The Canadian government is set to spend as much as $10-billion to buy new military surveillance aircraft from U.S. giant Boeing Co. BA-N based on “highly flawed and invalid information,” says Bombardier Inc. BBD-B-T chief executive Eric Martel. The move is short-sighted and will hurt the country as Bombardier and other domestic players try to build out their defence potential in the years ahead, he insists.
In an interview with The Globe and Mail, Mr. Martel said Ottawa appears to have made up its mind to purchase Boeing’s P-8A Poseidon reconnaissance jets from the Virginia-based plane maker in a sole-source contract without a formal request for proposals. He said his team understands the government intends to invoke a national security exception in its decision to speed up the transaction and avoid exposing itself to legal challenges.
“I think we were misled,” Mr. Martel said of the government’s procurement process. “Other countries are knocking on our door today because they see ours as the product of the future, which is a bit mind-boggling considering that in our own country right now we’re not even being considered.”
Bombardier and several other Canadian manufacturers have been pushing for an open competition to supply the government’s Canadian Multi-Mission Aircraft project, which aims to find a replacement for the military’s CP-140 Aurora planes. The contract, estimated to be worth $6-billion to $10-billion, is one of the largest military procurements in years. Boeing has told Canada that it could stop building its plane in 2025 if additional orders aren’t placed.
The Bombardier CEO’s open criticism speaks to the high stakes involved as nations boost their military spending amid increasing geopolitical tensions – not only for the government but also for the company. Ottawa wants to avoid repeating the embarrassments of military procurement projects such as the Lockheed Martin F-35 strike fighter fiasco a decade ago and the delays experienced on others, such as the purchase of Airbus Kingfisher search and rescue planes. Bombardier, meanwhile, wants to avoid having to explain to future military clients why it can’t do business with its home government.
Montreal-based Bombardier has teamed up with rival General Dynamics Corp. GD-N, one of the world’s biggest defence contractors, on a surveillance aircraft with submarine hunting capability they say would fit the military’s needs. Bombardier is supplying the jet, a modified version of its Global 6500 model, while General Dynamics contributes much of the “mission systems,” including sonar equipment and satellite communications.
The government has declined to issue a formal call for proposals, opting instead for a Request for Information (RFI) sent out last year to get a feel for the capabilities of potential suppliers. It also hired a third-party consultancy, U.S.-based Avascent, to get an outside opinion on the solutions available to replace the Aurora aircraft.
In March, Public Services and Procurement Canada said it sent a request through the U.S. foreign military sales program to explore the viability of buying 16 Boeing P-8A jets. Analysts said it’s further proof Boeing is on a short track for the contract.
Olivier Pilon, a spokesman for Jean-Yves Duclos, federal Minister of Public Procurement, said Mr. Duclos and his team are in touch with numerous stakeholders related to the aircraft contract, including Bombardier. “Discussions on the replacement of the aircraft fleet are ongoing and no final decision has been taken,” Mr. Pilon said. Officials with the Department of National Defence did not answer questions sent by The Globe.
Bombardier has been working behind the scenes to better understand the government’s thinking, meeting with bureaucrats and lawmakers to press for an open competition. During one such meeting, Mr. Martel said he and Pierre Sein Pyun, Bombardier’s vice-president of government affairs, were stunned when a public official – “a decider,” in their words – told them that military procurement has been so problematic in recent years that Ottawa intends to proceed with sole-source contracts when it can to save time and trouble.
“It became clear for us that the P-8 is the easy button,” Mr. Pyun said. “They don’t want to trouble themselves with an open tender process … They’ve been burned with some programs that have nothing to do with us.”
Last week, senior officials with the departments of National Defence, Public Services and Procurement, and Innovation, Science and Economic Development Canada appeared before a Commons committee to answer questions about a possible Boeing P-8 purchase.
Simon Page, an assistant deputy minister in charge of defence and marine procurement, said that based on the findings of Avascent, the project team concluded that it would be “very challenging” for Canadian industry to develop and deliver a plane in a time frame that dovetails with the life expectancy of the CP-140 planes currently in use. Mr. Martel challenged the competency of Avascent to make that assessment and said the consultancy never met with Bombardier or any other local aerospace firm.
In their testimony, the senior officials also said that among the 23 submissions received from the RFI process, the Boeing plane was the only “military off-the-shelf” product that could meet the needs of Canada’s Armed Forces. Mr. Martel says that having an off-the-shelf product was never a requirement that was spelled out explicitly in the RFI. Rather, Mr. Pyun says, the RFI asked respondents if they could offer a solution by the end of the 2030s. The timeline was later modified to require first deliveries in 2032, a deadline he says Bombardier and General Dynamics can meet.
Adding to the confusion, Boeing’s own proposed offering for Canada, the Block 2 version of the P-8A, is still in development until 2025, which means it’s not really off-the-shelf, while Japanese manufacturer Kawasaki’s P1 aircraft, which is in the mix, is flying now and should be considered off-the-shelf, Mr. Martel said. After Ottawa received the RFI submissions, federal officials responded to Canadian companies that subsequently contacted the government, but never formally followed up with any potential bidders to exchange additional information.
“The government of Canada is poised to make a $6-billion to $10-billion investment on potentially highly flawed and invalid information,” Mr. Martel and General Dynamics executive Joel Houde wrote in a letter this week to Mr. Duclos. “How can Canadian government officials conclude there is no Canadian solution when they have not had a single aerospace expert meet with Canadian industry to review the detailed engineering behind Canadian industry alternatives?”
Federal officials have cited the fact that several of Canada’s closest military allies fly the Boeing P-8 jet as a big plus, including the United States and all other members of the Five Eyes intelligence pact. Bombardier counters that several of those countries are searching for alternatives or modifications to the planes because of operational shortcomings and cost.
According to Bombardier, nations with a domestic airplane manufacturing capability have not purchased the P-8. France, for example, is launching development of its own multi-mission aircraft.
Mr. Martel said Canada should adopt the same long-term thinking, looking beyond this one military procurement contract to consider how it could help build out a stronger domestic military manufacturing base. Bombardier already builds a handful of specialized aircraft every year that are used by other nations – it has jets flying missions for the U.S. government over Afghanistan, for example – but it has ambitions to significantly grow its military business in the years ahead.
“There are over 180 P-8s flying up there and we believe we could be the replacement in the future for the majority of them” Mr. Martel said, adding that Canada’s aerospace sector was spawned from military beginnings before veering in a more commercial direction. “There is clearly a path here where we can bring our industry back in and be proud of that.”