds up to 10 additional vessels to our backlog of seven so we can build up to 17 vessels."
The 10 additional vessels include up to five so-called medium-endurance vessels that will be used for various coast guard programs, including the deployment and recovery of navigational buoys. Up to five other offshore patrol ships will also be built for fisheries protection, search and rescue, and environmental response.
Canada is concerned that a major oil spill in the area will catch it unprepared, with dire environmental and economic consequences for the coastline.
Vancouver Shipyards is still planning and designing the first batch of vessels ordered in 2011. The vessels on that order include a polar icebreaker, slated to be the largest of its kind in Canada's fleet, an offshore oceanographic science vessel, three offshore fisheries science vessels, and two naval joint support ships, the Sun reported.
The shipbuilding group includes, in addition to Vancouver Shipyards, the Vancouver Drydock in North Vancouver and Victoria Shipyards in Victoria.
Federal Public Works Minister Diane Finley said Canada's $38-billion procurement project was "unprecedented investment" that would bring $2 billion a year in economic benefits for Canadians.
"By economic benefits, what I really mean is good, skilled jobs, and even better ... it is at last bringing some long-term stability to this industry," Finley told a cheering crowd at the Seaspan's North Vancouver shipyard.
"Those boom-and-bust cycles that have long plagued the Canadian shipbuilding industry are already becoming a thing of the past," Finley said.
The industry is expected to generate more than 15,000 jobs over the next 30 years, including jobs in steel, information technology and defense sectors, she said.
The International Association of Machinists Lodge 692 gave Finley a cautious welcome, the Globe and Mail reported. Association official Walter Gerlach said the key will be bringing the vessels in on time and on budget. "The machine's going to have to hit on every cylinder every time and hope we don't run into any problems," he said in an interview.
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