Analysis: Anand pushes $9 billion Boeing aircraft deal as Bombardier calls for competition

On the same subject

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  October 31, 2018 | Local, Aerospace

  Ottawa sticking to F-35 program as it gets ready for full fighter competition

  DANIEL LEBLANC Canada is facing a complex challenge as it gets ready to launch a full competition for new fighter jets stemming from its long-standing involvement in the international coalition that is building the Lockheed Martin Corp. F-35 stealth aircraft. The federal government confirmed on Monday that it will maintain its membership in the F-35 consortium. At the same time, Ottawa is getting ready to send out requests for proposals for new fighter jets to five potential bidders, including Lockheed Martin. Federal officials insist that all bidders will have to adhere to Canada's Industrial and Technological Benefits policy (ITB), which requires the winning supplier to “make investments in Canada equal to the value of the contract." The cost of replacing the Royal Canadian Air Force's current fleet of CF-18s is estimated at $26-billion. Under the rules of the F-35 consortium, however, partner countries such as Canada must forego such regional offset programs, which have long been a central element of Canadian military acquisitions. Earlier this year, Canada paid $54-million to remain in the F-35 buyers' pool. “We're keeping our involvement alive to get access to that product at the best possible terms,” Pat Finn, an assistant deputy minister at the Department of National Defence, said in an interview on Monday. “If the F-35 were to win, the lowest cost access to the aircraft is through the partnership. Having been involved from the outset, we don't want to lose the privilege of that." Since 1997, Canada has paid nearly half a billion dollars to stay in the F-35 consortium. Jeff Waring, a director-general at Innovation, Science and Economic Development Canada, said it will be up to Lockheed Martin to determine how it can meet Canada's requirement for regional offsets if it wants to bid on the contract. “The ITB policy is a market-driven approach; it doesn't prescribe to bidders how they need to invest in Canada,” he said. The federal government has nearly finalized its request for proposal for the new fighter jets. It is now waiting for industry feedback over the next six weeks before launching the formal competition next year. Three European companies (Dassault Aviation, Saab Automobile and Airbus) and two American companies (Lockheed Martin and Boeing Co.) have said they intend to bid on the contract. In the draft request for proposal, the government has laid out new details on its “economic impact test” that will penalize companies that are deemed to have a negative effect on the Canadian economy. When it was announced last year, the test was dubbed the “Boeing clause” because of U.S.-based Boeing's trade dispute with Canada's Bombardier Inc., which Bombardier subsequently won. The new measure is expected to look at whether companies have launched a trade action in the two previous years against a Canadian company. Given Boeing launched its case against Bombardier in 2017, it will likely be in the clear by the time it would have to submit a final bid in 2020. The previous Conservative government had committed to buying F-35 fighter jets, which were deemed at the time to be the only aircraft able to meet Canada's requirements, in large part because of their stealth capabilities. The current Liberal government has modified the requirements to make sure there can be competition between the various manufacturers. “If your aircraft cannot meet [a requirement] today, we are not saying automatically that you're out; but you have to tell us what is your solution to meet it, at what price and what schedule,” said Mr. Finn. In the last federal election, the Liberals said in their platform that they would not buy the F-35, promising instead to select “one of the many, lower-priced options that better match Canada's defence needs.” However, the Liberals also promised to launch an “open and transparent” competition, which is now scheduled to be launched in May. https://www.theglobeandmail.com/politics/article-ottawa-sticking-to-f-35-program-as-it-gets-ready-for-full-fighter/

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  March 24, 2020 | Local, Aerospace

