Back to news

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

On the same subject

  • Names of aircraft manufacturers on “suppliers list” for Canada’s new fighter jet still a mystery

    February 20, 2018 | Local, Aerospace

    Names of aircraft manufacturers on “suppliers list” for Canada’s new fighter jet still a mystery

    DAVID PUGLIESE, OTTAWA CITIZEN More from David Pugliese, Ottawa Citizen Published on: February 16, 2018 | Last Updated: February 16, 2018 1:40 AM EST Feb. 9 was the deadline for companies to apply to the Canadian government to be on the supplier's list for the new program to provide a fleet of fighter jets. Being on that list is a requirement to be able to enter the competition to provide Canada with 88 new fighter aircraft. Public Services and Procurement Canada was looking at having the list formalized by Feb. 12, at which time they would make it public. The reason for the fast turnaround is because it is relatively easy to be included on the list – essentially a manufacturer has to have a fighter jet currently in production. But the list has yet to be formalized. Procurement Canada said they are still working on the list but offered no explanation about the delay. But expect the major aircraft manufacturers who have indicated previous interest in the competition. They are: Lockheed Martin with the F-35, Eurofighter Typhoon, the Dassault Rafale, and Saab's Gripen. Sources are also indicating that Boeing will join the competition with Super Hornet....perhaps an Advanced Super Hornet? http://ottawacitizen.com/news/national/defence-watch/names-of-aircraft-manufacturers-on-suppliers-list-for-canadas-new-fighter-jet-still-a-mystery

  • COVID-19 MAY WELL BE THE END OF THE CANADIAN ARMED FORCES AS WE HAVE KNOWN THEM…AND OF OUR EFFECTIVE SOVEREIGNTY

    May 19, 2020 | Local, Aerospace, Naval, Land, C4ISR, Security

    COVID-19 MAY WELL BE THE END OF THE CANADIAN ARMED FORCES AS WE HAVE KNOWN THEM…AND OF OUR EFFECTIVE SOVEREIGNTY

    The lesson from this history is simple. Cutting defence spending in times of austerity is a bipartisan affair in Canada. This is owing less to politics than arithmetic. DND's budget –which typically ranges from 1/5 to 1/4 of total federal departmental discretionary spending –is too big to be excluded from any serious spending restraint initiative. This is well understood by Liberals, Conservatives and the Finance Department. The COVID-19 Recession and its Impact No one knows how deep or how long the COVID-19-induced recession will be. But every serious analyst agrees it will produce the sharpest drop in output since the Great Depression. The International Monetary Fund, for example, projects a 6.2 per cent annualized decline in GDP for Canada,1nearly double that of the 2009 recession. And already the government's fiscal response is without precedent and will lead to the largest deficit in postwar Canadian history (at least 10 per cent of GDP, or over $200 billion). This does not mean that Ottawa will snap into austerity mode next year. The economy will likely be too weak for that kind of action and cutting government spending is not in the Trudeau government's DNA to begin with... One big difference between now and the past is that there will be enormous pressure on Ottawa after the recession to boost spending in a wide range of areas which have been exposed in the pandemic. These include public health funding, medical research, pandemic prevention and mitigation, the social safety net, and industries particularly hard hit during the recession. There are also Liberal election campaign commitments from 2019 to honour –almost none of which had been implemented pre-pandemic –of which national defence is conspicuously absent. ...this could produce a perfect storm for Strong, Secure, Engaged (SSE). This was always a big risk associated with a defence policy that had its funding ramped up gradually over many years. As the Harper government amply demonstrated, it is relatively easy to reduce or eliminate the rate of planned increases to defence funding –the government took almost no flak for doing so in 2010. Making matters worse, DND has failed to come anywhere near meeting the spending trajectory profiled in SSE, as David Perry has analyzed thoroughly. Which means flattening DND's budget ramp is even more tempting for any government in austerity or even re-prioritization mode. Would a change in government matter here? Unlikely. While the Conservatives are more committed to national defence and the Canadian Armed Forces than the Liberals, they would likely see deficit reduction as their top priority, and it is virtually impossible to have meaningful expenditure restraint that doesn't involve national defence [what the Harper government did from 2010 on]. Conclusion Over the past generation, recessions and the fiscal consolidation that has followed them have had a seriously negative impact on DND's budget. The COVID-19 recession could be the most severe Canada has faced in at least 40 years. It has already resulted in the largest peacetime deficit in Canadian history. And, because of the pandemic, government priorities have changed radically overnight. The future for SSE and its associated funding does not look bright. National Defence probably has a year or two before the crunch hits. Now is therefore the time for strategic thinking and serious priority setting among the political, public service and miitary leadership to ensure that the 2020s don't become another decade of darkness. Eugene Lang is Adjunct Professor, School of Policy Studies, Queen's University, and Fellow, Canadian Global Affairs Institute. He was chief of staff to two ministers of National Defence in the Chrétien and Martin governments and served as an official in the Department of Finance. The 2020s most certainly will be “another decade of darkness”. It is not improbable that the Canadian military, if the Liberals win the next election, will effectively end up as a constabulary/militia force with domestic response to natural disasters of various sorts as its primary function along with very token commitments to UN peacekeeping missions. Bye bye to serious numbers of new RCAF fighters, to serious numbers of new RCN frigates, and to the needed large funding to renew NORAD's North Warning System [see this post: “So Will the Canadian Government Put Some Big Bucks into Modernizing NORAD's North Warning System?“]. And bye bye to any meaningful military participation in NATO. Canada will then finally be defenceless against help from the US ( the following quote is from the last sentence of this earlier CGAI paper's Executive Summary: “Throughout its 60-year existence, NORAD has been Canada's “defence against help.”). Any American administration will have no hesitation in demanding the use of Canadian territory and waters for its own defence purposes if our efforts fall well below what the US thinks necessary. US Air Force bases at Cold Lake, Yellowknife, Goose Bay and a US Navy one at St. John's anyone? Take a look at this as an example of an increasingly prevalent Canadian progressive view; and Justin Trudeau's “base” is progressive to the max: Spending $19 billion on fighter jets won't fight COVID-19 or climate change Instead of buying a new weapons system, the federal government should disarm and invest in a Green New Deal There it is. Plus earlier from Mr Lang: Is the “business Liberal” extinct? By the way the photo at the top of the post is of the Avro CF-100 Canuck interceptor, the first jet fighter developed in Canada–to defend against Soviet bombers...and US help. Mark Collins

