National Shipbuilding Procurement Strategy Secretariat Secrétariat de la stratégie nationale...

National Shipbuilding Procurement Strategy Secretariat Secrétariat de la stratégie nationale d’approvisionnement en matière de construction navale NATIONAL SHIPBUILDING PROCUREMENT STRATEGY

STRATÉGIE NATIONALE D’APPROVISIONNEMENT EN MATIÈRE DE CONSTRUCTION NAVALE

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National Shipbuilding Procurement Strategy (NSPS)

Technical Briefing

October 2011

Final

NATIONAL SHIPBUILDING PROCUREMENT STRATEGY


National Shipbuilding Procurement Strategy Secretariat Secrétariat de la stratégie nationale d’approvisionnement en matière de construction navale

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National Shipbuilding Procurement Strategy

• Establish a strategic relationship with two Canadian shipyards and designate them as source of supply to build government’s large ships, where:– One shipyard will build the combat vessels package:

• Arctic/offshore patrol ship, Canadian surface combatant.– The other will build the non-combat vessels package:

• Offshore oceanographic science vessel, offshore fisheries science vessel, polar icebreaker, joint support ship.

• Set aside smaller vessels for competition by other than the two selected yards and their affiliates;

• Repair, maintenance and refit remains business as usual.




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Economic Benefits for Canada• The Government has recognized a once-in-a-generation opportunity to

leverage its fleet renewal investment to foster a stronger, more sustainable Canadian marine industry.

• The Canadian Association of Defence and Security Industries (CADSI) has estimated that the renewal of the federal fleet will support 15,000 jobs annually in communities across Canada over the next 30 years. (Sovereignty, Security and Prosperity – Government Ships, May 2009)

• Canada’s marine industries are broader than the ship construction that occurs in shipyards and involves many hundreds of Canadian companies, most of them small and medium enterprises.

• The Industrial and Regional Benefits Policy will ensure that the full value of the resulting contracts (both shipyard and non-shipyard related work) is leveraged back into the Canadian economy.



National Shipbuilding Procurement Strategy Secretariat Secrétariat de la stratégie nationale d’approvisionnement en matière de construction navale NATIONAL SHIPBUILDING PROCUREMENT STRATEGY


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28 Large Vessels• Combat Ships:

–Arctic Offshore Patrol Ships (6-8)

–Canadian Surface Combatants (15 per CFDS)

• Non-Combat Ships:–CCG Science Vessels (4)

–DND Joint Support Ships (2+1)

–CCG Polar Icebreaker (1)


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Innovative Measures to Ensure a Fair Result

• Extensive Consultation with Bidders– Concept, Process, RFP, Evaluation Criteria & Weighting

• Governance– Evaluation teams working independently– Robust dispute avoidance and resolution processes– Deputy Ministers’ Governance Committee to oversee and validate the process

and its results– Government approval to award Umbrella Agreements without results

• Transparency– Bidders informed of results first– Final scores of all bidders released publicly– Bidders have agreed to share detailed 3rd party assessments and area scores

amongst themselves– NSPS website was kept updated with all significant developments

http://www.tpsgc-pwgsc.gc.ca/app-acq/sam-mps/snacn-nsps-eng.html




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Innovative Measures to Ensure a Fair ResultUse of independent 3rd party experts:Fairness Monitor• Independent observer • Ensures the procurement is conducted with integrity and accountability in a fair, open,

transparent and compliant manner• Attended all consensus meetings of the evaluation teams • The Fairness Monitor has reported that “decisions were made objectively, free from

personal favouritism and political influence, and encompass the elements of openness, competitiveness, transparency and compliance.”

First Marine International• Internationally recognized expert in shipbuilding field• Conducted assessment of the current state of shipyards• Defined required target state for each package based on international benchmarks• Reviewed shipyards’ proposed plans for upgrades and improvements• Provided a written analysis of shipyards’ plans for use by the “Plans” evaluation team• First Marine International attests that it “carried out its work for the National

Shipbuilding Procurement Strategy Secretariat independently and free from influence.”




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Innovative Measures to Ensure a Fair ResultKPMG• Assisted in the development of the procurement process and evaluation plan• Helped make certain that all possible measures were taken to ensure fairness, openness

and transparency and that selection criteria, scoring methodology and processes were reasonable and defendable.

• Provided advice on the long-term strategic sourcing arrangements, and the validation of criteria and methodologies related to the selection of two shipyards.

• KPMG attests that “the evaluation criteria and methodologies are valid, that is, a reasonable and appropriate means to select the two shipyards that meet the Canadian Government’s objectives for the procurement.”

PricewaterhouseCoopers• Reviewed the shipyards’ financial situation proposal• Provided a written analysis for use by the “Financial Situation” evaluation team• PricewaterhouseCoopers LLP attests that “the bid evaluation process which we

supported was robust and designed to ensure fairness and transparency and we were able to fulfil our responsibilities in accordance with these principles.”




