The Politicization of Defence Procurement
JOE VARNER
© 2006 FrontLine Defence (Vol 3, No 1)

The politicization of Canada’s Defence procurement process continued with the recent announcement of a $4.6 billion plan for 16 new aircraft to replace Canada’s fleet of old C-130 Hercules tactical transports just on the eve of the federal election. 

To most observers there was little surprise in the announcement that had been circulating in the Ottawa ‘rumour mill’ for some months. The only real surprise came when, after whispers that the announcement would be nothing more than a directed contract to Lockheed Martin for the C-130J Hercules as part of the Air Force’s omnibus purchase, the government backed away and instead launched a competition with the Airbus A400 tactical transport aircraft to replace the ageing Hercules fleet. 

As the Department of National Defence talked of a competitive process, they also admitted that Airbus had “some hurdles to overcome” to meet the military’s specifications. Meanwhile, lobbyists for Airbus were quietly complaining that the specifications too closely resembled those of the C-130J for any other ­aircraft to fairly enter the bidding process. 

Sadly, the whole politicized process to date appears to suffer from the same malaise that affected the purchase of the Victoria Class submarine fleet, CH-149 Cormorant search and rescue helicopter fleet, and the ugly saga of the Sea King replacement that has been on-going since 1978 without resolution. The fierce competition that led to the selection of Sikorsky’s largely ‘paper’ H-92 over the Cormorant, also known as EH-101, is well known to all (including Canada’s Federal Court). 

Between Friday, 11 November 2005 and the following Monday, the Canadian Forces had reportedly planned to call on a cabinet committee to approve the so-called $12.1-12.2-billion purchase of new airplanes and helicopters for Canada’s increasingly stretched and aging Air Force. The procurement would be based on a single page for each program of performance-based specifications for tactical transport, fixed wing search and rescue, and transport helicopters. The military claimed that its new approach could save as much as $250 million and avoid the 17,000 (or so) page submissions that tended to come out of the Statement of Requirement and detailed Requirement Specifications. A senior military officer confirmed the details of the cabinet submission to the press which reportedly included long-awaited replacements for the aging C-130 Hercules transport planes and the CC-115 Buffalo search-and-rescue aircraft. It also allowed for the purchase of new troop transport helicopters and provided a retainer for guaranteed use of giant transport planes. The plan was reportedly to purchase as many as 50 new aircraft including some 16 fixed wing tactical transports, 15 fixed wing search and rescue at $1.3 billion aircraft and 15 medium to heavy lift tactical transport helicopters at $2-3 billion. But, sometime between November 11th and 14th, the government or the military made a decision to proceed only with the C-130 Hercules fleet replacement. Some reports suggested that lobbyists had warned the Cabinet on the eve of an election that they would open up a ‘can of worms’ in vote-rich Ontario and Quebec. 

Observers and industry representatives reportedly suggested that the Canadian Forces had set the performance-based specifications for their new hoped-for aircraft fleets to favour the C-130J Hercules, the C-27J Spartan and the Boeing CH-47 Chinook helicopter. An un-named military official reportedly said that the $3-billion budget for the replacement of Canada’s Hercules with 16 aircraft meant that only updated versions of the same planes would meet the requirement and budget effectively cutting out the competing Airbus A400. But the C-130J series has a number of detractors in the U.S. and is under a series of flight restrictions. 

The military rejected or even failed to examine what might have been a more cost-effective solution to purchase refurbished C-130Hs with as low as 15,000 hours on the aircraft. The C-130H is considered a more reliable aircraft and more closely meets our current requirements, but has about 33 percent less capability than the new J series. Given Canada’s experience with the Victoria class submarine and the problems that have followed their reactivation, the purchase of refurbished aircraft would likely have been a political non-starter and an unacceptable risk for the military to present to the government. In an ominous signal of further problems, it was recently reported that U.S. Pentagon is expected to recommend halting further purchases of the C-130J aircraft for the American military. 

