Canada taps KPMG as outside expert on defense shipbuilding

July 16, 2013 at 6:37 PM
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OTTAWA, July 16 (UPI) -- Canada has hired international advisory firm KPMG to help with its $33 billion strategic shipbuilding program amid internal political pressures facing Prime Minister Stephen Harper's Conservative government over an ongoing F-35 Joint Strike Fighter debate.

The new half-million-dollar contract gives KPMG a larger footprint in Canada's third-party defense advisory services, as the firm is already involved in the JSF procurement program.

Harper faced sharp criticism, including an upbraiding by the Auditor-General, over the handling of the F-35 procurement program.

A KPMG role as a third-party advisory creates a safe buffer between debate over the two programs and Harper's government, analysts said.

KPMG will help with contract negotiations, cost proposals and project management for Canada's National Shipbuilding Procurement Strategy program, said to be worth about $33 billion.

The Harper government released its shipbuilding strategy in fall 2011, creating long-term arrangements with two shipyards in British Columbia and Nova Scotia.

Public Works Minister Rona Ambrose said KPMG will provide support as a third-party expert for National Shipbuilding Procurement Strategy projects. The task-based, three-year contract with an initial value of about $500,000 carries an option to extend it for up to 10 years.

"Our government created the National Shipbuilding Procurement Strategy to end the boom and bust cycle in Canadian shipbuilding, to deliver much-needed equipment to the Royal Canadian Navy and Canadian Coast Guard, and to support the Canadian economy by building ships right here in Canada," Ambrose said in a statement.

"Industry analysts have estimated that our shipbuilding strategy will contribute 15,000 jobs from coast to coast to coast and over $2 billion in annual economic benefits over the next 30 years."

KPMG will help to ensure the most equitable and effective contracts possible, while getting the best value for Canadian taxpayers, Ambrose said.

Harper hired KPMG last year to validate numbers in Canada's F-35 program and found the project could cost Canadian taxpayers $44 billion for its planned four decades of service. Canada hasn't yet decided on its F-35 procurement program.

The government says Canada is following through on its commitment to build new ships in Canada and not contract out abroad. "The NSPS will mean long-term jobs and economic growth for the country, stability for the industry, and vital equipment for our men and women in the Royal Canadian Navy and the Canadian Coast Guard."

The Globe and Mail in a commentary warned, "Canada's shipbuilding program is too important to run aground on poor planning.

"Will we ever see steel cut on our promised new fleet of Arctic patrol craft and new warships for the Royal Canadian Navy?

"Yes, but it will require continuing political will in holding to schedules and budgets and resolve in the face of relentless criticism," The Globe and Mail said.

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