Report: Ottawa cut deal with CH-148 Cyclones chopper firm over delays

The Harper government agreed to go easy on the maker of the air force’s long-delayed maritime helicopters after winning a series of economic concessions, new documents reveal.

The saga involving the CH-148 Cyclones serves a cautionary tale for taxpayers in the raging debate over the F-35 stealth fighter, says a defence expert.

In exchange for not receiving fully capable and operational helicopters on time in 2010, the Public Works and Defence departments managed to wring $110 million in extra industrial and economic promises out of U.S.-based Sikorsky Aircraft Corp., says a briefing note prepared for Defence Minister Peter MacKay.

It also won concessions from the manufacturer on the cost of operating the helicopter, an extension to the long-term maintenance contract and a vague promise to "restructure liquidated damages," which were the result of Sikorsky’s failure to deliver aircraft on time.

The documents, dated June 2010, were released just recently to The Canadian Press under access-to-information laws.

The $5.7-billion program, which has been beset by cost-overruns and delays, has been the subject of intense criticism by the auditor general, similar to the much more expensive F-35 fighter program.

Philippe Lagasse, an assistant professor of public and international affairs at the University of Ottawa, says the Cyclone is a civilian helicopter that’s being battle-hardened for the military and has had a lot of development glitches, much like the F-35, which is being built from scratch.

"Be careful when you are buying a developmental aircraft. I think that’s the simplest lesson here," he said Monday.

"And that goes for any piece of military kit. Until it’s flying in the air, or sailing at sea, you don’t know how long it’s going to take."

Also, like the stealth fighter deal, Lagasse said the Conservatives have been eager to keep the Cyclones off the public radar, dodging questions in the House of Commons from critics.

"It speaks to a general attitude about not admitting difficulties publicly with some of these procurements and not being more forthright," he said.

Sikorsky was originally supposed to deliver its first chopper in 2008 under an agreement signed with Paul Martin’s Liberal government.

The whole fleet of 28 was mandated to be on the flight line by end of last year.

When it became clear that schedule wasn’t going to be met, the Harper government worked out a deal with the Stratford, Conn., corporation to provide a handful of scaled-down aircraft, which would be retrofitted later.

In October 2009, the company said it would miss its deadline and pushed the delivery of a final version of the aircraft and its all-important mission software to January 2012, and even that date wasn’t met.

The Royal Canadian Air Force is expected to receive only five more test aircraft this year, in addition to the one that’s already been delivered to 12 Wing Shearwater.

The repeated delays saw the federal government and Sikorsky face off in an arbitration, where the company filed a $100-million claim saying requests to tinker with the specifications were the reason for the holdup.

The latest delay opens the door to as much as $80 million in contract penalties, which defence officials say will be recouped later down the road.

Lagasse said he has some sympathy for the air force in that their original choice to replace the Sea Kings — the EH-101s — were cancelled almost 20 years ago by Jean Chretien’s Liberal government, and after an open competition the decision to go with the Cyclone has the feel of compromise.

The entire contract has been a headache for defence officials.

Aside from the two contract amendments over delays, the department was forced last year to hand back $250 million in unspent funds related to the Cyclones.

The cash had been authorized in previous budgets to pay for the aircraft that still haven’t been delivered.


Source: OTTAWA — The Canadian Press / By MURRAY BREWSTER - April 17, 2012 (thechronicleherald.ca)

Photo: A Canadian military Sikorsky CH-148 Cyclone conducts test flights with HMCS Montreal in Halifax harbour on Thursday, April 1, 2010. The Harper government agreed to go easy on the maker of the air force's long-delayed maritime helicopters after winning a series of economic concessions, new documents reveal. The ongoing saga involving the CH-148 Cyclones serves a cautionary tale for taxpayers in the raging debate over the F-35 stealth fighter, says a defence expert. (ANDREW VAUGHAN / CP)

(18.04.2012)