$5B deal to replace Sea Kings
By MICHAEL TUTTON
Sikorsky helicopter deal gives multibillion-dollar lift to Canadian aerospace
A Sikorsky S-92 helicopter is seen in this undated file photo. (CP PICTURE ARCHIVE/Andrew Vaughan)/Hout)
SHEARWATER, N.S. (CP) - The federal government, in a bid to calm a whirlwind of political debate, announced Friday it plans to buy 28, bargain-priced Sikorsky Cyclones to replace Canada's geriatric fleet of Sea King helicopters.
New Defence Minister Bill Graham announced the $5 billion project, which includes maintenance and service support costs over the aircrafts' expected 20-year contract. The plan was unveiled in front of a squad of Sea King pilots and crew - most of them far younger than the aircraft they fly - at a military air base near Halifax.
The rookie minister and background information from the military both initially pegged the cost of the helicopters at $3.2 billion but Defence Department spokeswoman Capt. Bonnie Golbeck said later Friday that the cost of the helicopters would be $1.8 billion. The 20-year maintenance contract, which also includes a simulator and training for crews, would cost $3.2 billion.
The minister claimed the Cyclone, the military version of the Sikorsky S-92, "represents the right helicopter for the Canadian Forces at the best price for Canadians."
The military, despite previous misgivings, appeared to be on side, saying politics didn't affect a decision that was more than 25 years in the making.
"We are going to get a state-of-the-art helicopter which will satisfy our operational requirements," said Ray Henault, the chief of defence staff.
Critics said the process has been ridiculously slow and badly flawed. In the end, the government chose a helicopter that has no track record because Canada will be the first to use it as a military aircraft.
"We're not going to congratulate the government because they've delayed this project for 10 years, and through those 10 years they've created a risk for our crews," said Gordon O'Connor, the Conservative defence critic.
The twin-engine S-92, built by U.S.-based Sikorsky Aircraft Corp., has been touted as the less-expensive option when compared with its main rival, the larger, three-engine EH-101 Cormorant, built by a British-Italian consortium led by AgustaWestland (formerly EH Industries).
But one veteran airman openly questioned the merits of the final choice.
Sgt. Phil Moffitt, a Halifax-based airman who retires next fall after 27 years of working aboard and flying Sea Kings, said he would have preferred the Cormorant, a sentiment quietly shared by others in the military.
"We already have that aircraft (the Cormorant) in the Canadian Forces. It would be better for cross training for technicians and air crew," he said.
"Its size, reliability, the fact it has the extra engine - in my opinion, it's the best aircraft for the job."
The Defence Department had long pushed the government to buy the more expensive Cormorant. In fact, the department issued a recommendation to do so as far back as 1987.
Both federal bureaucrats and Sikorsky officials defended Ottawa's choice Friday, saying the lighter aircraft is capable of fulfilling its role as the "eyes and ears" of Canada's 12 frigates.
"We didn't dumb things down, or raise the bar or lower the bar," said Alan Williams, an assistant deputy minister in the Defence Department "We remained true to our principles."
Lloyd Noseworthy, general manager of Sikorsky Canada, said the company found ways to eliminate about 2,000 kilograms from the aircraft while ensuring it can take on the rigours of maritime flying.
"We're very pleased, and very honoured and very proud to have the best product for the Canadian Forces right now," he said.
The obsolescent Sea Kings will be kept flying for at least another four years as the S-92s are built to the military's specifications. The first Cyclone is supposed to be delivered in late 2008.
Meanwhile, the Sea Kings - involved in four fatal crashes that have claimed at least 10 lives over the years - will require about 30 hours of maintenance for every hour of flying time.
That last of the Cyclones is expected be delivered in 2011 - almost 50 years after the first Sea King took to the air over Shearwater.
There will be financial incentives for beating deadlines and a $100,000 per day penalty, to a maximum of $36 million, for late delivery.
Sikorsky has also committed to invest $4.5 billion in "industrial activity" across Canada.
There had been speculation the Cormorant team would take legal action over the bidding process. But a spokesman said the company is "digesting" the news and had no comment Friday.
The announcement closed a saga that began in the 1980s, when the Defence Department set out to replace the CH-124 Sea King - also a Sikorsky product.
