HALIFAX — Ottawa is dropping key performance standards for navy helicopters due this fall in return for the manufacturer’s promise to guarantee another $80 million in work for Canadian aerospace companies over the next two decades.
The revised deal with U.S.-based Sikorsky, signed June 30, means the first six Cyclone choppers that fly from frigates in November won’t be required to have a system allowing some encrypted tactical information to be exchanged between ships and helicopters.
This message-exchange system was one of the original requirements in the $5.1-billion contract for the 28 helicopters, which are already more than three years behind schedule.
The helicopters will also no longer have to pass an endurance test for flying in warmer temperatures nor a test that requires one engine to keep going if a second engine fails in higher temperatures.
Also, the software needed for some military sensors and weapons systems won’t be complete by the fall.
A spokeswoman for the federal Department of Public Works says Sikorsky will have to provide more contracts to Canadian firms in exchange for more time to work on the helicopters.
“It’s not a penalty. It’s more business for Canadian industry. It’s value added for Canada,” said Johanne Provencher, director of defence and major projects at the department.
Provencher said the deal is acceptable to the federal government because the helicopters can still be used for military evaluation and training.
The industrial benefits are tied to the $3.2-billion service contract for the helicopter, which lasts until 2028, said a Public Works official.
Provencher said Sikorsky has also dropped a claim for $100 million against Ottawa in a legal dispute over what the terms of the original contract required.
“This was something that was tough to negotiate, to withdraw this claim,” said Provencher.
Provencher said Sikorsky has also agreed to provide Ottawa with up to $30 million from sales income if the manufacturer sells the Cyclones to other countries.
The revision is the second contract amendment since Sikorsky originally won a hotly contested bidding war in 2004.
On Dec. 23, 2008, the government allowed Sikorsky to extend the original deadline almost two years, until this fall, and gave the company an additional $117 million to pay for engine design changes and other features.
Defence Minister Peter MacKay had said prior to that amendment that the contract was “the worst procurement debacle” in Canadian military history, and he blamed the Liberal predecessors for the situation.
However, the New Democrats and the former chairman of the Senate national security committee have also criticized the Conservatives for not doing enough to ensure the contract stayed on schedule.
A Defence spokesman said the department would only accept six of the less-capable helicopters, and then will expect Sikorsky to come up with the final model that meets all requirements.
Sikorsky will also retrofit the first six helicopters to meet the standards of the final model, Jay Paxton said.
“The Canadian Forces will begin training on interim helicopters in fall 2010 and the delivery schedule for the fully compliant helicopters is on schedule for 2012 delivery,” Paxton said in an email.