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A National Competition to select 2 Canadian Shipyards: Issue a Solicitation of Interest and Qualification to all Canadian

shipyards to establish a short list of potential shipyards for the competitive RFP (Sept 2010);

Issue a Request for Proposals to the short-listed shipyards (Issued Feb 7, 2011, Closed July 21, 2011);

• Five Proposals from 3 Bidders: 2 Combat, 3 Non-Combat

Evaluation of Proposals and select 2 shipyards (Fall 2011);

Finalize an Umbrella Agreement with each selected shipyard (Fall 2011);

Negotiate Individual Contracts for the first project in each work package (2012).

Process Overview




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NSPS GovernanceDeputy Ministers’ Governance Committee

PWGSC (Chair), IC, DND, DFO

ADM Interdepartmental Steering Committee

Evaluation Review Board

Evaluation Teams

Evaluation Co-Leads

Independent 3rd Party Subject Matter Experts

Fairn

ess Mon

itor




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Bid Evaluation

2aC u rre n t S ta te

3 6 p o in ts

2bP la ns

2 4 p o in ts

Area 2 - Shipyard'sCurrent State and P lans

6 0 p o in ts

Area 3 - Cost to Canadafor Upgrades and Im provem ents

2 0 p o in ts

4aF in a n c ia lC a p a b ility6 p o in ts

4bS o urces o f fu nd ingfo r Im p ro vem e n ts

4 p o in ts

Area 4 - Shipyard'sFinancial S ituation

1 0 p o in ts

Area 5 - Value Proposition1 0 p o in ts

Rated Criteria100 points

Area 1 - Mandatory CriteriaA d m in is tra tive

L eg a lF in a n c ia l




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Evaluation Area 1Mandatory Criteria

• Administration: Such as continued adherence to the Qualification requirements, agreement to meet the target state within specified deadlines and meet the value proposition and industrial regional benefits obligations.

• Legal: Primarily the legal capacity to enter into contract; and

• Financial: Such as the bidder not being under Companies’ Creditors Arrangement Act or insolvent.




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Rated Evaluation Area 2aShipyard’s Current State

• Request for Proposals Requirement– Evaluation of shipyard’s Current State versus

international benchmarks (Target State)

• Evaluation Method– Record current state from First Marine

International reports– Calculate score based on total gap




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Rated Evaluation Area 2bShipyard’s Plans

• Request for Proposals Requirement– Assessment of shipyard’s plans for upgrades and improvements

required to close gaps in benchmarking and capability

• Evaluation Method– Team reviewed First Marine International’s benchmarking and

capability reports– Team reviewed shipyard’s proposed plans – First Marine International analyzed the shipyard’s proposed plans

and prepared appraisal report for each plan– Team reviewed First Marine International’s appraisal reports– Based on above reviews, each plan was assigned a Probability of

Failure rating– Consensus reached for each plan to arrive at a total bidder score




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Rated Evaluation Area 3Cost to Canada

• Request for Proposals Requirement– Assess cost to Canada

• Evaluation Method– Calculate the Net Capital Cost to Canada for

each bid– Assign a score – Highest score for lowest cost




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Rated Evaluation Area 4aFinancial Capability

• Request for Proposals Requirement– Assess the bidder’s financial capability without award of

NSPS contracts

• Evaluation Method– Team reviewed shipyard’s financial information – PricewaterhouseCoopers analyzed shipyard’s financial

information and prepared appraisal report– Team reviewed PricewaterhouseCoopers’ appraisal

report– Based on above reviews, the team rated the shipyard’s

financial capability & assigned the corresponding score




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Rated Evaluation Area 4bSource of Funding

• Request for Proposals Requirement– Assess the bidder’s ability to meet future contract commitments

based on review of financial capability and business plan

• Evaluation Method– Team reviewed shipyard’s financial information – PricewaterhouseCoopers analyzed shipyard’s financial

information and prepared appraisal report– Team reviewed PricewaterhouseCoopers’ appraisal report– Based on above reviews, the team rated the commercial terms,

sources and available equity, as well as the ability to repay considering revenue projections and proposed repayment from Canada




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Rated Evaluation Area 5Value Proposition

• Request for Proposals Requirement– Assess the bidder’s proposed contribution to

Canada’s marine sector

• Evaluation Method– Team reviewed the bidder’s proposal and rated

it in accordance with individual components:• Strategy credibility

• Expected benefits of the strategy




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Next Steps – Post Announcement• Debrief each shipyard

– detailed results of their own proposal’s evaluation, including scores and rationales

• Finalize Umbrella Agreements with both shipyards– Establishes framework for subsequent contracts

• Negotiate ship construction contracts for the first projects in each package– Combat: Arctic Offshore Patrol Ships

– Non-Combat: Coast Guard Science Vessels




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Unique and Innovative Measures Taken to Ensure a Fair Result

• Dialogue with and involvement of the shipyards;

• Clearly defined and published evaluation criteria;

• Participation of internationally recognized, independent expert consultants;

• Unique and active governance regime;

• Fairness Monitor conclusion: “… decisions were made objectively, free from personal favouritism and political influence, and encompass the elements of openness, competitiveness, transparency and compliance.”



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