Management Science in the Public Sector---The Estevan Case

A consultant's study commissioned by the Canadian Department of Transport, (DOT), recommended that the oldest of the five ships then in service, the Estevan, be replaced, and furthermore suggested that a sixth ship might be needed to meet growing Coast Guard duty requirements. The “good news” to build a new ship at the Vancouver shipyards was announced by the minority Liberal government during the 1968 federal election.To decide which combination of features was to be specified in the design of the new ship, Mr. Baldwin, DOT's Deputy Minister, commissioned an optimal investment study from the National Energy Board's OR Branch as DOT did not at the time have an in-house OR group. This OR study led to the startling conclusion that the Estevan need not be replaced and that only three ships were required to perform all Coast Guard functions, thereby leaving one ship available for standby and emergencies. The decision to build a new ship was accordingly set aside.As the federal elections had by then taken place, this decision was perceived as a breach of a campaign promise and was brought up in Parliament. Mr. Hellyer, then Minister of Transport, effectively disposed of this question by stating that it was an OR study and budgetary considerations rather than politics that led to the “setting aside” of plans for a new ship. The OR plan was then successfully implemented and has been credited both with the saving of the cost of a Coast Guard vessel estimated at about six million dollars in 1968 currency and with the subsequent savings in Coast Guard operations and investments estimated at many times this amount. Furthermore, this success led Mr. Baldwin to create an in-house OR capability at DOT.