  • Business group wants National Shipbuilding Strategy reopened for Quebec shipyard

    January 16, 2019 | Local, Naval

    Business group wants National Shipbuilding Strategy reopened for Quebec shipyard

    Murray Brewster · CBC News Association puts pressure on Liberals to direct new projects to Davie yard A Quebec-based business association claiming to represent over 1,000 companies inside and outside the province is launching a high-profile campaign to convince the Liberal government to reopen the oft-maligned National Shipbuilding Strategy. The group is demanding the federal government include the Davie shipyard, in Levis, Que., in the policy and plans to make it a major issue in the October federal election. The Association of Davie Shipbuilding Suppliers, which has been around for about a year, represents companies that do business with the shipyard. It plans an online campaign, beginning Thursday, and will lobby chambers of commerce as well as federal and provincial politicians. It is hoping to use its extensive membership and thousands of associated jobs to put pressure on the government in an election year to direct the building of additional coast guard ships exclusively to the Quebec yard, one of the oldest in the country. The shipbuilding strategy, conceived under the previous Conservative government but embraced by the Liberals, has turned into a giant sinkhole for federal cash with little to show for it, Simon Maltais, the association's vice-president, told CBC News. "We can call it a boondoggle," he said. "It has been seven years in the making. At the moment, there is absolutely no operational ship afloat and working for Canada." The Conservatives under former prime minister Stephen Harper chose two shipyards — Irving Shipbuilding of Halifax and Seaspan in Vancouver — as the government's go-to companies for the construction of new warships and civilian vessels. The Davie shipyard was, at the time, emerging from bankruptcy, and under the strategy it only became eligible for repair and refit work on existing vessels and perhaps the construction of smaller vessels. Delays and cost overruns Irving and Seaspan have invested hundreds of millions of dollars in modernizing their yards and have just begun to produce new vessels. The first Arctic offshore patrol ship for the navy is being outfitted in Halifax and others are in various stages of construction. Three offshore fisheries science vessels, constructed in Vancouver for the coast guard, are undergoing repairs after defective welds were discovered last year. The entire program has been beset with delays and rising cost estimates. Last year, Public Services and Procurement Canada refused to release a revised timeline for the delivery of ships from Seaspan, including construction of a heavy icebreaker and the navy's two joint support ships. Politics and shipbuilding Maltais said it makes no sense to keep excluding Davie from full-fledged ship construction work when much of the coast fleet is over three decades old and in dire need of replacement. Refreshing the strategy would insure the federal government gets the ships it needs and Quebec companies "get their fair share" of the program. "We know it's an electoral year and, yes, we want the federal government and the people in the election to talk about it," he said. Maltais clams members of his association have been talking to federal politicians on both sides of the aisle in the province and they support the idea. "They seem to be on the same page as us," he said. Defence analyst Dave Perry, an expert in procurement and the shipbuilding program, said the political campaign has the potential to make the federal government uncomfortable, but he doubts it will achieve the objective of reopening the strategy to add a third shipyard. "That would certainly be a major change in the strategy," he said. "There had been a view of doing something less than that." The proposal being put forward by the association would not take any work from Halifax or Vancouver, but instead direct all new work, on additional icebreakers for example, to the Quebec yard. Just recently, Davie was awarded a contract to convert three civilian icebreakers for coast guard use, but the association argues the need is greater. The federal government did debate an overhaul of the strategy, according to documents obtained and published by CBC News last summer. The size and scope of the "policy refresh" was not made clear in a heavily redacted memo, dated Jan. 23, 2018. So far, nothing has taken place and government officials have insisted they were still committed to the two-yard strategy. During the last election campaign, the Liberals pledged to fix the "broken" procurement system and invest heavily in the navy. https://www.cbc.ca/news/politics/business-group-wants-national-shipbuilding-strategy-reopened-for-quebec-shipyard-1.4979592

All news