The Canadian Army has scrapped a $2-billion order for new armoured vehicles — the latest in a series of troubled procurements.

Gen. Tom Lawson, the chief of defence staff, announced Friday the cancellation of an order for 108 close-combat vehicles, confirming what military sources told CBC News on Thursday.

"We've recommended to the government of Canada not to proceed with the procurement process for the close-combat vehicle," Lawson said.

Bids by three defence contractors — Nexter, BAE Systems Inc. and General Dynamics Land Systems Inc. — had been set to expire on Monday.

Armoured vehicles cancelled

Gen. Tom Lawson, Chief of the Defence Staff, speaks to reporters during a technical briefing on the future of the land combat vehicles and the cancellation of the procurement of the close combat vehicle in Ottawa on Friday, Dec. 20, 2013, in Ottawa. (Justin Tang/Canadian Press)

The program had been hanging in the balance for months after the army signalled it was worried about whether it could afford to train crews and operate and maintain the new vehicles in a time of tight money. Budget restraints have slashed baseline funding by 22 per cent.

Improvements to the military's light-armoured vehicles will provide the same level of protection to soldiers in the field as the close-combat vehicles would have, said Lt.-Gen. Marquis Hainse, commander of the army.

Lawson said he's satisfied the military has the capability to handle any mission.

"I have complete confidence that the army remains fully capable of supporting any operation that the government of Canada may assign to the Canadian Armed Forces," he said.

Procurement process thrown into question

Having yet another major military purchase go down the drain could be a political black eye for the Conservatives, who have struggled to deliver on an extensive list of military equipment.

In addition to the armoured vehicles, National Defence and Public Works in the summer of 2012 cancelled and subsequently restarted a program to buy 1,500 military trucks for the military.

Following news of the cancellation, the Canadian Association of Defence and Security Industries called for a review of the government's procurement process.

"It must be a difficult day for the companies directly affected," association president Tim Page said in a statement. "They've spent a considerable amount of money to position their products to win the competition on the basis of a stated need that now is no longer required.

"The situation is evidence of a compelling need for urgent consideration and articulation of a renewed and affordable Canada First Defence Strategy, as committed to by the government in the throne speech."

Retired lieutenant-general Andrew Leslie, who led the Canadian Army through almost the entire Afghan war, said the close combat-vehicle was an essential capability for a military that intends to fight not only an all-out war, but also future insurgencies where homemade bombs will be major weapons.

Leslie says the cancellation means the army will go into future conflicts less well-equipped than it should be.

Puts lives at 'unnecessary risk'

The close-combat vehicles are 36-tonne machines which can carry troops and also fight like a light tank.

Experience in Afghanistan showed the army's existing light-armoured vehicles, while capable, were vulnerable to ever more powerful bombs — a lesson insurgent groups around the world have learned and will likely put into practice in the any new conflict.

"This decision and others has put the lives of Canadian Forces personnel at unnecessary risk," said Leslie, who will run for the Liberals in an Ottawa-area riding in the next federal election.

Leslie said he doesn't buy the argument that National Defence can no longer afford the program when it continues to underspend its budget by roughly a $1 billion a year.

He also said it was appalling that neither Defence Minister Rob Nicholson, nor Public Works Minister Diane Finley stepped forward to take responsibility for what was clearly a political decision.

"This is nonsense,"Leslie said. "This program was approved by the government and personally endorsed by (former defence minister) Peter MacKay and the prime minister.

"It is their job to explain it, not members of the Canadian Forces. Where are they? I don't see them."