Cyclones: Cancellation?

From a Globe and Mail story, to build on this earlier post:

Federal officials are threatening to cancel a $5-billion contract with Sikorsky Inc. because the U.S.-based helicopter maker is asking for up to $500-million in extra funds to replace Canada's 40-year-old Sea Kings.

Senior sources said the relationship between Ottawa and Sikorsky took a turn for the worse after the firm acknowledged this year that it was running late in its plans to provide 28 high-tech Cyclone helicopters to the Canadian Forces.

The government's controversial efforts to replace the Sea Kings, which go back to the early 1990s, are now complicated by Sikorsky's request for more funds to deliver replacement helicopters.

Sikorsky officials refused to comment on the current negotiations, but senior federal officials said the company has requested between $250-million and $500-million in new funding.

Sources said there is talk in government that the Cyclones need a "more powerful engine" to meet Canada's requirements, and that delivery could be delayed by nearly two years even with additional money. High-ranking sources said the contract dispute is causing concerns at the highest levels of the government, and that cancellation of the contract is a possibility. If new funding were to be offered, the government would be seeking ironclad guarantees that Sikorsky would deliver the aircraft at the new agreed-upon time.

"All of the options are on the table," a federal official said.

"We can cancel or come to a compromise."..

Sikorsky won a competition in 2004 to provide 28 helicopters to replace the fleet of Sea Kings. At contract signing, Sikorsky agreed to deliver the first helicopter in January of next year.

The maximum penalty on the contract for late delivery is $36-million...

Update: Latest:

MacKay won’t axe Cyclone deal — yet
Delays, cost overruns put replacement project in jeopardy
...
The military "started getting vague signals" from Sikorsky last fall about delays in delivery, Mr. MacKay said.

"We’ve now had one major sit-down with Sikorsky to hash out some of the potential problems here," he said...

Mr. MacKay said he’s worried further delays could cost the military pilots.

"Am I concerned? Absolutely," he said. "Am I concerned that we’ve, in fact, already lost qualified people because of the delays? Of course I am. I’m very concerned."

Any more bad news could be devastating for the "fragile" Sea King community, said Larry McWha, a retired colonel who used to fly the helicopters.

He’s heard from people who are still in uniform that some air force personnel are considering leaving the military due to the delays...

Then there's this:

The Harper government refused yesterday to fork over any extra cash to Sikorsky Inc., which has asked for hundreds of millions in additional funds to deliver promised helicopters to the Canadian Forces.

Issuing a warning that applies to all federal suppliers, Public Works Minister Michael Fortier said Sikorsky has to live up to its $5-billion contracts to provide 28 Cyclone helicopters to replace Canada's 40-year-old Sea Kings.

"When the government signs a deal with a supplier for a specific good at price X, that's the price the government should pay for that good," said Mr. Fortier, a lawyer and former banker.

"Where I come from, a price is not an approximation, it's not an estimate. ... In this case, the price was set at contract signing."..

...Mr. Fortier said the U.S.-based firm has to find a way to meet its contract. If that doesn't happen, he made a thinly veiled threat to cancel the deal and find another way to replace the Sea Kings, which are nearing the end of their life cycle.

"I gave clear direction to my deputy minister that he was to try and break the logjam and find a solution, but at the same time, we are working, as we should be, on alternative solutions if we can't come to an agreement with the supplier [emphasis added]," Mr. Fortier said in an interview...

Government officials have been told that the prototypes for the Cyclones are struggling to reach key requirements set out by National Defence, such as conducting a typical anti-submarine mission in two hours and 50 minutes.

There is speculation in the aircraft industry that Sikorsky wants to provide the Canadian Forces with a helicopter that has a more powerful engine, a bigger gearbox and a fifth rotor, which would allow it to meet all requirements.

However, such a helicopter would be more costly than the original four-bladed version proposed by Sikorsky...

Pretty high stakes standoff, in which there sure don't seem to be any easy or very good results. If we're desperate would there be any argument for buying Sikorsky S-70B Seahawks (more here)? More on US plans for new Seahawks here and here. If it's good enough to be the USN's standard helicopter...?

The aircraft was considered for the maritime helicopter for a while in the 90s after the EH-101 contract was cancelled. Indeed the Seahawk was initially thought of for the competition the EH-101 won in 1987:

...Three contenders were singled out as possible replacement for the Sea King: Sikorsky's S-70 SeaHawk (called the SH-60 Seahawk in the US Navy), Aérospatiale’s AS332F Super Puma and finally, AgustaWestland's new EH-101, of which the latter was purposely designed to be a Sea King replacement[8]

However, in a surprise move, Sikorsky then withdrew from the contest, the reason being that the SeaHawk was seen by the CF to be too small...