Tories have spent $1.7 billion on troubled Cyclones, making them too big to fail
Thursday, Jan 09, 2014 12:01 am
OTTAWA - More than $1.7 billion has already been spent on the elusive effort to replace Canada's aging Sea King helicopters, internal documents show — a clue as to why the Harper government is sticking with the troubled program.
The eye-popping figure — about 30 per cent of the overall $5.3-billion budget — could have meant a far worse political firestorm for the Conservatives than the one that accompanied the ill-fated plan to buy the F-35 stealth fighter.
In the aftermath of an independent report last fall on the beleaguered plan to buy the CH-148 Cyclone choppers as replacements for the Sea Kings, the government acknowledged it was looking at other aircraft — even going so far as to meet with other manufacturers.
Documents obtained by The Canadian Press under the Access to Information Act show the money went towards "acquisition progress payments" and "in-service support set-up." The nearly decade-long program has delivered just four test helicopters that National Defence has refused to formally accept.
The $1.7-billion figure is slightly higher than numbers that were buried deep in federal public accounts records released last fall.
Only about one-third of the total has been spent on aircraft. The bulk has gone towards developing mission systems, training facilities in Nova Scotia and B.C., flight-simulation equipment and support.
The briefing notes, prepared for a committee of deputy ministers, also paint a more detailed picture of the back room tug-of-war and building frustration in the military as missed delivery deadlines continued to pile up.
Cancelling the program was clearly not an option, say critics who accuse the Conservatives of perpetrating a charade with its consultations last fall.
Spending so much money and having virtually nothing to show for it would have caused untold political damage, especially among a frustrated Conservative base still reeling from the ongoing Senate expense scandal.
"It would have been a bigger blow to them, to their base, than the F-35 situation," said NDP defence critic Jack Harris.
"I am certain that politics was part of the calculations."
The Conservative reputation for prudent management of the public purse took a hit in 2012 when the auditor general slammed the F-35 stealth fighter program, even though no money had been spent.
Regardless of whether Ottawa could have recouped some of the costs, cancelling the Cyclones would have triggered an ugly, protracted court battle in the run-up to the 2015 election, said Michael Byers, a political science professor and defence researcher at the University of British Columbia.
"I think this is a big, dark cloud that hangs over the Conservative government," said Byers, who has argued publicly for the deal to be scrapped.
"We saw some of this exposed during the scandal over the F-35, and the Sea King replacement is another story that speaks very loudly to the problems this government has managing multibillion-dollar military procurements."
Byers said the government is rolling the dice on an unproven, developmental aircraft when it could have had an established maritime helicopter by 2018 — the latest deadline set by Sikorsky, the Cyclone's manufacturer.
The Cyclones are meant to replace Canada's 50-year-old CH-124 Sea Kings. Conservatives often criticized Jean Chretien's Liberal government for cancelling the original program in 1993, to the tune of $478 million in penalties.
The Department of Public Works waited until after the close of business Friday — "take-out-the-garbage day" in political communications circles — to announce it would renegotiate the Cyclone contract, a clear sign to many the government was anxious to mitigate the political damage.
The government was sensitive to the bad optics even before last Friday's announcement. A briefing dated Dec. 13, 2012, noted that officials had leaned on Sikorsky to paint their ongoing meetings as "discussions," not "negotiations."
Ottawa's relationship with the aircraft maker has been increasingly strained, especially after former defence minister Peter MacKay characterized the Cyclone program as the "worst procurement in the history of Canada."
The flight decks of a number of Canadian warships — notably HMCS Regina — were reconfigured to accommodate the Cyclones, only to be switched back because of the delays. Internal documents show National Defence wanted the contractor to foot the $700,000 bill for the modifications, a demand overruled by Public Works.
There was also table-thumping about who would pay for the fuel in the already-delivered test helicopters.
Eventually, National Defence decided to bill Sikorsky and tack on an extra $250 per fill-up "to recover the direct personnel and equipment costs associated with the refuelling process and administrative overhead costs for accounting and invoicing." The Aug. 28, 2012, briefing insisted that the government wasn't making any money off the deal.
The government has set a deadline of the end of March to negotiate the new contract with the U.S.-based manufacturer and promises no further cheques will be cut until fully completed helicopters are delivered.
Flight training began in October on four Cyclones already at the military air base in Shearwater, N.S., said Public Works spokesman Pierre-Alain Bujold.
The air force is prepared to take ownership of up to eight test helicopters before the Cyclones are declared capable, Bujold said in an email.
That appears to be a concession; the government has said it would not formally accept the aircraft until Sikorsky had delivered a helicopter that's up to snuff.
The government's statement last Friday said it expected the Cyclones to be fully operational by 2018 and that the Sea Kings would begin retiring next year.
National Defence has not explained whether Canada would be short of helicopters during the time between the retirement of the Sea Kings and the arrival of the Cyclones.