By Kirsten Ruecker, Ken Epps, and Bill Robinson

On 6 April 1998 the Department of National Defence announced that Canada will purchase four surplus Upholder Class conventionally-powered submarines from Britain. The Department claims that Canada must act now to maintain a necessary submarine capability and to take advantage of low costs and innovative financing arrangements.

A review of the facts reveals:

• the Upholder proposal is not the deal claimed. Total program costs are similar to costs of new submarines and Canada can afford neither.
• the roles proposed by DND for the Upholders are unrealistic, unnecessary, or already met by existing department equipment.

The Canadian government should cancel the Upholder purchase and retire Canada's existing fleet of Oberon submarines.

Canada's Department of National Defence (DND) has argued for new submarines to replace its three conventionally-powered Oberons since 1980. Initial proposals for conventional vessels were replaced in the 1987 White Paper on Defence by plans for 10 to 12 nuclear-powered submarines capable of sub-surface Arctic patrol. When the nuclear program was cancelled in the 1989 federal budget, planning reverted to a renewed search for conventional, diesel-electric submarines. The current program is the second time that DND has presented the Government with plans to acquire the same four UK Upholder submarines. Although then National Defence Minister David Collenette indicated in May 1996 that the first Upholder deal would not proceed, departmental officials revived the program, stating in 1997 briefing notes to a new Minister that "the proposal has been improved.[1]

Costs and Benefits

Submarines are economically attractive to the Department of National Defence because they are viewed to be the "least costly of all major naval platforms" with acquisition, personnel and operating costs purportedly cheaper than surface vessels such as frigates. The Upholders are additionally attractive because, according to DND, the submarines are available at a "bargain basement price" of $610 million to be met by an "affordable" financing scheme.[2]

The $610 million purchase price is a small part of the total submarine program cost, however. As shown by Table I, this purchase price does not include additional acquisition costs such as the construction of shore facilities to accommodate the new vessels. Before they are ready for use by the Canadian navy, the Upholders also would need to undergo several modifications, including the installation of Canadian communications and cryptographic equipment, alterations to accommodate the Mk48 torpedo currently in the Canadian inventory, and changes to the sonar systems to include towed array sonar. According to DND, these additional costs (which may or may not include the cost of shore facility upgrades) will total an additional $140 million.[3]

As with most major naval programs, in future years the Upholders would require refits for repairs and replacement of outdated equipment, substantial projects with large price-tags. To allow Arctic missions DND is considering the refit addition of an Air Independent Propulsion (AIP) system, the cost of which, although not reported, can be assumed to be substantial. Refit programs over a 30-year program would likely total a minimum of $1 billion and if an AIP system is added, a process that would require cutting apart the submarines to insert a new propulsion 'plug,' then total refit costs would easily double. Finally, DND suggests that operating costs for the four Upholders would be the same as for Canada's three Oberon submarines, about $90 million per year. (A smaller crew size and newer Upholder technology are cited as the reasons for the similar expense.)[4] These are ongoing program costs that over the 30 years the Upholders are expected to be in service would total about $2.7 billion. Hence, the cost to the Canadian taxpayer of the Upholder program would likely total at least $5.45 billion. Put otherwise, the Upholder submarines will cost at least $180 million per year for three decades, a far cry from the cited price of $610 million ($750 million including modifications).

DND presents the "affordability" of the Upholders as a central reason for the Canadian government to purchase the submarines immediately.[5] The department is aware that the current fiscal climate precludes a proposal involving new submarines. Yet as the full program costs outlined above demonstrate, the used Upholders are not the bargain claimed, and the purchase of new submarines would not add to the program cost dramatically. For example, if the original $2.45 billion cost to the British government of the new submarines was reimbursed by Canada, the total program value would increase by about one-third, a large but hardly insurmountable jump over the proposed program expenditure. Furthermore, the recent announcement of the sale of two French Scorpene submarines complete with air-independent propulsion systems to Chile for $420 million (US), suggests that Canada could find other deals equal to, or better than, the Upholders if price were a major factor.[6]

