Defence procurement scandal!!!

What a shocking idea, that the Air Force might actually set the specifications for aircraft it needs to carry out the missions governments give it. But when the procurement pedal nears the metal, "Oink! Oink!":

Defence Minister Peter MacKay will be trying to soon meet with Industry Minister Tony Clement and Public Works and Government Services Minister Christian Paradis to try to convince them to move forward on the fixed wing search and rescue aircraft project.

Mr. MacKay wants to convince them to proceed with a procurement process that will select the Alenia C-27J (the FWSAR project has come up with a set of specifications designed with the C-27J in mind [but see below]) .

DND wants to award Alenia the $3.1 billion contract [cost over many, many years - MC] but there’s some concern in the government about how that might look to the public, according to defence insiders.

Here’s the problem, according to those I talked to at NDHQ. The C-27J will be built in the U.S., ensuring jobs for Americans at a time when thousands are getting laid off in the Canadian aerospace sector. Last week Bombardier announced it is cutting 1,300 jobs because of the downturn in orders for its business jets.

All this also comes at a time when the Aerospace Industries Association of Canada has sent a letter to Mr. MacKay repeating its warning that Canadian firms have been left in the cold or will be left out in the cold in regards to obtaining substantial work on the C-17 and C-130J in-service support packages (Boeing says it intends to meet industrial regional benefits and Lockheed says there will be loads of good work to come…just give them time).

The letter, however, is unusual in the sense that although individual domestic defence and aerospace firms aren’t strangers to complaining about contracts, the industry association usually takes a low key approach….so things in this area must be bad for them to approach Mr. MacKay like that.

For his part, Mr. MacKay won’t talk publicly about the matter.

It also won’t help much that Mr. MacKay’s push to give Alenia the contract is based on the firm’s promise to “try” to bring in Canadian firms so they can get a share of the C-27J production order going to the U.S. military (some 200 planes). However, there are no firm commitments and Alenia will only go as far as saying they are willing to talk to Canadian companies who would then be given a chance to bid for such subcontract work.

The message from the Canadian Forces, however, is that its operational needs take precedence over creation of domestic jobs [what an odd concept! - MC]]. The Air Force argues it is in the best position to decide what plane meets SAR requirements [so, contrary to what was argued above, the specs were not set specifically so that only the C-27J would meet them] and industrial aspects should only be a secondary consideration.

However, some inside NDHQ admit that such an argument is starting to wear thin on those in the bureaucracy (read Treasury Board, Industry Canada, PCO), particularly at a time of recession and large-scale layoffs. There is also a concern in some quarters at Industry Canada that domestic firms have not reaped much benefit from the billions of dollars already spent on defence procurement in the last two years [check out this gravy train from just over a year ago, though].

“It’s true that the foreign companies have to spend dollar for dollar the same value of their procurement contract in Canada with Canadian companies but it’s the quality, or in this case the lack of quality of that spending that is at issue,” one defence insider told me. “If you provide industrial benefits that will allow Canadian companies to earn further aerospace and defence business down the road then that’s great but the concern from some departments is that is not happening.”

PCO has requested a briefing note explaining why the C-27J should be selected. Having something in writing will allow it to make DND the fall guy if for some reason the FWSAR procurement blows up in the government’s face.

I do wonder however why the FWSAR contract should be effectively sole-sourced [more on the recent revival of the FWSAR project here]. The EADS CASA C-295 has been offered against the Alenia C-27J; the former is a decent enough aircraft and, one would think, should have a chance fairly to compete against the requirements set by the Air Force. And an oddity: neither the CF nor our media ever mention that the new FWSAR aircraft also almost certainly needs a decent capability as a regular transport. I am sure the Air Force sees the C-27J as [end at link]...

...the plane it clearly wants (with the most useful secondary transport capability to supplement within Canada--and maybe the hemisphere--our C-130J Hercules, once all our Es and Hs are gone to the boneyard)...

But there is no reason that role should not be included in a real competition. If, finally, the C-295 simply will not do (too slow, say, in the SAR role) the government should forthrightly say why. Otherwise it would be something of a scandal.

By the way, just keep in mind those journalists who produced stories in which certain interested parties bemoaned the fact that the Airbus A400M could not compete for the tactical airlifter contract (C-130J)--because the specs said contenders should be flying in 2006, when the selection was being made. Guess what? IT STILL AIN'T FLOWN YET [Update: latest here]!