Boeing has lock on $8 billion contract for new military transports, choppers

[Guest Chainsaw]

TORONTO (CP) - As expected, Boeing Corp. has a lock on $8 billion in contracts to build new heavy-lift transport planes and helicopters for the Canadian Forces.Rival manufactuers including Europe's Airbus Industrie had complained that the process unfairly favoured Chicago-based Boeing. A statement Friday from Public Works Minister Michael Fortier said a rigourous review of requirements and ability to deliver promptly had determined that only Boeing's C-17 Globemaster transport and Chinook medium-to heavy-lift choppers filled the bill.

 

The deal will furnish the forces with four C-17s for $3.4 billion and 16 Chinooks for $2.7 billion. When maintenance is included, the total will top $8 billion.

 

Fortier's statement said work now begins to finalize the terms.

 

The contract for the C-17s is expected to be formally awarded next spring, with the first plane delivered no later than 18 months after that date, and the last within four years of the contract award.

 

The helicopter contract is expected to be awarded by next summer, with first delivery no later than three years after that and the last within five years.

 

In addition, the Defence Department has launched a process to buy 17 aircraft to replace Canada's aging fleet of Hercules transport planes, at a cost of about $4.9 billion.

 

Industry observers say the government seems intent on purchasing a newer generation of Hercules from Lockheed Martin, although at least three firms have come forward with alternative proposals.

 

Canada currently owns 32 Hercules but two are permanently grounded and three more are expected to be pulled from service by the end of the year.

 

The rest will reach the end of their useful life in 2010, which is about the same time the new tactical aircraft will be introduced.

 

"With a strategic airlift capability of our own, we will no longer have to borrow from our allies or contract commercial aircraft, two options that come with strings attached," Defence Minister Gordon O'Connor said last month during a visit to CFB Trenton, which serves as a staging point for many Canadian airlift operations.

 

As well, the C-17s will be able to carry Canada's Disaster Assistance Response Team in one trip. Deployment of the team, such as to the tsunami disaster zone in southeast Asia, now takes 24 flights in a Hercules.

 

"If we hadn't moved on this project, and moved now, the capacity of the Canadian Forces to provide tactical airlift beyond the year 2010 would have been almost eliminated," said O'Connor.

 

That would have jeopardized Canada's ability to support its forces on domestic and international operations, he added.

 

Liberal defence critic Ujjal Dosanjh had complained that awarding the contract to Boeing would be a blow to Canadian sovereignty because the planes would be manufactured and repaired in the United States - Canada has no facility to do either.

 

But David Rudd, executive director of the Canadian Institute for Strategic Studies, said repairing the planes at their factory of origin is routine and is what British and Australian air forces do with their C-17s.

 

"When you buy aircraft, you undertake a certain degree of upkeep and maintenance here in Canada," he said, adding it would be cost-ineffective to build a repair facility in Canada for just four planes.

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