In keeping with other large DND procurement programs, the proposed submarine deal includes potential industrial-regional benefits (IBs) for Canadian industry. According to Ministerial briefing notes, negotiations with the UK "succeeded in ensuring Canada achieves an excellent set of indirect IBs" with the UK Ministry of Defence and the British naval contractor VSEL. These include an offer granting Canadian companies "special access" to British defence-procurement programs for eight years, and a promise from VSEL to provide work to Canadian firms. The briefing notes claim that Canadian companies would benefit from contracts related to the conversion of the Upholders for Canadian operations, as well as from maintenance, repair and overhaul, and spare parts contracts. They also cite potential Canadian industrial benefits from future development and modification of the submarines. According to a report in the Vancouver Sun, the addition of AIP systems in particular could yield a "huge economic spin-off" for Ballard Power Systems in British Columbia.[7]

However, linking procurement to a regional economic program of industrial benefits is an unreliable economic strategy at best and the Canadian military industrial landscape is littered with costly failures. In the case of Saint John Shipbuilding, for example, after costly retooling to build nine of the 12 Canadian Patrol Frigates, the New Brunswick shipyard has obtained no additional frigate orders, resulting in the lay-off of most of its workers.

Proposed Roles

The Department of National Defence proposes several roles for the Upholders. These include:

Anti-Submarine Warfare

The primary role of submarines is to hunt submarines of hostile nations, and if necessary to fight and repel a surface or sub-surface attack by sea. In its briefing notes the Department cites growing threats from submarines, with particular reference to the Persian Gulf and Asia Pacific regions.[8] The stealth and speed of submarines, their ability to travel long distances, and the difficulty of tracking their movements are all qualities viewed to be valuable assets in anti-submarine warfare (ASW). In a world characterized by DND as an "increasingly unpredictable international environment"[9] submarines are considered essential.

Yet Canada already possesses extensive ASW capabilities - including frigates, destroyers, maritime helicopters, Aurora maritime patrol aircraft, underwater sensors, and radio intelligence sites - and its allies are by far the strongest naval powers in the world. The vast majority of the world's submarines are operated by allies or by countries with which Canada has very close relations, and most are Canadian arms customers, with the implication that the government does not believe they pose a threat to Canada. In short, Canada does not need additional ASW capability.

Sovereignty protection

Canada, according to DND, needs the Upholders to "protect Canadian security and sovereignty" from threats that include challenges from allies such as Spain and the US.[10] By way of example, the department suggests that erroneous reports about Canada using submarines to monitor Spanish fishing fleets had a deterrent effect in the 1995 turbot dispute with Spain, and that this was "a tangible example of ‘possible presence equals deterrence.'"[11]

This outlandish claim has no basis in reality. The outcome of the Turbot crisis was the result of diplomatic pressure and the arrest of a Spanish fishing boat by a Canadian surface vessel. The absurd claim that Spain might have considered using military force but was deterred by the existence of Canada's Oberon submarines suggests major flights of imagination by Canadian military planners.

Canada's offshore sovereignty does not face any current military threat and it is not likely to. If it were threatened, Canada would not need submarines to respond. Submarines are not as effective in monitoring and surveillance as aircraft. For example, although a submarine with modern sonar can, according to some reports, monitor 125,000 square kilometers for extended periods (one to three months), an aircraft like the Aurora can monitor 300,000 square kilometers in 10 hours.[12] And submarines are limited in the options they can exercise. A submarine can sink an offending ship, but a surface vessel like a frigate can also fire a shot across its bow, block its route, or land a boarding party.

