CTV.ca News Staff
 
Updated: Sun. Jun. 25 2006 12:51 PM ET

Defence Minister Gordon O'Connor says his $15 billion spending plan is necessary to update a military that has been hollowed out after years of underspending and cutbacks.

Speaking on CTV's Question Period, O'Connor said the massive spending plan is an absolute necessity.

"What we're trying to do now is put in place the very basic requirements of the military to be effective. Mobilities - air mobility, army mobility on the ground, and mobility at sea, so that's where we're starting."

Beginning this week, O'Connor and Prime Minister Stephen Harper will be visiting four Canadian cities across Canada to build support for the plan -- which makes the largest single defence spending bonanza in the nation's history.

The wishlist includes $2 billion for three naval support ships, $1.1 billion for new army trucks, $4.2 billion for 15 heavy-lift helicopters, and $7.5 billion for tactical and heavy-lift aircraft.

O'Connor countered allegations that he and Chief of the Defence Staff Gen. Rick Hiller were at odds over the spending plan.

Insiders suggested Hillier wanted short-haul tactical airlift capable of landing on rough fields with speed and greater protection, while O'Connor wanted strategic lift.

O'Connor told Question Period the military, between 2003 and 2005, made four recommendations to the former Liberal government -- all of which were denied -- to acquire strategic lift.

"The military are 100 per cent behind strategic lift and so is Gen. Hillier. The only issue is how much money we have and what we can afford to have," O'Connor said.

However, the military will be getting both needs answered -- ending any crossing of swords between Hiller and O'Connor.

"Right now the cabinet has provided me with enough money to buy strategic and tactical lift. So there's never been a dispute whatsoever."

Under the current arrangement, the Canadian military rents heavy-lift aircraft from Russia and Ukraine whenever it is needed.

That arrangement is unacceptable, O'Connor said, because it means those countries can refuse access to the equipment if they disagree with the purpose.

The planes are also available on the commercial market, which means the military is competing against other private customers to use the equipment.

In addition, the planes are not certified for use in Canada, beyond landing and taking off.

In addition to overseas use, the new equipment will give Canada the ability to meet needs within its own borders.

"We shouldn't be depending upon other countries. We shouldn't be depending upon other countries ... to lift our troops or our equipment. We've got to be self reliant."

O'Connor also dismissed suggestions he has major conflicts of interest on a number of spending announcements, stemming from his days as a lobbyist.

Critics have demanded he remove himself from the deal, but he has so far refused and shows no sign of changing his mind.

"I don't have any conflicts. I've said this a number of times. I have no relationships to any company at all. I own no shares, I have no revenues, I have nothing from these companies. And if you understand the process, I have no say in who competes and I have no say in who wins."

However Ujjal Dosanjh, the Liberal defence critic, told Question Period O'Connor has a number of conflicts because companies he was involved with as a lobbyist are bidding on the new contracts.

"If he's not involved then why doesn't he just recuse himself and say I wouldn't be involved. He has never said that. The fact is the people he used to meet with in his previous life as a lobbyist are now reporting to him, some of them are still there, with respect to joint support ships, with respect to trucks, and others, he is conflicted."

Dawn Black, the New Democrat defence critic, criticized the speed at which the spending plan has been passed and the changing nature of the military.

However, Black supported giving troops the equipment they require.

"Of course we support a well equipped Canadian Forces. We're asking the men and women of the Canadian Forces to take on ever more dangerous tasks, so they must be equipped with what they need to do the job we ask them to do."

MONTREAL - Bell Helicopter Textron Inc.'s Canadian unit expects to find out in the next two weeks whether it has won the largest contract in its 20-year history, part of a US$2-billion-plus deal to supply the U.S. military with 322 light utility helicopters.

Bell Helicopter, which would do about half the manufacturing of the choppers at its Mirabel, Que., plant and finish them in Texas, is one of four groups vying for the deal, expected to be valued at more than US$2-billion.

Bell's 412EP is up against the UH-145 by American Eurocopter and Sikorsky Aircraft; the UH139 by AgustaWestland and L-3 Communications Holdings; and the MD Explorer by MD Helicopter.

The U.S. Army is planning to use the aircraft at commands and National Guard units for general purpose, non-combat missions. It needs them to replace ageing aircraft as well as Black Hawk choppers that had been performing domestic duties since the Cold War ended but are needed again on the front lines in Iraq and elsewhere. The army said on June 2 it expected to announce the winning bidder within 30 days.

"We're confident," said Michel Legault, director of business development with Bell Helicopter Textron Canada. "We think our helicopter has the most proven reliability of all the copters. We'd like to think we have the best bid in to the U.S. government."

There are 800 of the 412s in service; the biggest customer is Canada's military, with about 100 choppers. But it is a civilian 'copter also used to transport oil workers out to offshore rigs.

