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Troubled CH-148 program has cost more than $1 billion

September 18, 2013  By The Globe and Mail

Sept. 18, 2013, Ottawa - The federal government has spent more than $1-billion on a delay-plagued acquisition of naval helicopters, sources say – a deal that Ottawa is now threatening to scrap.

Those sources say that if a contract goes unfulfilled, the government
would launch a legal claim to recover monies paid, a standard practice
in procurement deals. In the event the contract is cancelled, Sikorsky,
the manufacturer of the Cyclone helicopters, would likely launch a

The government has made milestone payments over the years on the
procurement deal for 28 choppers, originally signed by the Liberal
government in 2004.

Last week, Public Works Minister Diane Finley
signalled Ottawa is contemplating pulling the plug on an acquisition the
Auditor-General has estimated would total $5.7-billion when all costs,
including setup, maintenance and training, are included. Ms. Finley said
the government is shopping around for alternatives to the Sikorsky
CH-148 Cyclone.

Ottawa and Sikorsky have been knocking heads over
the project. The federal government has refused to officially accept
delivery of four “interim configured” Cyclones at a Canadian Armed
Forces Base in Nova Scotia on the grounds they do not meet contracted


But while she’s threatening to scrap the purchase,
Ms. Finley’s office and her department refuse to discuss how much money
Ottawa has already poured into the acquisition. The minister’s office
forwarded a question about expenditures to the department and the
bureaucracy avoided answering it, saying only that the choppers don’t
yet pass muster.

“The government expects suppliers to meet their
contractual obligations and Canada will not accept the helicopters until
contractual requirements are met,” Public Works spokesman Pierre-Alain
Bujold said. “The helicopter is not compliant at this time.”

Works also declined to explain in what respects Sikorsky has fallen
short of contract terms. A 2010 Auditor-General’s report said Ottawa
“understated the complexity of configuring this helicopter,” and noted
that while the Defence Department treated the procurement as an
off-the-shelf purchase, it was far from that. “This will result in an
aircraft that never existed before.”

Should the Conservative
government scrap this purchase of Cyclone choppers, it would be the
latest in a line of pullbacks on headache-prone military procurements –
from F-35 fighters to army trucks to supply ships.

An independent
evaluation of the contract conducted for Public Works has not yet been
released, but excerpts of the report obtained by CBC last week make it
appear as though Ottawa is being advised to relax the requirements of
the helicopter deal. It reportedly urges Ottawa to “sacrifice less
important requirements in order to deliver relevant capability” to the
Royal Canadian Air Force.

A spokesman for Sikorksy declined to
discuss how much money Ottawa has spent for the acquisition, but said
the manufacturer’s “singular focus” is fulfilling the contract.

Jackson said Sikorsky has another five “flight-ready” Cyclones at a
secure New York facility awaiting transfer to Canada. The four currently
at Canadian Forces Base Shearwater are being used for initial pilot,
aircrew and maintenance training.

He said Sikorksy stands ready to
work with Ottawa on a “pragmatic approach” that could speed things up.
“We are in ongoing discussions with the government regarding delivery
schedules and the best way to expedite them.”

The Canadian
government recently sent a team to Britain to consider the Royal Navy’s
Merlin helicopters. This service branch recently received upgraded
Merlin Mk2 helicopters.

Another chopper maker, AgustaWestland,
publicly appealed to Ottawa this week to consider its AW101 helicopter
instead. Its CH-149 Cormorant is used by the Forces for air-sea rescue.


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