A U.S. Navy Boeing P-8A Poseidon maritime patrol aircraft takes part in the Malta International Airshow at SmartCity Malta outside Kalkara, Malta, Sept. 23, 2017.Darrin Zammit Lupi/Reuters
Ottawa is poised to award a sole-source contract for new military surveillance aircraft to U.S. giant Boeing Co. BA-N, despite appeals from rival Bombardier Inc. BBD-B-T and other domestic aerospace players, who have vowed to fight the decision in court.
The government is expected to make the announcement Thursday, according to a senior government official. The Globe and Mail is not naming the person because they are not authorized to speak publicly about the matter.
Bombardier and several other Canadian manufacturers have been pushing for an open competition to supply the Canadian Multi-Mission Aircraft project (CMMA), which aims to find a replacement for the military’s CP-140 Aurora planes, which were manufactured by the Lockheed Corp., now the Lockheed Martin Corp. LMT-N. The government is opting instead for a one-on-one agreement to purchase Boeing’s P-8A Poseidon reconnaissance jets from the Virginia-based plane maker.
The contract, estimated to be worth $6-billion to $10-billion, is one of the largest military procurements in years. Boeing has told Ottawa it could stop building the P-8A Poseidon in 2025 if it doesn’t receive any new orders.
Bombardier spokesman Mark Masluch said Wednesday that his company continues to advocate for a fair and open process but will wait for further details or a formal notification from the government before commenting further.
The government official said cabinet went with the Boeing surveillance aircraft for three principal reasons: It meets the requirements of the Canadian military, it is compatible with the U.S. and NATO allies, and the price is competitive.
The official said the contract will benefit Canadian companies across the country and particularly in Montreal, which has a vibrant aeronautical industry. Ottawa will monitor the deal for related investments and jobs, the official added.
Ottawa is set to award the contract to Boeing based on “highly flawed and invalid information,” Bombardier chief executive officer Éric Martel told The Globe in a recent interview. The move is short-sighted and will hurt the country by denying a significant opportunity for Bombardier and other domestic players to build their aerospace defence capabilities, he said.
Boeing has countered that the P-8A Poseidon would benefit Canada by supporting 3,000 jobs and generating $358-million in economic output for the country. Among the Canadian companies with a role in the aircraft’s production and service are CAE Inc., GE Aviation Canada and IMP Aerospace & Defence.
Mr. Martel told The Globe his team understands that the government intends to invoke a national-security exception in its decision to speed up the transaction and minimize exposure to legal challenges. He vowed to fight it nonetheless, with one possible avenue being federal court.
“We’re going to do what we have to do here,” he said.
Montreal-based Bombardier has teamed up with rival General Dynamics Corp. GD-N, one of the world’s biggest defence contractors, on a surveillance aircraft with submarine hunting capability that they say would meet the military’s needs and the delivery times required. Bombardier would supply the jet – a modified version of its Global 6500 model – while General Dynamics would contribute much of the “mission systems,” including sonar equipment and satellite communications.
Both Bombardier and General Dynamics are already heavily involved in defence contracting, with planes in use by militaries around the world, but the aircraft they are proposing for the CMMA contract is largely in its prototype phase. That seems to have weighed heavily in the government’s decision to go with Boeing’s proven plane.
In a letter to Deputy Prime Minister Chrystia Freeland and three other ministers dated Nov. 3, Mr. Martel and General Dynamics executive Joel Houde warned that a failure to solicit bids for the CMMA program would be “contrary to law and will expose the Government of Canada to material litigation risk and the strong possibility of another high-profile failed defense procurement.”
Under federal law, including the Government Contracts Regulations and the Canadian International Trade Tribunal Act and associated regulations, there are very few circumstances under which Ottawa can enter into a procurement contract without first soliciting bids, the executives said in the letter. “None of these circumstances exist here,” they said.
Senior officials with the departments of National Defence, Public Services and Procurement Canada, and Innovation, Science and Economic Development Canada appeared before a separate Commons committee recently to answer questions about a possible Boeing plane purchase.
Simon Page, an assistant deputy minister in charge of defence and marine procurement, said that based on the findings of an independent consultancy, the project team concluded that it would be “very challenging” for Canadian industry to develop and deliver a plane in a time frame that dovetails with the life expectancy of the CP-140 planes currently in use.
Bombardier was misled by the government, Mr. Martel told The Globe. As the company tries to expand its defence business, he said, it would be difficult to explain to other potential customers why its own government did not consider it for a major military contract.
The controversy threatens to pick up political steam. The premiers of Ontario and Quebec have called for an open request for proposals, and a parliamentary committee on national defence has asked the government to open the contract up to competition.