Leverage with Allies

Related to sovereignty concerns, DND argues the Upholders would provide Canada with the necessary leverage to gain information about allied submarine movements, claiming that "without submarines, incursions into Canadian waters, without permission, could potentially increase." Four vessels would allow Canada a permanent submarine presence in the Pacific to respond to the lack of US consultation about American submarine movements "even in the shared waters of the Straits of Juan de Fuca," as well as the Dixon Entrance (near the Queen Charlotte Islands) where DND alleges US submarines travel submerged with "minimal prior notice."[13] Indeed, the sharing of information about allied navy submarine movements has been a recurring department argument. In 1995, Commodore Jim King, Director General Maritime Development, wrote in Jane's Defence Weekly that the new submarines would give Canada "leverage" to get allies to share information about submarine movements.[14]

It is worth noting, however, that had such a deployment really provided much likelihood of obtaining useful information and had the acquisition of such information really mattered to DND, one or more of Canada's Oberon subs could have been deployed on the West Coast long ago. The fact that this has never been done demonstrates that even the defence department does not take this "role" seriously. In reality, the willingness of allies to share information is a political challenge unlikely to be affected by procurement decisions.

Arctic Security

Another proposed Upholder role is patrol of the Arctic. By refitting the Upholders with an Air Independent Propulsion system (AIP), the submarines could submerge two weeks or longer without the ‘snorkelling' necessary for the submarine to replenish its air supply and recharge its battery. In contrast, a diesel-electric submarine without an AIP system can submerge for 4-10 days without snorkelling. A refitted Upholder would be able, according to DND, to travel further and longer under the Arctic ice and increase Canada's influence in Arctic waters.

Even during the height of the Cold War, however, there was never any evidence that the possibility of incursions into Canada's arctic waters undermined Canadian sovereignty or security - just as there was never any evidence that Canada's lack of ability to monitor air traffic north of the 70th parallel undermined Canadian sovereignty or security. An Upholder refit to enable extended Arctic missions and travel under the ice cap would greatly increase the program's costs. There are much cheaper means by which Canada could monitor her Arctic waters if there were ever a reason to do so.

Support to civil authorities

The Upholders, according to DND, would be used in operations to support civil authorities where, it must be assumed, the authorities could not handle the operations alone. Examples cited include the interdiction of drug runners and the monitoring of fishing fleets off Canadian shores, tasks that would ordinarily be performed by the RCMP, Coast Guard, or Department of Fisheries and Oceans.

But Canada possesses much more appropriate means than submarines for coastal patrol tasks like drug interdiction or monitoring illegal fishing. Canada's existing frigates, destroyers, maritime helicopters, coastal patrol vessels, and Aurora and Arcturus patrol aircraft already provide a credible and effective capability to contribute to these tasks. And if these problems have grown to the point where regular military support is anticipated, federal funding would be better spent on more equipment for the non-military departments mandated to address the problems.

International Commitments

With reference to the proposed British offer of the Upholders, DND states that "internationally the failure to act ... further erod[es] the already questioned credibility of Canada's military commitment to the NATO alliance."[15] By implication, to avoid a loss of credibility with other alliance members and to demonstrate commitment to NATO, Canada should proceed with the deal.

Canada's willingness to meet its international obligations should not be measured by its ability to contribute to all components of an international force. In the past, Canada has contributed on the basis of its forces' strengths and it will continue to contribute to multilateral initiatives. Canada's naval strength lies in multi-purpose forces that meet Canadian needs first, such as its frigates and maritime patrol aircraft. These are the forces it should contribute when it chooses to participate in multinational operations.

Conclusion

No matter how the Canadian government would pay for the Upholder class submarines, the program is one that Canada cannot afford. When all costs of buying and operating the four submarines are included, the Upholders are not the deal that advocates claim them to be. Several billion dollars of government funding would be used to fulfill roles that are unnecessary or adequately covered by existing military equipment. During a period when cuts to other government programs continue, the acquisition of submarines would be fiscally irresponsible.

