Military Procurement, Flawed
Jul 15, 2006

Bogus Announcement Process
During the week of June 25 to July 1, 2006, the Government of Canada announced military procurement of over $17 billion. This included strategic and tactical aircraft, supply vessels, helicopters and trucks.

Canadian Taxpayers will have a nasty bill to pay for this decision, which was made without parliamentary oversight. At every opportunity in the weeks prior to the announcement, the opposition parties questioned the Minister of Defence, who simply replied that no decisions had been made.

This was not exactly true, of course, since such an announcement requires a great deal of preparation. The Conserva­tive government intended to wait for the end of the session of Parliament so it would not have to face the opposition. It appears that this major decision was timed to give rise to as little public debate as possible. Not a shining example of transparency.

No strategic defence plan
A few days before these announcements, General Rick Hillier had stated that the defence capability plan, to be prepared by the military as part of the new defence policy, would not be ready until the fall of 2006.

In other words, the Minister of Defence made these decisions outside the parliamentary process and without a clear plan.

Economic benefits to aerospace industry doubtful
With respect to the procurement of aircraft, economic benefits to Canadian industry are highly questionable. Since 55% of Canada’s aeronautics and aerospace industry is concentrated in Quebec, it would only be fair for Quebec to receive 55% of the potential benefits.

Strategic aircraft and helicopters
The contracts for strategic aircraft and helicopters will be awarded by an advance contract award notice (ACAN). The government can simply cite “National Security Exemptions” to justify this approach.

In these advance notifications, the government indicates that it intends to request bids from Boeing only, arguing that it is the only known company that can supply aircraft meeting the ­quality requirements stipulated by the government. In the case of the strategic airlifters, the timing requirements have been ­arbitrarily chosen so that only Boeing can meet them.

The government has therefore indicated its preference for Boeing.

The government posted on the Public Works Canada MERX site an advance contract award notice on July 7, 2006, with a closing date of August 4, 2006, thus allowing other companies a mere 30 days to respond. How could a competitor present a serious bid on such short notice?

Tactical aircraft
The government is using a different approach for the tactical aircraft. Bids are to be submitted by a letter of interest that is still called a solicitation of interest and qualification (SOIQ). Under this approach, interested companies are invited to make comments. For its part, the department intends to publish the statement of operational requirements as soon as possible.

As to the benefit to the industry in Canada, however, the following information is provided:

  • 50% of the value of the bid for the purchase of the aircraft will be invested in the Canadian aerospace and defence industry.
  • If a contractor submits the only acceptable solicitation of interest and qualification, that contractor will be held to the following requirement: a target of 15% but no less than 10% of Canadian industry content will be invested in each of the following regions – Atlantic Canada, Quebec and the West.

Unacceptable Division
This is totally unacceptable for Quebec’s aerospace industry. The tactical contract provides that if, for example, Lockheed Martin is the only company to submit a solicitation of interest and qualification, just $130 million of a $2.6 billion contract will be invested in Quebec.

How can an aerospace industry as advanced as Quebec’s, which represents 55% of Canada’s capacity, agree to just $130 million of a $2.6 billion contract?

This is simply scandalous: it ignores Quebec’s vital contribution to the aerospace industry in Canada.

The Conservative government has clearly made its choices as regards the strategic aircraft and helicopter contracts with Boeing. Quebec’s industry will benefit very little from this economically, and the taxes paid by Canadians and Quebeckers will flow south.

As to the tactical aircraft, if Lockheed Martin becomes the sole contractor selected, Quebec stands to receive just minimal industrial benefits.
This is unacceptable.

Claude Bachand is the Bloc Québecois critic for National Defence and vice-chair of the Standing Committee on National Defence and Veteran Affairs (SCONDVA).
© FrontLine Defence 2006