Re-equipping military with helicopters getting costlier

Defence Minister Peter MacKay said his department is taking a close look at the $5-billion shipborne helicopter contract with Sikorsky aircraft after a news report said the 28-aircraft deal could run up to $500 million over budget.

He wouldn't comment on hints that the government might cancel the program.

"We are going to continue to have very explicit and specific discussions with Sikorsky to find out whether they can live up to their contractual obligations," MacKay said.

Bryon Wilfert, the Liberal defence critic, said cancellation has to be the last option.

"If you cancel it, where do you go from there?" he asked.

The government has also been working on a quick-fix plan to buy six big Chinook helicopters from the United States army to bolster the Afghan mission and meet a requirement of the Manley report on extending the deployment.

While government sources have suggested that the Chinook deal would cost "a couple of hundred million dollars," an American defence agency has told Washington legislators that the cost could run to $375 million when spares, tools, technical support and training are included.

The agency is clearly keen on the sale, saying the purchase of Chinooks would "greatly contribute to Canada's military capability by making it a more sustainable coalition force."

A government spokesman in Ottawa said the deal is still under negotiation and no price has been set.

A source said the $375 million figure is a negotiating position and the government doesn't think that's the final number.

The American agency also said the contract would contain no industry spinoff benefits for Canada, normally a must in military contracts.

The Canadian government has a separate $4.7-billion deal with Boeing for 16 Chinooks which includes major industrial benefits.

The Sikorsky deal, which is to replace the navy's obsolete Sea King helicopters with new Cyclones, a variant of the company's H-92 Superhawk, is already facing delivery delays of up to 30 months.

The government is officially brushing off both the delays and the potential overruns.

"The maritime helicopter project is a large and complex military procurement involving a major contractor," said Lucie Brosseau, a spokeswoman for Public Works.

"On such an important and large project, there are many factors that can cause problems and delays."

She wouldn't go into detail, citing "ongoing discussions with the contractor."

"However, Canada is keeping all its contractual and legal options open to ensure that any delay in procuring these helicopters is kept to a minimum and to protect Canada's rights under the contract."

Brosseau pointed out that the first delivery isn't due until next January and "penalties may only be invoked once delivery date has been missed."

Alan Williams, a retired assistant deputy minister of materiel at National Defence, said he would be "very surprised" if Ottawa decided to cancel the contract.

"The likelihood of actually cancelling the contract is minimal," he said. "A lot of time and effort went into picking what was at the time, the best possible helicopter."

Richard Aboulafia, a Washington, D.C.-based aviation industry analyst with Teal Corp., said musings about ending the contract may be a negotiating tactic.

"There's a lot of posturing in defence contracts, and some of it is quite public," he said.

"It's very unusual to see a contract cancelled outright at this stage."

While the government and the contractors dicker, soldiers in Afghanistan still have to hitch rides with allies, and air force mechanics struggle to keep the Sea Kings aloft. In most cases, the choppers are a lot older than the people maintaining and flying them.