What’s lost in Canada’s bid to purchase naval vessels

A Jang Bogo III-class submarine is seen in this photo provided by Hanwha Ocean. Courtesy of Hanwha Ocean

On Feb. 3, a Canadian delegation travelled all the way to the city of Geoje on Korea's southern coast for a first-hand look at Hanwha’s shipyard. Stephen Fuhr, Canada’s secretary of state for defense procurement, led the over 20-member delegation. Their weeklong trip to Korea came as Hanwha is in fierce competition with Germany’s TKMS for a Royal Canadian Navy contract for 12 new diesel submarines to replace their current aging vessels. The companies should submit their proposals no later than March 2.

Ret. Navy Capt. Moon Keun-sik

Watching the competition closely, I felt the urge to provide insight into the core issues Canada should pay attention to choose the right submarines.

The trend that disturbs me most was the emergence of non-combat elements such as job creation and technology transfer as core factors in determining who will win the bid.

Submarine weapon systems are directly tied to the lives of their crews. Unlike aircraft or armored vehicles on land, escape and rescue options for submarines are extremely limited once an accident occurs.

There has long been a clear and widely accepted principle in submarine acquisition worldwide. The foremost criteria have always been whether the required performance can be delivered, whether that performance has already been proven and whether there is real operational experience. For decades, this functioned as an unwritten rule in submarine procurement.

Only after these conditions were met did price and delivery schedules enter consideration. No matter how advanced a platform may be, it is unlikely to be selected if it exceeds budget limits or cannot be inducted into service when needed. Technology transfer, maintenance and sustainment systems and industrial offsets are also weighed. However, these factors were traditionally regarded as secondary considerations, assessed only after performance had been firmly established.

Canada’s ongoing submarine procurement competition, however, suggests that this principle is being ignored. The focus of the competition appears to be shifting rapidly away from the submarine’s safety and combat performance toward how much economic and industrial benefit a bidder can deliver to the nation. Industrial cooperation ratios, local job creation, shipyard investments and supply chain relocation are now widely rumored to account for as much as 80 percent of the evaluation. This indicates that the submarine acquisition program has increasingly taken on the character of a “state-to-state industrial contest.”

Particularly concerning is the issue of whether an operationally proven submarine actually exists. A submarine is not a weapon whose performance can be validated on paper alone. What matters most is whether it has been built, deployed at sea and operated over extended periods; whether its acoustic signature meets expectations; whether it performs reliably during high-speed maneuvers and prolonged submerged operations; and whether its weapons systems have been tested in realistic operational conditions. The existence of an operational submarine means that countless risks have already been identified and mitigated in real-world environments. By contrast, a submarine that exists only as a design remains, regardless of its impressive specifications, little more than a “paper submarine.”

The core elements of submarine performance are clear. How quiet is it? How long can it remain submerged? How effectively can it detect and strike an adversary before being detected itself? All three factors are directly linked to crew survivability. Lower acoustic signatures reduce the likelihood of detection, while superior underwater endurance expands operational options. When these attributes are combined with reliable detection and strike capabilities, a submarine truly becomes both an “invisible shield” and a “decisive spear.”

Having learned submarine design and construction technologies from Germany more than three decades ago, Korea now finds itself facing its former “teacher nation” in a second major confrontation in the global submarine market. Korea prevailed in the first encounter, which resulted in the export of three submarines to Indonesia in 2011. Competitive pricing and export financing played decisive roles in that victory. In the current competition, export financing has been removed from consideration, leading many observers to expect that price competitiveness and performance superiority will determine the outcome.

Assessments suggest that Korea remains more competitive on price, while also holding advantages in acoustic performance, underwater endurance and weapons operation capabilities. Most importantly, these submarines are already in active operational service. Based on these factors alone, the prospects for success initially appeared strong.

Nevertheless, the current Canadian submarine competition has shifted its focus away from these fundamental questions and toward which bidder can offer greater industrial “gifts.” Notably, senior Canadian submarine officers who have embarked on and sailed aboard the ROK Navy’s Dosan Ahn Chang-ho-class submarine, as well as Canadian naval personnel who have recently served aboard the Jang Bogo III-class submarine, have praised the platform’s performance. But the logic guiding political decision making appears to be moving in an entirely different direction. This is not merely a problem for a particular country or company; it signals a broader shift in the competitive standards of the global submarine market.

It is, of course, legitimate to consider industrial and economic benefits in defense procurement. However, when their weight becomes excessive, the most critical values risk being compromised. A submarine is, before anything else, a weapons system in which sailors entrust their lives. A submarine whose performance and safety are relegated to secondary concerns ultimately represents a choice that trades national security and the lives of service members for industrial gain.

This is why the process must return to fundamentals. Only superior performance ensures that crews return safely. The fact that this simple truth is being obscured by industrial logic and inter-state competition is what makes the current procurement contest so deeply troubling and regrettable to those observing it today.

Ret. Navy Capt. Moon Keun-sik is adjunct professor at Hanyang University Graduate School of Public Policy.