The federal government has slammed the brakes on a multimillion-dollar program to replace the military's aging trucks.

The last-minute cancellation of the program raises questions about the future of the long-delayed military acquisition.

Companies had until 2 p.m. ET Wednesday to bid on a contract for 1,500 new medium-sized logistics trucks for the Canadian Forces.

But Public Works emailed bidders three minutes before the deadline to let them know the contract has been cancelled.

"Economic, marketplace and budgetary circumstances have changed since this solicitation process began," the notice said.

"Therefore, the Government of Canada needs to reassess this procurement to ensure that the right equipment is acquired for the army at the best value for Canada, prior to proceeding with a new solicitation."

A government source who spoke to CBC News cited "price escalation" as the reason behind the announcement. Concerns had emerged that the anticipated $800-million purchase could balloon to several hundreds of millions of dollars over budget.

Defence industry sources were upset with the 11th-hour cancellation, telling CBC News it was "absolutely ridiculous," showing "complete mismanagement" and "astounding incompetence."

'Urgent' purchase announced in 2006

Former defence minister Gordon O'Connor first announced the program to great fanfare back in 2006.

"This government is committed to strengthening the Canadian Forces by ensuring that they finally have the equipment they need to get the job done," O'Connor said in a news release.

He said the government planned to buy 1,500 logistics trucks and 800 commercial vehicles adapted for military use, along with equipment to go with them, at a total cost of $1.2 billion.

The new Standard Military Pattern Vehicles were to replace the current fleet, which has been in use since the 1980s. The vehicles are reaching the end of their service life.

"The requirement for this equipment is urgent," the Defence Department said back in 2006.

The medium-weight trucks are considered the workhorses of the regular and reserve forces, ferrying supplies to troops at home and abroad.

But after more than two decades of service, the trucks are rusted out and have brake problems.

'Commitment to taxpayers dollars'

The Defence Department referred questions to Public Works, which had nobody available to comment but issued a press release late Wednesday evening announcing a decision to "re-evaluate" the truck purchase.

"It is important to make sure that we will get the right equipment for our men and women in uniform at the right price for the Canadian taxpayer," Public Works Minister Rona Ambrose said in the release.

"When we provide our Canadian army with the new tools they need to do the jobs asked of them, we must ensure that the right practices are used, and the best value for Canadians is achieved," added new Associate Defence Minister Bernard Valcourt in the statement.

Valcourt took over responsibility for defence procurement from Julian Fantino in last week's cabinet shuffle, as Fantino moved over to the international co-operation portfolio following the announcement of Bev Oda's resignation.

The release specified that the re-evaluation applied only to the proposals for standard military pattern trucks, and not other vehicle procurement projects. It also noted that 1,300 "commercial off-the-shelf" trucks have already been delivered to the military for its use.

This is not the first time the government has parked a plan to replace the aging trucks.

Last November, Public Works told prospective suppliers it was restarting the process after six companies and eight types of trucks had already been pre-qualified, citing "further refinements in the technical specification."

"The refinements in the requirement were necessary to identify the interface control constraint between the vehicle and the payloads it must carry," the department said at the time.

with files from James Cudmore