Recent upgrades to light-armoured vehicles have made new close-combat vehicles unnecessary, Canada's top soldier said Friday as he announced the military would not go ahead with the $2-billion purchase.
"These capability improvements combined with an assessment of the most likely employment scenarios for the Canadian Armed Forces in the future were the most important factors in our analysis," said Gen. Tom Lawson, the chief of defence staff.
"Based on this assessment and the fundamental principle that the Canadian Armed Forces do not procure capabilities unless they're absolutely necessary to the attainment of our mandate, we've recommended to the government of Canada not to proceed with the procurement process for the close-combat vehicle."
The cancellation of the order for 108 close-combat vehicles is the latest in a series of troubled procurements.
The program had been hanging in the balance for months after the army signalled it was worried about whether it could afford to train crews and operate and maintain the new vehicles in a time of tight money. Budget restraints have slashed baseline funding by 22 per cent.
Bids by three defence contractors – Nexter, BAE Systems Inc. and General Dynamics Land Systems Inc. – had been set to expire on Monday.
London, Ont.-based BAE Systems, which makes the military's current light-armoured vehicles, had mixed feelings about the decision to cancel the order for close-combat vehicles.
"I've been using the term 'bittersweet,"' spokesman Ken Yamashita said.
"On the one hand, it's a great testimony to the upgrades that we're doing on the LAV IIIs. That's something we're glad to hear, that we've exceeded their expectations on that, which we always try to do with customers.
"On the other side, it's one of the reasons that they're are not going ahead with the contract – I'm sure there are other reasons as well – but that's one of the reasons they've stated, is that it meets the requirements for the close-combat vehicle."
BAE Systems says it will now focus on selling its CV90 closed-combat vehicles to other countries.
"Our position is that we are obviously disappointed. We remain committed to Canada and working with Canadian industry across a range of programs," spokesman Mike Sweeney said in an email.
"We also remain focused on other CV90 opportunities. These include a Danish competition for 2-400 vehicles and a joint development of a new family of vehicles for Poland with local company Polish Defence Holdings. The chassis for this will draw upon CV90 technology."
Nexter lamented the time and money it spent on the cancelled bid.
"Nexter has invested a great amount of time, energy and resources in the CCV program over the past four years," company executive Patrick Lier said in a news release.
"Millions of dollars have been spent because we believed the competition would be fair, open and provide a rigorous assessment of the candidate vehicles with a view to acquiring the best possible medium weight infantry fighting vehicle for Canada."
Nexter also said it wants the Canadian government to compensate it for the cost of its bid.
"It would be our expectation that the government would compensate industry bidders for the cost of their bids," he said.
"No company can afford to make such considerable investments only to have the process produce no result."
Having yet another major military purchase go down the drain could be a political black eye for the Conservatives, who have struggled to deliver on an extensive list of military equipment.
In addition to the armoured vehicles, National Defence and Public Works in the summer of 2012 cancelled and subsequently restarted a program to buy 1,500 trucks for the military.
Following news of the cancellation, the Canadian Association of Defence and Security Industries called for a review of the government's procurement process.
"It must be a difficult day for the companies directly affected," association president Tim Page said in a statement. "They've spent a considerable amount of money to position their products to win the competition on the basis of a stated need that now is no longer required.
"The situation is evidence of a compelling need for urgent consideration and articulation of a renewed and affordable Canada First Defence Strategy, as committed to by the government in the throne speech."
Retired lieutenant-general Andrew Leslie, who led the Canadian Army through almost the entire Afghan war, said the close combat-vehicle was an essential capability for a military that intends to fight not only an all-out war, but also future insurgencies where homemade bombs will be major weapons.
Leslie says the cancellation means the army will go into future conflicts less well-equipped than it should be.
The close-combat vehicles are 36-tonne machines that can carry troops and also fight like a light tank.
Experience in Afghanistan showed the army's existing light-armoured vehicles, while capable, were vulnerable to ever more powerful bombs – a lesson insurgent groups around the world have learned and will likely put into practice in any new conflict.
"This decision and others has put the lives of Canadian Forces personnel at unnecessary risk," said Leslie, who will run for the Liberals in an Ottawa-area riding in the next federal election.
Leslie said he doesn't buy the argument that National Defence can no longer afford the program when it continues to underspend its budget by roughly a $1-billion a year.
He also said it was appalling that neither Defence Minister Rob Nicholson, nor Public Works Minister Diane Finley, stepped forward to take responsibility for what was clearly a political decision.
"This is nonsense," Leslie said. "This program was approved by the government and personally endorsed by (former defence minister) Peter MacKay and the prime minister.
"It is their job to explain it, not members of the Canadian Forces. Where are they? I don't see them."