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Ottawa to unveil purchase of 4 cargo jets for military
The Globe and Mail (Canada) 02/02/2007
Author: Daniel LeBlanc
All material copyright Thomson Canada Limited or its licensors. All rights reserved.




OTTAWA -- The government will announce today the purchase of four new Boeing C-17 cargo planes for $1-billion, in addition to 18 engines that will be bought from the U.S. Air Force at a cost of about $100-million -- plus the Pentagon's commission.

The government found it was cheaper to obtain the engines directly from the U.S. military, which already has a deal to buy hundreds of them from Pratt & Whitney in the United States.

However, the U.S. government typically adds 3 to 5 per cent in administrative surcharges to its own cost when it facilitates such a "foreign military sale," in the Pentagon's lingo.

A source said the savings for the Canadian government will offset the cost of the commission.

The Canadian Forces will obtain a total of 16 engines for the four planes, plus two spares.

"We're paying a lot less than if we bought them directly from Pratt & Whitney. Boeing is selling us the planes without the engines because that is how the Americans buy them too," the source said. "The government's objective is to ensure that the savings are bigger than the commission."

The purchase of the planes will be announced this afternoon at the Canadian Forces Base in Trenton, Ont., by Public Works Minister Michael Fortier, Industry Minister Maxime Bernier, Defence Minister Gordon O'Connor and General Rick Hillier, the Chief of the Defence Staff.

The government is facing stiff opposition to the purchase.

"We don't need them. If I was the Minister of Defence, I wouldn't go for that. We don't need those C-17s," said Liberal MP and defence critic Denis Coderre, who explained the government can rent cargo planes when it needs them.

The Conservative government is also coming under fire over the regional distribution of the economic benefits flowing from the deal. Given that the C-17s are built in the United States, the Canadian government is asking Boeing to invest the amount of the sale price in Canada in indirect benefits.

A number of Quebec politicians and businesses have said the province deserves about half of the economic benefits, since Quebec houses more than half of Canada's aerospace industry.

Even Mr. Bernier was quoted as saying last year,

"If the Quebec industry represents more than half of Canada's aerospace industry, it is in the natural order of things that it obtain its fair share of the contracts," he reportedly said.

OTTAWA, Feb 1 (Reuters) - Canada will on Friday announce that, as expected, it has signed a C$3.4 billion ($2.9 billion) deal with U.S. firm Boeing for four strategic airlift planes, CTV television and opposition politicians said on Thursday.

The choice comes as no surprise since Ottawa said last July that Boeing was the only firm which could supply the planes. A spokeswoman for Defence Minister Gordon O'Connor declined to confirm the reports.

Critics accuse Ottawa of changing the specifications at the last moment to ensure that only Boeing's C-17 Globemaster could win, a charge that the minority Conservative government rejects.

Boeing is also likely to win a C$4.7 billion contract to supply medium- to heavy-lift helicopters and is also in the running for a further C$4.9 billion purchase of 17 smaller tactical cargo planes.

($1=$1.18 Canadian)