  Aerospace industry calls for essential designation

  The Aerospace Industries Association of Canada issued the following letter to the Canadian government, asking to be declared as an essential service during the COVID-19 crisis. Dear Prime Minister and provincial Premiers, Canada's aerospace sector plays a critical role in Canada's overall economy and continues to do so even during this current COVID-19 crisis. Employing nearly 215,000 people, including jobs in manufacturing, technical trades, and management, we have built world-class capability and capacity when it comes to high-value, innovative aerospace products and series. AIAC members operate in all regions of the country, offering products and services to Canada and indeed the entire world. Home to leading aviation and space companies, Canada is a world leader in producing and servicing all aspects of the global aerospace, defence and space industry. It is also a sector that can, and will, play a significant role in Canada's economic recovery, if allowed to do so. The unprecedented Coronavirus (COVID-19) health crisis is resulting in difficult decisions, including shutting down parts of our economy that are not deemed essential. However, Canada's aerospace industry ensures the safe transport of products and services necessary in times of crises, and also products and services required for maintaining critical infrastructure such as satellite systems in space and defence infrastructure. Aerospace businesses must have the option to remain open to support the flow of these goods and services. Therefore, the Aerospace Industries Association of Canada (AIAC) calls on the government, and the provincial premiers, to declare the aerospace industry as an essential service. As this uncertain global situation continues, AIAC and its members are in contact daily with many of your ministers and their officials. We are in this together and have indicated our full support. We are actively engaging with our members and working closely with officials at the department of Innovation, Science, & Industry and Economic Development and Small Business, Export Promotion and International Trade to determine how we can best support the critical need in terms of items and supplies required to combat the virus. Prime Minister and Premiers, as you take further action to prevent the spread of the virus, please allow aerospace to stand with you and continue our vital contributions to the safety and security of Canadians, and indeed the world. https://www.skiesmag.com/news/aerospace-industry-calls-for-essential-designation

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  May 31, 2019 | Local, Aerospace

  Boeing surprised Canada changed rules of jet competition to allow Lockheed Martin bid

  David Ljunggren OTTAWA (Reuters) - Boeing Co is surprised Canada softened the rules of a competition for new fighters to allow Lockheed Martin Corp to submit a bid, but is still confident it has a chance, a top executive said on Wednesday. Following a U.S. complaint, Ottawa this month said it planned to drop a clause stipulating that bidders in the multibillion dollar race to supply 88 jets must offer a legally binding guarantee to give Canadian businesses 100% of the value of the deal in economic benefits. The original clause would have excluded Lockheed Martin's F-35 fighter, the plane the Canadian air force wants. The contract is worth between C$15 billion and C$19 billion ($11.1 billion to $14.1 billion). “I was surprised by the recommended change ... why would you deviate from a policy that's been so successful to accommodate a competitor?” said Jim Barnes, the Boeing official in charge of trying to sell the company's F-18 Super Hornet jet to Canada. The change in the rules around economic benefits was the latest wrinkle in a decade-long troubled-plagued effort to replace Canada's CF-18 jets, some of which are 40 years old. The final list of requirements for the new fleet of jets is due to be issued in July. “Right now we feel like we can put a very compelling offer on the table even with this change,” Barnes told reporters on the margins of a defense and security conference in Ottawa. Innovation Minister Navdeep Bains - in overall charge of the benefits aspect of procurement - said in response to Barnes's comment that Ottawa would ensure the competition was fair. Compelling bidders to offer watertight guarantees of economic benefits contradicts rules of the consortium that developed the F-35, a group to which Canada belongs. Boeing is offering a binding commitment and Barnes said the firm would stress to Canadian officials the potential economic disadvantages of entertaining a non-binding bid. An official from Sweden's Saab AB, another contender, told reporters that Canadians could lose out by ignoring contenders that had made firm investment commitments. “I am concerned that the ability to respond to a non-binding environment may not necessarily give Canadians the best value at the end of the day,” said Patrick Palmer, head of sales and marketing for Saab Canada. Airbus SE, the fourth firm in the race, declined to comment. Reporting by David Ljunggren; Editing by Susan Thomas https://www.reuters.com/article/us-canada-fighterjets/boeing-surprised-canada-changed-rules-of-jet-competition-to-allow-lockheed-martin-bid-idUSKCN1SZ2AA