FAQ: How Canada procured new military helicopters
Canada's long and sometimes fraught bid to refresh the military's aging fleet of helicopters was deemed "troubling" in the Auditor General's report released in late October.
The audit centred on decision documents, risk assessment and the approvals process in the acquisition process of the CH-148 Cyclone and the CH-147 Chinook helicopters.
"The way the advance contract notification instrument was applied in the directed procurement of the Chinook helicopters did not comply with the letter or intent of the applicable regulations and policies," said Auditor General Sheila Fraser in the report.
"In our opinion, the contract award process was not fair, open, and transparent."
The purchase of the Cyclone helicopters from manufacturer Sikorsky — dubbed by Defence Minister Peter MacKay as "the worst debacle in Canadian procurement history" — has been marked by missed delivery dates and amended contracts.
Meanwhile, critics seized on Canada's lack of resources, saying the Armed Forces in Afghanistan need better helicopter support. Acting on recommendations made in the Manley Report, which assessed Canada's role in Afghanistan, the military purchased six used CH-147 helicopters from the U.S. in 2008. Canada also placed an order with Boeing for 15 more.
Here is a brief history of the acquisition process of the CH-148 and the CH-147 Chinook helicopters.
What did the original contract with Sikorsky call for?
The contract for 28 Cyclone helicopters was awarded to the U.S-based Sikorsky in July 2004 in a deal valued at $5.1 billion. Then defence minister Bill Graham touted the choppers as "the right helicopter for the Canadian Forces at the best price for Canadians."
"The country will be getting a robust maritime helicopter that will meet our military needs for many years to come," Graham said.
Under the agreement, Canada would spend $3.2 billion on the Cyclones as well as $1.8 billion on servicing the units over two decades. Sikorsky also pledged to invest $4.5 billion in industrial activity in Canada over 20 years.
The first helicopter was to be delivered in 2008, with another helicopter to be delivered every 27 months.
Controversy surrounded the announcement as critics charged Canada was signing on to an unknown entity. While Sikorsky had produced the S92 — a civilian version — Canada was the first country to purchase the military version of the helicopter.
Critics also charged that rival company Cormorant had been unfairly shut out, owing to political wrangling. Brian Mulroney's Conservative government in 1992 placed an order with Cormorant for 50 EH-101 helicopters but the deal was later quashed under Liberal prime minister Jean Chrétien in 1993. The Liberal government paid out more than $470 million in penalties to cancel the deal.
What negotiations have taken place regarding the Cyclone delivery?
Sikorsky and the federal government negotiated a new deadline delivery of November 2010 after the original 2008 target was missed. Canada also paid an additional $117 million to cover design changes and new features.
Under an agreement made in 2010, the federal government agreed that the first six Cyclone choppers produced wouldn't have a communication system that would allow ships and helicopters to share confidential tactical information.
Standards were also changed so that the first six helicopters delivered wouldn't have to pass an endurance test for flying in high temperatures, and sonar software requirements were dropped.
In exchange, Sikorsky agreed to guarantee another $80 million in work to Canadian aerospace companies. The Department of Public Works also said Sikorsky agreed to drop a lawsuit against Ottawa over the terms of the demands of the original contract. The suit was valued at $100 million.
When did Canada acquire Chinook helicopters?
In December 2008, Canada purchased six used Chinook D-model helicopters from the U.S. army. Earlier, Canada had used the pooled the helicopter assets of NATO and the coalition partners for use in Afghanistan.
"Our government is determined to give the Canadian Forces the tools that they need to do the important work that we ask of them," MacKay said, speaking to reporters at an airport in Saint-Hubert, Que., in 2008.
"Our Canadian Forces have been in the unfortunate position of not having any other option than hitchhiking rides with allies to move personnel in countries like Afghanistan."
Canada initially announced in 2006 a plan to purchase 16 Chinook helicopters but it was not until 2009 that the federal government detailed a plan to buy 15 F-model helicopters in a production contract worth $1.2 billion. Another $2.2 billion was promised in a 20-year deal in service and support maintenance.
The first aircraft is expected to arrive in July 2013, after Canada ends its combat role in Afghanistan.
How will the helicopters be used?
MacKay said the Chinook helicopters will help the Canadian forces transport troops and supplies by air, a valued option given that land convoys have been frequently sabotaged by roadside bombs.
The Cyclone helicopters will be used to replace the Navy's fleet of Sea King helicopters, which were brought into service in the early 1960s. The Department of Defence says the helicopters will aid in the offensive reach of the country's warships allowing for greater surveillance and search-and-rescue capabilities.
What did the auditor general conclude?
Fraser, who examined the management of the purchases since 2006, suggested in her fall report that National Defence "underestimated and understated" the complexity of the purchases.
"Both helicopters were described to internal decision-makers and the Treasury Board as non-developmental, using "off the shelf" technologies," the report said. "On that basis, overall project risks were assessed as low to medium. In each case, however, significant modifications were made to the basic models."
The report suggests delays and increased costs were a direct result of a number of significant modification requests.
The auditor general also said National Defence failed to develop full life-cycle plans and costs. The procurement projects were not appropriately managed, and senior review boards failed in their responsibilities, she said.
"For the medium- to heavy-lift helicopter, there was an absence of timely meetings, challenge, and approvals by senior boards at all key decision points in the acquisition process and before seeking Treasury Board approvals," the report said.