Ottawa needs to “get tough” with the American helicopter manufacturer
that is more than four years late in delivering a replacement to the
Canadian Forces’ nearly 50-year-old Sea Kings, say two military experts.
In
a report scheduled for release on Monday, UBC professor Michael Byers
and military analyst Stewart Webb argue that ongoing delays and cost
increases raise the question “of whether Canada should simply cancel the
contract and start the procurement process over again.”
The report is entitled “The worst procurement in the history of Canada,” quoting from Defence Minister Peter MacKay’s characterization of the $5.7-billion purchase last year.
The acquisition of 28 Cyclone choppers, made by Sikorsky Aircraft Corp., was launched by the Liberal government in 2004, but the file has evolved considerably since the Conservative government came to power in 2006.
In late 2008, the Harper government approved $117-million in extra funding to Sikorsky to settle a dispute over helicopter design, acknowledging that Ottawa had requested additional capabilities after the initial contract signing.
The deal included a new timeline for the delivery of the Cyclones, which were to arrive at Canadian Forces Base Shearwater in Nova Scotia in July, 2012. That deadline has passed, with no certainty on future deliveries of the helicopters that will be flown off Canadian frigates.
“The Harper government has been in charge of the file since February 2006 and therefore oversaw most of the cost overruns and delays,” said the report, which was provided ahead of its release to The Globe and Mail.
Sikorsky confirmed it is still in negotiations with the federal government on a revised delivery schedule, pointing out that four aircraft with “interim” capabilities have already been provided for training purposes.
“The outcome of those discussions will determine the delivery schedule. We are hopeful that we will reach an agreement that allows for expedient delivery to the Canadian Forces,” Sikorsky spokesman Paul Jackson said.
In a statement on Friday, Public Works sounded a tough line and warned that it can slap $80-million in penalties if Sikorsky fails to deliver fully compliant helicopters by next July.
“When the government signs a contract with a supplier, it expects their obligations under the contract to be met,” Public Works spokeswoman Lucie Brosseau said. “Sikorsky has yet to deliver any helicopters to the government of Canada.”
Still, Mr. Byers and Mr. Webb argue Ottawa should toughen its negotiations position, including opening the door to the outright cancellation of the current contract.
“Because the government is dealing with a single manufacturer, it is left in a weak negotiating position regarding cost increases and revised delivery schedules,” the report said.
The report argues that Ottawa should consider buying another fleet of helicopters, including Seahawks that are also manufactured by Sikorsky and currently used by the U.S. Navy. “If Canada wished, it might be possible to transform the Cyclone contract into a Seahawk contract, thereby saving face and, perhaps, costs for both parties,” the report said. “At the least, if Canada is to have a strong and credible negotiating position vis-à-vis Sikorsky, it must have a credible alternative in view.”
Canada’s fleet of Sea Kings is nearly 50 years old, and the helicopters are becoming increasingly hard to maintain in a full state of readiness.
Mr. Byers is a professor of political science and the Canada Research Chair in Global Politics and International Law at the University of British Columbia, and once ran for the NDP in a federal election. Mr. Webb is a research associate at Salt Spring Forum.
1. “The Government provide transparency on the Maritime Helicopter Project, so that the public can judge the appropriateness of any approach to dealing with the crisis.”
2. “The Government get tough with Sikorsky regarding the overdue and overbudget CH-148 Cyclone by actually imposing the late penalties, and refusing further top-up funding.”
3. “The Government commence an accelerated review of off-the-shelf alternatives without further delay, so as to be in a position to negotiate a new contract with another supplier in the event of a continued failure by Sikorsky to fulfill its obligations.”
The report is entitled “The worst procurement in the history of Canada,” quoting from Defence Minister Peter MacKay’s characterization of the $5.7-billion purchase last year.
The acquisition of 28 Cyclone choppers, made by Sikorsky Aircraft Corp., was launched by the Liberal government in 2004, but the file has evolved considerably since the Conservative government came to power in 2006.
In late 2008, the Harper government approved $117-million in extra funding to Sikorsky to settle a dispute over helicopter design, acknowledging that Ottawa had requested additional capabilities after the initial contract signing.
The deal included a new timeline for the delivery of the Cyclones, which were to arrive at Canadian Forces Base Shearwater in Nova Scotia in July, 2012. That deadline has passed, with no certainty on future deliveries of the helicopters that will be flown off Canadian frigates.
“The Harper government has been in charge of the file since February 2006 and therefore oversaw most of the cost overruns and delays,” said the report, which was provided ahead of its release to The Globe and Mail.
Sikorsky confirmed it is still in negotiations with the federal government on a revised delivery schedule, pointing out that four aircraft with “interim” capabilities have already been provided for training purposes.
“The outcome of those discussions will determine the delivery schedule. We are hopeful that we will reach an agreement that allows for expedient delivery to the Canadian Forces,” Sikorsky spokesman Paul Jackson said.
In a statement on Friday, Public Works sounded a tough line and warned that it can slap $80-million in penalties if Sikorsky fails to deliver fully compliant helicopters by next July.
“When the government signs a contract with a supplier, it expects their obligations under the contract to be met,” Public Works spokeswoman Lucie Brosseau said. “Sikorsky has yet to deliver any helicopters to the government of Canada.”
Still, Mr. Byers and Mr. Webb argue Ottawa should toughen its negotiations position, including opening the door to the outright cancellation of the current contract.
“Because the government is dealing with a single manufacturer, it is left in a weak negotiating position regarding cost increases and revised delivery schedules,” the report said.
The report argues that Ottawa should consider buying another fleet of helicopters, including Seahawks that are also manufactured by Sikorsky and currently used by the U.S. Navy. “If Canada wished, it might be possible to transform the Cyclone contract into a Seahawk contract, thereby saving face and, perhaps, costs for both parties,” the report said. “At the least, if Canada is to have a strong and credible negotiating position vis-à-vis Sikorsky, it must have a credible alternative in view.”
Canada’s fleet of Sea Kings is nearly 50 years old, and the helicopters are becoming increasingly hard to maintain in a full state of readiness.
Mr. Byers is a professor of political science and the Canada Research Chair in Global Politics and International Law at the University of British Columbia, and once ran for the NDP in a federal election. Mr. Webb is a research associate at Salt Spring Forum.
1. “The Government provide transparency on the Maritime Helicopter Project, so that the public can judge the appropriateness of any approach to dealing with the crisis.”
2. “The Government get tough with Sikorsky regarding the overdue and overbudget CH-148 Cyclone by actually imposing the late penalties, and refusing further top-up funding.”
3. “The Government commence an accelerated review of off-the-shelf alternatives without further delay, so as to be in a position to negotiate a new contract with another supplier in the event of a continued failure by Sikorsky to fulfill its obligations.”
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