Prime Minister Mark Carney is expected to make a brief stop in Halifax on his way to the NATO Summit in Turkey this week, where he could announce the winner of the Royal Canadian Navy's competition for a new submarine fleet. Speculation is growing that the government may split the contract between the two finalists instead of awarding it to a single company.
Timing and location point to imminent announcement
Carney is heading to Ankara for the NATO summit, whose first day features the NATO Summit Defence Industry Forum. The agenda includes procurement announcements and a so-called “Big Reveal.” Vice-Admiral Dan Charlebois, Commander of the Royal Canadian Navy, is scheduled to be in Halifax on Monday, making it convenient for Carney to drop in, make a major naval announcement, and then continue to Turkey.
The government has been tight-lipped about the pending decision, repeatedly telling Canadians that an announcement is coming soon. While officials had previously said a decision would be announced before the end of June, Stephen Fuhr, Carney’s secretary of state for defence procurement, said in mid-June that Canadians could expect a decision within 30 days.
Two very different submarine designs compete
The competition, known as the Canadian Patrol Submarine Project, has narrowed to two companies: Germany’s ThyssenKrupp Marine Systems (TKMS) and South Korea’s Hanwha Ocean. The German Type 212CD is exceptionally quiet and well suited to anti-submarine warfare and intelligence-gathering in the Arctic and North Atlantic. The Korean KSS-III is larger, with greater range and endurance, better suited for long-distance deployments across Canada’s vast maritime approaches.
If money were no object, buying six of each submarine and operating a mixed fleet could make sense, giving the navy access to both designs’ strengths and potentially speeding up delivery timelines by drawing from two production lines. Relying on a single supplier could mean waiting until well into the 2040s before all 12 submarines are in service.
Advantages and drawbacks of splitting the fleet
The Korean KSS-III’s biggest advantage is that Hanwha argues it can deliver boats more quickly than the German alternative. The downside is that no NATO member currently operates the submarine; Canada would be the first export customer if the Carney government chooses Hanwha for all or part of the contract.
Navy leadership is open to splitting the fleet despite the obvious increase in costs associated with maintaining two training systems, two maintenance programs, and two separate supply chains. This contrasts sharply with the Royal Canadian Air Force’s position on fighter aircraft, where senior leaders have consistently opposed operating both the F-35 and the Swedish-made Gripen due to increased costs and complexity. Yet the Carney government appears to be considering precisely that option for fighter aircraft.
Splitting the fleet would also offer geopolitical benefits, deepening strategic partnerships in both Europe and the Indo-Pacific while avoiding the appearance of choosing one region over the other.
Industrial benefits remain a key factor
Throughout the submarine competition, the government has emphasized that major industrial benefits for Canada will play a significant role in the final decision. In support of Hanwha’s bid, the South Korean government has promoted partnerships with Algoma Steel in Ontario and floated the possibility of Hyundai establishing a Canadian manufacturing facility for hydrogen-powered long-haul freight trucks. TKMS has focused its industrial pitch on long-term defence partnerships, proposing work with CAE in Montreal on submarine training systems and simulators, partnering with Seaspan Shipyards in British Columbia on maintenance and sustainment, and integrating Canadian firms into its global supply chain.
What happens to those commitments if the contract is split remains unclear. Would Canadians receive half the promised investment from each company? Would all of the proposed partnerships proceed? Or would dividing the contract dilute some of the economic benefits? Those are questions Ottawa has not answered.
Whether Carney makes the announcement in Halifax on Monday or saves it for later, the decision will shape the Royal Canadian Navy — and Canada’s defence posture — for a generation.
