Winning helicopters assailed as inferior
By GLORIA GALLOWAY AND KEVIN COX
From Saturday's Globe and Mail
2004 July 24
Ottawa and Halifax — The 28 American-made military helicopters the federal government intends to purchase for $5-billion are smaller and weaker than the machines made by the losing bidder, and the price difference between the two is minute, sources said yesterday.
A series of Liberal defence ministers had promised that the controversial helicopter contract would go to the lowest bidder, a stipulation that critics said skewed the process in favour of Sikorsky Aircraft Corp.'s H-92.
It was expected to be much cheaper than its competitor, AgustaWestland Inc.'s EH-101, also known as the Cormorant, which has three engines rather than two and can accommodate more passengers and equipment.
But the Sikorsky bid reportedly came in just about 1 per cent under that submitted for the EH-101.
"The difference in price was razor thin but the Cormorant bid was found unacceptable," a source said, refusing to divulge the bottom line on the proposed EH-101 contract.
No officials from Team Cormorant were willing to speak to the media yesterday, and defence officials also refused to put a price tag on its bid.
Even when talking about the winning Sikorsky contract, the government would not give details of the costs, saying only that it would be paying in the neighbourhood of $5-billion — $1.8-billion for the acquisition of the helicopters and another $3.2-billion for a 20-year service contract to keep the aircraft flying.
The deal calls for delivery of the first helicopter within 48 months of the deal's signing this fall, then one machine a month after that.
Defence Minister Bill Graham and Public Works Minister Scott Brison told air force personnel at 12 Wing Shearwater — the Nova Scotia base where pilots and maintenance crews have struggled to keep ancient Sea King helicopters flying — that the Sikorsky bid represented the lowest cost for the aircraft and the service contract.
And Fisheries and Oceans Minister Geoff Regan said Sikorsky promised that the contract will bring $1-billion of work to aerospace companies in Atlantic Canada, with Ontario gaining $2-billion worth of industrial activity, Quebec $955-million and Western Canada $390-million.
The purchase comes 11 years after former prime minister Jean Chrétien ripped up a $5.6-billion contract signed by the previous Progressive Conservative government to replace both the military helicopters and those used in search-and-rescue missions with the EH-101. That decision cost the government $500-million in penalties.
Industry insiders have long complained that the Liberal government was desperate to avoid purchasing Cormorants to dodge the embarrassment of buying the same helicopters that Mr. Chrétien had rejected.
"That had absolutely nothing to do with our decision," Alan Williams, the assistant deputy minister of defence and the man who steered the bidding process, told a technical briefing yesterday.
He suggested that argument made no sense given the government had bought Cormorants in 1998 for $790-million when the military needed 15 helicopters to replace its search-and-rescue fleet.
But Mr. Chrétien was widely known to have been infuriated by that decision and the Liberals have seemed determined to prevent it from happening again — so much so that Team Cormorant has repeatedly complained about discrimination.
Sikorsky's H-92 is a military version of its S-92, which was built for commercial use.
Critics have suggested it would be all but impossible for Sikorsky to roll out the first helicopter in just four years. But Lloyd Noseworthy, the company's regional director for international business, said revamping the aircraft would be a relatively easy job and he had no concerns about delivering it on time.
"We have built probably more aircraft than all the other helicopter manufacturers put together, so this is business as usual for us," he said.
Public Works officials said yesterday there will be a penalty of $100,000 a day for tardiness. That penalty, however, is capped at a year — so the company will not have to pay more than $36.5-million in late fees, regardless of how long the helicopters are delayed.
The new aircraft will replace the Sea King fleet. The 40-year-old helicopters have been the workhorses of the Canadian military, flying hundreds of hours recently on surveillance missions from ships as part of the U.S.-led war on terrorism. But they require as much as 30 hours of maintenance for every hour in the air, and some pilots have expressed frustration at being forced to cancel missions because of malfunctions and having to fly without modern instrumentation.
A dozen of Canada's 41 Sea Kings were destroyed in crashes, killing 10 crew members and injuring about 111 people since the first chopper was purchased in 1963.
The crews who will fly the new machines were delighted that the long debate over the helicopters has ended and they will soon be training on modern aircraft.
"It's kind of like a kid at Christmas — we've got something to look forward to," said Corporal Kyle Roman, a member of the maintenance team at 12 Wing Shearwater.
The advent of the new equipment could also help recruit pilots who want to fly state-of-the-art aircraft, Lieutenant-Colonel Wayne Krause said.