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Multibillion-dollar military aircraft purchase expected next week

Saturday, June 03, 2006

OTTAWA -- The Harper government is poised to move on the first phase of a multibillion-dollar equipment upgrade for the Canadian Forces with
the expected announcement of the purchase of a new fleet of long-range cargo planes and the much anticipated replacement of its ageing Hercules transports, sources say.

The announcement, which could come as early as Monday, still requires a final rubber stamp from cabinet, but it will represent the Conservative
government's first response to the wish list presented to cabinet on May 30 by Defence Minister Gordon O'Connor.

At that meeting, O'Connor pitched at least six major capital projects worth more than $8 billion. Most of those projects, including armoured trucks, ships and other aircraft, have been pushed back to the fall, but two major transport aircraft purchases are ready to launch.

The most controversial of the two will likely be the purchase of four C-17 Globemaster long-range strategic transports at a cost of $1 billion for the planes themselves, plus a 20 - year support and maintenance plan that will bring the overall cost to $2.5 billion.

The government is expected to ``sole source'' the purchase of the four aircraft from the American manufacturer, Boeing, instead of opening up the usual competition for bids for such an expensive purchase. The government is allowed to sole source if it can make the case that no other similar airplane can meet its needs. The only other large, long-range transports available are Russian-built planes.

The Russian government has attempted to cut into the competition by spearheading its own military trade mission to Ottawa this week, but sources say Canada has decided to buy American, and that it will likely receive one of the four new C-17s late this year directly off the Boeing assembly line as part of an order that was already underway for the Australian Air Force.

Canada doesn't own large transports such as the C-17 and has normally leased such large planes to carry its heavy equipment on overseas missions from Russian or Ukrainian companies.

The Liberals considered a plan to buy large aircraft six years ago, but scrapped the idea. Since then, the deployment of the military's Disaster Assistance Response Team to two major crises the Dec. 26, 2004, Asian tsunami and last year's Central Asian earthquake has been delayed because transport was not readily available for its personnel and heavy equipment.

Under the government's new accrual accounting methods, the price of the expensive new planes among the largest transports in the world and bigger than anything now owned by the air force would essentially be spread over the life of the aircraft instead of requiring a lump-sum infusion of defence spending up front.

The Tories will also revive part of a plan announced by the Liberal government shortly before the last federal election to replace the ageing fleet of Hercules transports at a cost of $3 billion for up to 16 new planes.
The government is expected to open that project for competitive bidding, but industry insiders say the specifications will likely favour the U.S. firm Lockheed Martin's modern version of the Hercules, the C-130J.

Sources say the Conservatives could not risk sole-sourcing two large airplane purchases, so they expected the statement of requirements for the Hercules replacement will be brief as short as one or two pages as opposed to thousands of pages of details specifications usually placed before bidders and it is expected to call for delivery of the planes by about two years.

That would eliminate the C-130J's main competitor, the Airbus A-400, which is still in the design phase and isn't expected to go into production until 2009. ``There are competitions that are fair and there are competitions with known outcomes,'' said one industry insider.

Many of Canada's shorter-range tactical-lift Hercules date back to the 1960s and it is the workhorse of current deployment to Afghanistan.
Gen. Rick Hillier, the chief of the defence staff, has said that replacing the Hercules was the top equipment priority of the military and that, if the fleet was ever grounded, Canada would be unable to sustain its overseas deployments.

Parliament recently voted to extend the Canadian military mission to Afghanistan to 2009. There are currently 2,300 troops in Afghanistan.
Other major equipment purchases that were part of the Conservatives' ambitious ``Canada First'' election platform for the military are being pushed back to later in the year. These include armoured trucks and transport helicopters for the army in Afghanistan, fixed-wing search and rescue planes, a joint supply ship, Arctic icebreakers, and unmanned surveillance aircraft, or drones, that could help patrol the Arctic and both coasts.

Hillier and O'Connor have clashed on what the military needs most in terms of airlift. O'Connor wants a large airplane that can transport equipment overseas, such as the C-17, but Hillier says more Hercules, which can conduct more missions in hostile theatres under grueling conditions, are needed.

In the end, it appears that both men will get what they want, although moving ahead with both projects has pushed back the acquisition of other equipment.

``They very much want to do strategic lift,'' the insider said, ``but they can't do that without saying something about tactical at the same time.''
The purchase announcements also come amid reports that Canada's Aurora aircraft, the air force's eyes and ears for keeping watch over the country's vast coastline, have cracks and other structural problems on key portions of the planes and urgently need $500 million in repair work to keep them safely flying in the future.

According to a report obtained by the Ottawa Citizen, the Defence Department is trying to put together a plan to keep the 25-year old Auroras operating for another two decades.

Ottawa Citizen