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C-17s kick off re-equipment plan

Canada has signed the first contract under a plan to re-equip its long-neglected armed forces, a plan that focuses heavily on airlift capability. Delivery of four Boeing C-17s begins in September under the C$3.4 billion ($2.87 billion) strategic lift programme - the first and most urgent of Canada's procurements.

Despite last-minute delays while Boeing agreed industrial benefits for Canada's regions, the procurement plan has moved swiftly - too swiftly for the country's opposition politicians, who accuse Prime Minister Stephen Harper's Conservative government of riding roughshod over the competitive process. Announced by the Ottawa government at the end of last June, the C$17.1 billion "Canada First" programmes covered four strategic transports, 17 tactical airlifters and 16 heavylift helicopters, plus logistics trucks and supply ships. The purchase of 15-19 fixed-wing search-and-rescue (SAR) aircraft is expected to join the list soon.

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Canada has signeed a deal for four C-17s under its plan to re-equip the armed forces

When the Harper government unveiled its procurement process for the aircraft, it sparked a political controversy that rumbles on, but which is yet to derail its plans. Ottawa stated its intent to award contracts to Boeing for the C-17 and CH-47 Chinook, but also invited other suppliers to demonstrate they could meet the requirements.

Critics argued that the requirements were written around the government's preferred aircraft, and excluded other bidders, a controversy that continues to dog its choice of the Lockheed Martin C-130J for the tactical transport component as well as the pending fixed-wing SAR requirement, which critics charge is written around the Alenia C-27J.

Ultimately, the government received two challenges to the C-17 purchase - one from EADS offering the A400M and one from SkyLink offering leased Antonov An-124s. Their statements of capabilities were reviewed, but Ottawa ruled they did not meet the mandatory requirements, which included delivery deadlines.

The tactical transport procurement was handled differently, but has been criticised. A "solicitation of interest and qualification" was issued and drew three bidders - EADS with the A400M again, Lockheed with the C-130J and Snow Aviation with its upgraded C-130M. The Canadian government decided only the C-130J met its requirements.

Lockheed is now negotiating the industrial and regional benefits (IRB) tied to the C$5 billion programme, a process that proved problematic with the C-17, with politicians accusing the minister responsible for the procurements, Michael Fortier, of favouring his home province of Quebec, charges he has vehemently denied.

Ottawa demands direct and indirect work for Canadian suppliers equal to 100% of the contract. The four-aircraft production contract is worth C$869 million to Boeing, and the company has already agreed C$577 million in IRBs it has four years to place the remaining 34% and 10 years to execute its obligations. These are separate to offsets tied to the in-service support of the C-17s for 20 years, budgeted at C$1.6 billion.

While Canada will use Boeing's existing C-17 global support programme, Lockheed has agreed to place all C-130J support work - budgeted at C$3.3 billion over 20 years - with Canadian companies. Ottawa is likely to use a similar process for the fixed-wing SAR competition, which is expected to attract offers of the C-27J, C-130J and EADS Casa C-295.

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