Tory defence strategy runs into trouble
Conservatives have failed to deliver on their promise to reform defence procurement system, critics charge
STEVEN CHASE From Tuesday's Globe and Mail June 3, 2008 at 4:18 AM EDT
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OTTAWA — Part of the Harper government's vaunted Canada First Defence Strategy - billed as a hefty new investment for the military - is running into trouble over what critics say is insufficient funding for two key procurement projects.
Opposition parties say a deeper problem, however, is that the Conservatives have failed to deliver on their promise to reform a defence procurement system that the Tories once criticized as "a sad story of delays, starts, stops, restarts or abandonment."
In the latest development, a team led by one of the world's largest defence contractors announced yesterday that it was pulling out of competition for a $1.1-billion contract to perform part of an upgrade on Canada's 12 Halifax-class frigates.
A spokeswoman for General Dynamics Canada - a business unit of U.S.-based General Dynamics - said the company withdrew because it decided it couldn't make money on the Halifax contract, which she said offers only "unviable commercial terms and conditions."
The exit of General Dynamics - it's the second competitor to withdraw - leaves Lockheed Martin as the sole bidder. Liberal defence critic Bryon Wilfert says the situation could leave Ottawa hostage to a single supplier.
"[Later] they may come back and say ... 'We need more money.' Then what does the government do?" Mr. Wilfert said.
This news comes as federal officials scramble to resolve problems with another defence contract: a $2.9-billion project to build three support ships for the Canadian navy.
Only two companies have bid on this Joint Support Ship construction contract, and a government source said both companies informed Ottawa they would need more money than is allocated to build all three ships. These vessels are designed to haul fuel, food, parts and ammunition and function as floating repair bays as well as offshore medical facilities for soldiers.
The support ship cost problem has the Department of Defence contemplating whether to seek more money from the Harper government, a difficult request given the squeeze on Ottawa's finances caused by a slowing economy.
"The budget is not nearly adequate to get the three ships," said Ken Bowering of the Navy League of Canada, an advocate for maritime issues.
He said the process of selecting a builder "now looks like it's coming unglued."
Peter Cairns, president of the Shipbuilding Association of Canada, said Ottawa's support ship contract doesn't include sufficient money to account for the steep jump in steel and copper prices in recent years.
He also said Ottawa is trying to offload too much of the risk for contracts on the private sector, a factor that critics charge is discouraging bidders for the Halifax class modernization deal.
But one government source warned against expecting Ottawa to inject more cash into these defence procurement contracts. "The money available is the money available."
NDP defence critic Dawn Black said the process for buying new military equipment appears to be underfunded and is no more efficient than it was with the Liberals.
Public Works Canada spokeswoman Lucie Brosseau said the government could not comment on either contract because "the procurement process is not yet complete."
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Conservatives have failed to deliver on their promise to reform defence procurement system, critics charge
STEVEN CHASE From Tuesday's Globe and Mail June 3, 2008 at 4:18 AM EDT
Article Link
OTTAWA — Part of the Harper government's vaunted Canada First Defence Strategy - billed as a hefty new investment for the military - is running into trouble over what critics say is insufficient funding for two key procurement projects.
Opposition parties say a deeper problem, however, is that the Conservatives have failed to deliver on their promise to reform a defence procurement system that the Tories once criticized as "a sad story of delays, starts, stops, restarts or abandonment."
In the latest development, a team led by one of the world's largest defence contractors announced yesterday that it was pulling out of competition for a $1.1-billion contract to perform part of an upgrade on Canada's 12 Halifax-class frigates.
A spokeswoman for General Dynamics Canada - a business unit of U.S.-based General Dynamics - said the company withdrew because it decided it couldn't make money on the Halifax contract, which she said offers only "unviable commercial terms and conditions."
The exit of General Dynamics - it's the second competitor to withdraw - leaves Lockheed Martin as the sole bidder. Liberal defence critic Bryon Wilfert says the situation could leave Ottawa hostage to a single supplier.
"[Later] they may come back and say ... 'We need more money.' Then what does the government do?" Mr. Wilfert said.
This news comes as federal officials scramble to resolve problems with another defence contract: a $2.9-billion project to build three support ships for the Canadian navy.
Only two companies have bid on this Joint Support Ship construction contract, and a government source said both companies informed Ottawa they would need more money than is allocated to build all three ships. These vessels are designed to haul fuel, food, parts and ammunition and function as floating repair bays as well as offshore medical facilities for soldiers.
The support ship cost problem has the Department of Defence contemplating whether to seek more money from the Harper government, a difficult request given the squeeze on Ottawa's finances caused by a slowing economy.
"The budget is not nearly adequate to get the three ships," said Ken Bowering of the Navy League of Canada, an advocate for maritime issues.
He said the process of selecting a builder "now looks like it's coming unglued."
Peter Cairns, president of the Shipbuilding Association of Canada, said Ottawa's support ship contract doesn't include sufficient money to account for the steep jump in steel and copper prices in recent years.
He also said Ottawa is trying to offload too much of the risk for contracts on the private sector, a factor that critics charge is discouraging bidders for the Halifax class modernization deal.
But one government source warned against expecting Ottawa to inject more cash into these defence procurement contracts. "The money available is the money available."
NDP defence critic Dawn Black said the process for buying new military equipment appears to be underfunded and is no more efficient than it was with the Liberals.
Public Works Canada spokeswoman Lucie Brosseau said the government could not comment on either contract because "the procurement process is not yet complete."
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