The 1997-98 budget of the Department of National Defence is 12% higher than it was in 1980, and in 1998-1999 it will still be above the 1980 mark. Meanwhile, the department is considering additional cuts to personnel, significantly reducing Canada's contribution to international peacekeeping, in order to purchase submarines and other equipment. Project Ploughshares estimates that a budget of $7.5-8 billion would be sufficient to meet Canada's real military requirements, but only if it is not wasted on unnecessary purchases. If there is money to spare in the budget, it should be spent on programs which will make a real difference - by increasing Canada's contribution to the non-military, preventive aspects of security, which will contribute to building a more stable and durable peace, help prevent conflicts from developing, and prevent others from becoming militarized. Such efforts will not prevent all future conflicts, but an increase in Canada's contribution in this area would do far more for our collective security than the purchase of the Upholders would do.

The Canadian government should cancel the Department of National Defence's plan to acquire Upholder submarines.

Endnotes

1 "Acquisition of Upholder Class Submarines," Briefing Note for the Minister, 10 June 1997. (This document and other Ministerial briefing notes were obtained by researcher Ken Rubin under the Access to Information Act.) "Net cost of the acquisition has been reduced, additional offsets have been identified, and a stronger package of opportunities for Canadian industry is now included." The note also suggested that the US would "compensate Canada for the opportunity for U.S. forces to train with the Canadian diesel submarines."
2 "Submarines for Canada's Navy," Backgrounder BG-98-017, DND, 6 April 1998. A "lease to buy" arrangement paid over eight years would allow Canada to receive the submarines within two years. Canada would deduct the annual lease payment from the amount the UK pays to train its military at Canadian facilities which, in the past, has been valued at approximately $80 million per annum. DND also would partially finance the purchase by early retirement of five ships and avoidance of future refits for the Oberons, saving total costs of approximately $160 million. Of course, these estimated savings are based on the assumption that the destroyers and Oberons should otherwise have remained in operation.
3 Ibid.
4 "Aide-Mémoire for the Minister," Department of National Defence, 29 October 1996.
5 "The proposed communications strategy emphasizes the operational requirement and affordability issue - the purchase is a good deal for Canada...", "Briefing Note for the Minister: Acquisition of Upholder Class Submarines," Department of National Defence, June 10, 1997.
6 Defense News, January 5-11, 1998, p 8.
7 "Submarine buy will benefit B.C. company," Vancouver Sun, 23 July 1997. If the government refits the Upholders with an AIP system and Ballard wins the contract, it would be responsible for installing fuel cells in the submarines at a site in St. John's, Newfoundland. The Sun reports that Ballard is working on a variety of fuel-cell-based engines, and has received $12 million in seed investment money from DND, including $3.7 million in 1994 to develop a prototype for a 40-kilowatt plant for potential submarine use. During a November 1996 tour of Ballard facilities by the Prime Minister, the company's CEO also spoke of discussions with Saint John Shipbuilding to form a consortium to build submarine AIP sections. [Ministerial briefing notes, November 29, 1996]
8 "Canada says sub buy is NATO test," Defense News, 7-13 July, 1997.
9 "Canada and Submarines," DND document, undated (circa February 1996).
10 "Security plea for subs cites allies," Globe and Mail, 11 June 1997.
11 "Upholder Decision," undated DND document. According to the document, "The worst case scenario postulated that Spanish warships might become involved. In these kind of analyses the value of a modest Canadian submarine service was indisputable. The risk posed by our submarines to an extended Spanish military supply line would have denied them from considering a large scale military undertaking in Canadian waters. In fact it ‘deterred' the military option in the first place."
12 "The question of submarines," Globe and Mail, August 3, 1995.
13 "Security plea for subs cites allies," Globe and Mail, 11 June 1997.
14 "Canadians explore Upholder purchase," Jane's Defence Weekly, 14 January 1995, p. 27.
15 "Canada says sub buy is NATO test," Defense News, 7-13 July, 1997. A 20-page document prepared by the Canadian Navy for the Defense Minister, obtained by Defense News on June 30, 1997, is cited.

Table I - Upholder Submarine Program Costs (for 30 year program)*

*Note: The Department of National Defence has provided figures for the Upholder purchase, modification, and operating costs. The remaining figures are broad estimates, for which more accurate figures from DND would be welcome.