Most observers believed that the Alenia / Lockheed Martin C-27J Spartan, with its superior speed and range, was the best available aircraft for fixed wing search and rescue and than the slower Spanish EADS CASA C-295. However, the vastness of the Canadian area of SAR responsibility, particularly the Arctic, and the importance of achieving a timely response throughout the region as well as exercising national sovereignty, made the selection that much more sensitive. With the reality of increasing traffic in the north, the issue of northern sovereignty making headlines, and the political incorrectness of putting a price tag on public safety based on proximity to a major centre, the govern­ment may be rethinking the situation. 

The fixed wing search and rescue replacement had been promised in both the last federal budget, and in the run up to the last federal election, and seemed the easiest sell to the opposition and the Canadian people, but fears of another legal battle, like the Team Cormorant fight for fairness, likely forced the military and government retreat from the program decision that many observers believed was already made. 

Without question, the only aircraft that appeared ready to meet the medium to heavy lift tactical transport helicopter requirement was Boeing’s CH-47 Chinook, an aircraft that Canada had once phased out of its inventory due to cost (and the withdrawal from Europe at the end of the Cold War in the early 1990s). But many observers have questioned the reasoning behind the proposed Chinook purchase. For example, the purchase requirement was based upon the Afghanistan scenario – which some contend could be an ­aberration. Many have wondered how long Canada will remain in Afghanistan and what the price is of getting the requirement wrong, given that we will have the Chinook for 20 to 30 years. 

We currently have another aircraft in our inventory that meets the capability, the CH-149 Cormorant (EH-101), now the lead contender for the U.S. combat search and rescue. Officials have quietly said that the once rumoured front-runner, the “Green Cormorant” suffered from government bias and anger over tail rotor head cracks that had the effect of excluding the aircraft from the competitive process. 

While Canada has complained ­heavily about tail rotor cracks in the Cormorant, other countries facing the same problem continue to fly their EH-101 aircraft without restrictions and the U.S. has purchased the aircraft for the U.S. Presidential fleet as “Marine One” having beaten Sikorsky’s S-92. By way of comparison, the Chinook can transport 33 troops and their equipment, or 12,210 kilograms worth of cargo and can operate at very warm temperatures. Close in capability to the Chinook, the CH-149 Cormorant or EH-101 can carry 30 fully equipped troops or carry 5,443 kilograms of cargo. Lastly, the Chinook is supposed to go on the back of our proposed new amphibious warfare ships, which means they will have to be ‘navalized.’ This means an additional cost of 1 billion ­dollars for folding rotors and reinforced landing gear for ships that have not been designed and or built in a potential $2.1 billion shipbuilding project. 

In conclusion, it appears that the work of Canada’s Auditor General to get the Department of National Defence to do due diligence in justifying its major capital procurements has been pushed to the curb. Parliament has questioned the procurements and cautioned the government with little resolve. This is due to the fact that in Canada, with an increasingly obsolete and marginalized military, it is now ‘political suicide’ to argue against military procurements, right or wrong. 

Canada’s move from best value procurement with detailed specifications, to lowest priced compliant, and now to ­single page performance based requirements has left some observers to conclude that this is a move toward directed contracts and has left some in industry to lament that Canada is no longer a fair place to do business. Thus, with more questions than answers available to both military and government leaders on the eve of an election, and when faced with a skeptical national press, the government backed away from the omnibus purchases save the C-130 Hercules replacement program which apparently still clings to life. Even there, the government hedged its bets when it announced that Canada would appoint an independent “fairness monitor” to make sure the bidding process on a multi-billion-dollar military aircraft contract was open and competitive. The monitor, either an individual or a company, is to be named as the government fast-tracks the purchase of 16 tactical transport aircraft. 

Observers and critics are bound to ask what would signal the politicization of the Defence procurement process in Canada more than the appointment of a fairness monitor in the face of increasingly battered public perceptions and ­further potential lawsuits. 

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Professor Joe Varner, an Assistant Professor at American Military University, is currently serving as Senior Advisor on national security matters to the Deputy Chairman of the Senate Standing Committee on National Security and Defence, the Leader of the Opposition in the Senate of Canada.

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