Instead, Ottawa will go ahead with its plan to acquire the maritime choppers to replace the decades-old CH-124 Sea Kings, which it will start retiring next year.
The plan to replace the 50-year-old Sea Kings — which fly from the decks of Canadian warships — is years behind schedule, millions over its original price and is apparently beset with technical glitches.
Last year, the Public Works Department indicated it was looking at other aircraft because Cyclone manufacturer Sikorsky had delivered just four test aircraft, which National Defence has refused to formally accept.
Public Works had previously asked for an independent analysis of whether Sikorsky could deliver what it promised.
The government says that report found the program to replace the Sea Kings "would be viable with a different project structure and governance model."
A news release issued late on Friday afternoon says the air force will have fully capable Cyclone helicopters by 2018.
Public Works Minister Diane Finley said Sikorsky has agreed to deliver the new helicopters without any additional cost to the federal government.
When asked for more details, a government spokesman would only say Public Works accepts the independent analysis and referred to "negotiated Principles of Agreement with Sikorsky Aircraft Corporation" that would "form the basis of formal contract negotiations that will put these recommendations into place."
Public Works also said negotiations to amend the contract with Sikorsky will begin early this year and will hopefully be concluded by the end of March.
The original contract signed with Sikorsky in November 2004 was valued at $5 billion in total -- $1.8 billion was allocated for the acquisition of the choppers and $3.2 billion was for in-service support.
The value of the contract increased in 2008 to $5.3 billion, with $1.9 billion for acquisition and $3.4 billion for in-service support.
So far, Sikorsky has accrued $88.6 million in liquidated damages for its failure to meet the contract.