The helicopters are one of eight types of civilian choppers made at Mirabel.

Winning the contract would be good news for Montreal-area suppliers, notably engine supplier Pratt & Whitney Canada Corp.

But aerospace analyst Richard Aboulafia of the Teal Group in Fairfax, Va., said Bell will likely lose to Eurocopter/Sikorsky because its birds cost less -- US$4-million apiece, compared with Bell's US$7-million price. Europter's parent, EADS, is keen to increase its share of U.S. defence spending, and its partner is a unit of U.S. defence giant United Technologies Corp. "I'd say Bell is tied for second" with the others, Mr. Aboulafia said.

Harper to unveil $15-billion in defence spending

GLORIA GALLOWAY

Globe and Mail Update

Ottawa — Prime Minister Stephen Harper will announce the purchase of trucks, planes, ships and helicopters next week when he unveils a massive $15-billion procurement package for Canada's military.

The spending will be detailed at four separate events in four cities.

It comes after years of complaints by the military that armed forces personnel have been forced to operate with aging equipment that requires endless repair. Gen. Rick Hillier, the Chief of Defence Staff was all smiles on Wednesday when he spoke to reporters and senators about the refurbishing of the service — with good reason.

Prime Minister Stephen Harper will travel to Halifax on Monday to make the first announcement of three new supply ships at a cost of $2.1-billion, sources have told The Globe and Mail.

Those ships will replace vessels that were launched nearly 40 years ago.

Tuesday's announcement will take place in Quebec where the government will indicate plans to buy trucks worth $1.1-billion.

The truck purchase in that province will be presented as a tradeoff for the fact that the specifications for new airplanes, to be announced at the end of the week, will be tailored to those built by U.S.-based Boeing. Quebec's giant aerospace industry had been lobbying for a piece of the airplane procurement.

Mr. Harper will head to Edmonton on Wednesday to release the requirements for 15 new medium to heavy-lift helicopters. Those are expected to cost $4.2-billion and have been touted by the military as means of ferrying goods and supplies in theatres of conflict, like Afghanistan, without having to travel by land over dangerous terrain.

Then, on Thursday, the final announcement of the new planes will be made at CFB Trenton in Ontario.

That purchase is likely to be the most controversial, given the intensely competitive market for aircraft.

The Liberals — and other airplane manufacturers -- have been complaining for months that the Conservatives have rigged the competition for large, strategic lift planes to suit the Globemaster C-17s made by Boeing. In fact, the government will say it is going to buy four of those planes at a cost of $3-billion. But other companies will be invited to submit competing tenders.

The government will also say it is going to $4.6-billion worth of tactical-lift planes to replace the aging fleet of Hercules aircraft which will start becoming obsolete before the end of the decade.

In the end, the $15-billion worth of equipment to be announced next week will constitute one of the largest packages of military purchases ever tendered in Canada. The military is not one of the Conservative government's five priorities. But it will be able to go into an election — even if one is called early next year — saying it has made headway on the military file.

Minister of National Defence Gordon O'Connor's office remained tight-lipped about the impending announcments Thursday, but reiterated its support for the Canadian forces.

"Canada's military has seen 13 years of neglect under the previous Liberal government. Our new government is committed to ensuring that we fund the military and give them the equipment they need to do the jobs we ask them to do," a spokesman for Mr. O'Connor said Thursday. "When this government has an announcement to make — we will make it."

With a report from Scott Deveau

OTTAWA -- A Toronto-based commercial aviation company says it can meet all the Canadian Forces long-range transport needs for $42 million a year, instead of the $4 billion the Harper government plans to spend on a new fleet of large American-built military transports.

Skylink Aviation Inc., which charters commercial aircraft and already handles the Forces' strategic airlift needs, sent a proposal Wednesday to Defence Minister Gordon O'Connor offering to lease any combination of several large Russian-built transports, and base them in Canada.

The planes would be available to the Forces "24hrs./7 days a week on standby exclusive to DND," says a copy of the Skylink proposal, obtained by CanWest News Service.

The Conservatives are expected to announce this week the purchase of four C-17 Globemaster transports, built by the American company, Boeing. The $4-billion purchase has been dogged by controversy because it will be sole-sourced other companies won't be allowed to bid on it which critics say will result in a bad deal for Canadian taxpayers.

Boeing's main European rival, the consortium EADS, has already taken the unusual step of going public with an unsolicited $2-billion bid for the airlift contract because it says it was getting the cold shoulder from the government.

Skylink has offered three different long-range transports, the two most relevant being the massive IL-76 Ilyushin, the Russian-built equivalent of the C-17, and the Antonov AN-124, which is one of the world's largest planes.