The matter could have been settled when Brian Mulroney's Conservative government ordered 50 EH-101 helicopters - essentially a fancier version of the Cormorant - in 1992.
But the $5.8-billion contract was cancelled by former Liberal prime minister Jean Chretien, who declared in the 1993 election campaign that the helicopters were "Cadillacs" the nation couldn't afford.
His move cost taxpayers $500 million in penalties and became a lightning rod for those who argued the Liberal government was set on destroying Canada's military.
Opposition critics have long complained the Liberals repeatedly doctored the tender specifications, either to avoid making a decision or to ensure they wouldn't have to buy the same helicopter Chretien had derided while in opposition.
The bureaucratic process has taken numerous twists in recent years.
In 1998, the ruling Liberals awarded a $790-million contract for 15 search-and-rescue versions of the Cormorant.
The balance of the order for 28 maritime patrol choppers went into a complex tendering process that at one point divided the air frame and internal electronics into separate bids.
After facing a barrage of criticism from the aircraft industry, the federal government issued a call for a single tender last December, just days after Chretien left office.
Facts about the federal government's decision Friday to replace its aging fleet of Sea King military helicopters:
New helicopter: A military version of the Sikorsky S-92, which will be called the H-92 Cyclone.
Manufacturer: U.S.-based Sikorsky Aircraft Corp., a unit of United Technologies Corp.
Cost: $1.8 billion for 28 helicopters and $3.2 billion for 20 years of service and parts.
Delivery date: The first Cyclone is expected to be delivered in 2008 - the final one by early 2011.
Use: The shipborne Cyclone will be used to extend the offensive reach and defensive perimeter of Canada's 12 naval frigates to about 175 km.
Investments: Sikorsky has committed to partner with 170 Canadian firms and invest $4.5 billion in industrial activity - $2 billion in Ontario and $1 billion in Atlantic Canada.
Competition: The twin-engine S-92 is less expensive than its chief rival, the larger, three-engine EH-101 Cormorant, built by a British-Italian consortium led AugustaWestland (formerly EH Industries).
Quote: "The government of Canada firmly believes that the Sikorsky H-92 helicopter represents the right helicopter for the Canadian Forces at the best price for Canadians," - Defence Minister Bill Graham.
Here's a chronology of major events in the story of the navy's Sea King helicopters:
1963: First new Sea Kings delivered to the navy.
1982: Government gives approval in principle to replacing the Sea King.
1986: Defence Department asks for industry proposals.
1987: Defence gives nod to the British-Italian-built EH-101.
1992: Contract is awarded to Paramax Systems of Montreal and EH Industries Ltd. for 50 EH-101s for search-and-rescue and shipborne use. Total cost: $5.8 billion.
1992-93: Opposition to the purchase, led by peace groups and backed by Liberal and NDP MPs, begins to grow. It becomes an election issue.
1993: In September, then-prime minister Kim Campbell cuts the order to 43 aircraft and orders officials to shave $1 billion in costs.
1993: In November, newly elected Prime Minister Jean Chretien kills contract.
1995: Federal government settles cancellation costs for the EH-101 at $500 million.
1995: Government asks for proposals for 15 search-and-rescue helicopters.
1998: $790-million order placed for 15 Cormorant helicopters, a slimmed-down EH-101 for search and rescue.
1999: Government reduces order to 28 military helicopters for $2.9 billion.
2000: Government issues statement of requirements and says first helicopter will be delivered by 2005.
2001: Defence minister confirms helicopters will not be ready by 2005.
2002: AgustaWestland (formerly EH Industries), offers the Cormorant helicopter with Boeing avionics; Sikorsky offers the H-92 helicopter with a General Dynamics avionics; and Lockheed Martin Canada offers the Eurocopter NH-90 with a Lockheed Martin avionics.
2002: Ottawa shelves plan to have bidders compete for two separate contracts - one for basic airframe, the other for avionics or so-called mission systems.
2003: Government calls for tenders for 28 new military helicopters.
2003: Eurocopter NH-90 fails to qualify for final competition.
2004: Defence minister confirms new helicopter will not be ready for another four years.
July 23, 2004: Defence Minister Bill Graham announces $3.2-billion purchase of Sikorsky H-92, or Cyclone, the military version of the commercially available S-92. Additional $1.8 billion to be spent on servicing over 20 years.
