Helicopter purchase’s fate in doubt as Ottawa examines other models

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There are signs the Canadian government is preparing to pull the plug on a delay-plagued, multibillion-dollar purchase of naval helicopters, with the Harper Conservatives announcing they are now looking at other choppers.

"The government is considering other options for the Maritime Helicopter Project," a spokeswoman for Public Works Minister Diane Finley said Thursday.

"We are conducting an analysis of price and availability of other aircraft manufactured by other vendors."

Should the Conservative government scrap the purchase of 28 Cyclone choppers, made by Sikorsky Aircraft Corp., 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.

Canada is hardly alone when it comes to headaches from military procurement gone awry, where costs soar past the amount authorized or industry bitterly complains about unfair competition.

But the naval helicopter deal, signed in 2004 by a previous Liberal government and forecast to cost as much as $5.7-billion, has especially vexed Ottawa. Former defence minister Peter MacKay called the deal to buy the Sikorsky helicopters "the worst procurement in the history of Canada" in 2012, referring to the bumpy process of replacing Canada's 50-year-old Sea King choppers.

Plans to retire the Sea Kings go back to the mid-1980s. After ripping up a Progressive Conservative government contract for new choppers in 1993, the Liberals bought the Cyclones in 2004, stating the aircraft would start arriving at CFB Shearwater in 2008.

However, the company faced a variety of technological hurdles that delayed the development and production of the new aircraft, and the Harper government was forced to offer a 43-month reprieve on the delivery of the helicopters.

Amber Irwin, press secretary to Ms. Finley, said Thursday that Sikorsky has accrued $88.6-million in "liquidated damages," or financial penalties, for failure to meet the terms of their contract.

It's expected Ottawa can deduct this amount from future payments to the helicopter maker.

Ms. Irwin said Ottawa has reached the maximum amount of such fees it can deduct from payments to Sikorsky for late delivery of both the "interim" and "fully-compliant" versions of the contracted helicopters.

"Sikorsky was required to start delivering the interim maritime helicopters in November 2010 and the fully compliant maritime helicopters in June 2012," Ms. Irwin said in an e-mail.

Ottawa has stubbornly refused to accept delivery of several test Cyclones at a Nova Scotia Canadian Armed Forces Base.

"Canada will not accept the helicopters until contractual requirements are met," Ms. Irwin said.

A defence industry source said Thursday that the Canadian government recently sent a team to the U.K. to look at Royal Navy Merlin helicopters.

The British navy received upgraded Merlin Mk2 helicopters this summer – choppers that may be among the closest matches to what Canada was seeking in the Cyclone, the industry source said.

The Public Works Minister's office said a consultant's report on the viability of the Cyclone program is still not finalized.

Ms. Irwin said questions the report will answer include: "What is the level of confidence that Canada can have in Sikorsky's delivery schedule for the Maritime Helicopter?" and "What is the viability of the project?"

For all Ottawa's tough talk, however, it will likely be expensive and time consuming to scrap the Sikorksy contract and restart the process – drawbacks that are no doubt being weighed by federal decision makers right now.