Skylink offers to base two of each aircraft permanently at CFB Trenton, Ont., where they would be at the exclusive disposal of the Forces on short notice.

Based on 400 hours of yearly flying time for each of the four aircraft, Skylink says the two Ilyushin's would cost the government about $12 million a year, while the two Antonov's would cost about $30 million.

The C-17s are one of several large military purchases the Conservatives are expected to announce for the military this week.

A small fleet of heavy-lift, twin-rotor Chinook helicopters is also being earmarked for Forces troops in Afghanistan. The helicopters are the top priority for Gen. Rick Hillier, the chief of the defence staff, because of the continuing threat of roadside bombs to Canadian troops in Afghanistan.

Six Canadian soldiers were injured in a roadside bomb explosion and an attack by a suicide bomber in Afghanistan on Wednesday, prompting Forces spokesman Maj. Mario Couture a former aide of Hillier's to say: "If you are going to carry troops into zones of operation, the Chinook might be the best tool that you can have."

A senior Canadian official for Boeing told CanWest News this week that his company is talking to the government about a rush delivery of a new generation of Chinooks to the Forces.

Al deQuetteville, vice-president of Boeing's Canadian operation, said Boeing's assembly line is already rolling out another 450 Chinooks for the Pentagon and other allies.

"There's a tremendous opportunity here, for a country like Canada to get involved. It's given us the opportunity to offer a price on the Chinooks that is extremely attractive," he said.

Hillier said Wednesday that he has looked at every possible helicopter already owned by the Forces, including the aging Sea King, but nothing is suitable for the Afghanistan mission.

"If we had our own helicopters ... it would enable the operation without question," Hillier said.

He stopped short Wednesday of giving his blessing to the possible purchase of the C-17s, leaving open the possibility that the Forces could still lease strategic lift from a variety of sources.

"We are going to use strategic airlift, whether you rent it, whether you lease it, whether you buy it and balance that against doing something else," Hillier said.

Hillier and O'Connor have butted heads in private over the need to spend money on the expensive C-17s, when the Forces need other equipment, such as helicopters, armoured trucks and a replacement for the Hercules short-lift tactical airlift.

"You're going to spend money on strategic airlift in one form or another," said Hillier.

Ottawa Citizen

Europe aircraft groups to lobby Ottawa over bid

By Bernard Simon in TorontoBy Bernard Simon in Toronto

Published: June 19 2006 17:49 | Last updated: June 19 2006 17:49

Two European aerospace groups have launched vigorous lobbying campaigns to thwart alleged plans by the Canadian government to shut them out of three of Ottawa’s biggest military equipment orders in recent years.

EADS submitted an unsolicited bid to the department of national defence last week for 16 Airbus A400M military transport planes after reports that the Canadians were about to order four C-17 Globemaster aircraft from Boeing of the US without calling for competitive tenders. The Globemaster order would be worth about C$2.5bn ($2.2bn).

Speculation is also rife that Ottawa will favour another US group, Lockheed-Martin, to replace its ageing fleet of smaller C-130 Hercules transport aircraft.

Meanwhile, AgustaWestland, the helicopter group, is worried that Ottawa is set to give Boeing’s Chinook heavy-lift helicopters a head-start over Agusta’s Cormorant Mark II.

“We’re slightly concerned that we’re being frozen out of a competitive process that is open, fair and where the playing field would be level”, said Richard Thompson, senior vice-president at EADS’s military division.

Agusta-Westland is currently claiming C$1bn in damages from the Canadian defence department relating to a big helicopter contract awarded to US-based Sikorsky in 2004. The European group contends that the tender requirements were written in such a way to exclude rival bidders.

The minority Conservative government, which took office in February, has earmarked an extra C$5.3bn for military spending over the next five years.

According to the Tories’ first budget, tabled last month, “the international missions now being undertaken call for a new concept, with different force structures, different equipment and different operational requirements”.

The defence department confirmed on Monday that “a number of major defence procurement initiatives are being considered”. The Conservatives are also moving to repair relations with the US which, the Europeans fear, could include favouring US defence suppliers.

Boeing’s chief lobbyist in Canada, Al De Quetteville, is a former head of the Canadian air force. Boeing officials were not available for comment on Monday.

The government has come under political pressure to order heavier transport aircraft than the existing Hercules fleet, so that it does not have to rely on the Americans or others to carry Canadian troops and equipment abroad.

The Airbus A400M, which is due to go into service with the French air force in 2009, is roughly midway in size and cost between the Hercules and the Globemaster.

EADS contends that Ottawa does not need aircraft as big as the Globemaster. Like several other Nato members, Canada currently subscribes to a chartering service known as the Strategic Airlift Interim Solution (Salis).

The European groups also maintain that Canada is depriving itself of valuable industrial benefits by opting out of a competitive bidding process.