Defense Procurement News

The Canadian Federal Government had to reject both proposals for a mammoth contract to upgrade their surface fleet. Canada had planned to build a new fleet of patrol vessels and support ships, but both proposals were considered too expensive. This means that the Government will either have to scale back their requirements or increase the planned budget. Give them credit, as usually an attempt to award a contract like this with a plan to get costs lower or under control would probably not work.

For more see GlobeandMail.com.

BAE Systems received a contract for M777 howitzers. See a story here. The M777 is a light weight towed piece that is used by the US, England and Canada. These countries have ordered 700 of the weapon. The contract is worth over $80 M.

The Canadian government announced today that they are taking steps to improve the aviation assets for their troops in Afghanistan. See a story here. Up to now the Canadian ground forces relied on either Allied lift or use ground transportation. Now they are leasing Russian Mi-17 and buying CH-47D and F aircraft. The CH-47D will be used immediately, but the CH-47F will be new construction and available in 2013. The country is also leasing and buying UAV assets to support intelligence and surveillance operations.

This story says that GD is pitching upgraded Light Armored Vehicles (LAV) used by the US to the Canadian Defense Department. Because the US chose a variant of a Canadian assembled vehicle originally designed in Europe the GD proposal is actually made in Canada. Kind of a win-win for the Government there. Canada is not necessarily looking for a new vehicle, but due to operational experience in Afghanistan a heavier, more armored vehicle is attractive. More to come, I am sure, on this issue.

According to this article, a Canadian company, ABB Bomem Inc., was a subcontractor to a US firm making a system for the US military. It needed parts from an American company that were delayed several months due to the International Trafficking in Arms Regulations (ITAR). ITAR is a complicated legal process governing the export of American weapons and components to foreign entities. Since the Clinton scandals of the Nineties they have been ramped up a lot. Of course with the international integration of the worlds defense production they have also made it harder for US companies to do business with foreign nations and companies, as well as making it worse for foreign companies trying to get in to the large US market. This is why BAE, EADS and Finemeccanica are trying to buy US companies. Since they are already in the US and are considered American it makes it easier to operate under the ITAR.

The story out of Canada is that the contract to buy 28 H-92 aircraft from SAC is sliding to the right. There are also rumors of cost increases. The Canadian government is threatening to cancel the contract if delays and cost increases are true. Normally for a contract like this to buy an established system starts experiencing slips or cost growth there are usually requirement changes or the contractor didn’t really provide what the customer desired. There is no word yet on what has happened. It may be that Sikorsky was just a little aggressive in their schedule.

According to this article the Canadian government denied the sale of MacDonald Dettwiler and Associates Ltd.’s satellite business to Alliant Techsystems Inc. See a previous post about the planned sale here. Canada cited the fact that if the company became American the laws protecting US technology exports would deny Canada access to the company’s satellite that focuses on the Canadian Arctic. Due to several scandals in the Nineties the US ramped up the laws governing technology transfer and export and make it very difficult to do this.   Read the rest of this entry »

According to this story in The Canadian Press, Canada is requesting from the US older CH-47D aircraft to support their efforts in Afghanistan. Canada is planning on buying some CH-47F, but until those are available they are trying to get some refurbished US Army aircraft.   Read the rest of this entry »

The US Department of Defense awarded Lockheed-Martin a contract to produce Improvised Explosive Device (IED) countermeasure systems. Allen-Vangaurd, a Canadian company, supplies key components to Lockheed Martin for this. Shares soared on the news.   Read the rest of this entry »

Under Canadian law Boeing will invest some $150 M Canadian in various companies as part of an offset for being awarded the contract for 4 C-17 aircraft. See the story here in The Star Phoenix. The law requires Boeing to invest 100% of the contract value in Canada.

Canada announced that it will go ahead with the purchase of 17 C-130J aircraft from Lockheed Martin from a previously negotiated deal. The contract is worth $4.6 B Canadian. The Contractor Logistics Support (CLS) portion of the contract will be negotiated over the next year. The Canadian Press reports here. The hang-up on the CLS is how much of it will be done by Canadian companies. Canada currently uses C-130E and C-130H aircraft. This will increase their tactical lift capability, but there has been a long running discussion over strategic lift which Canada has none of. In fact, the Canadian units planned to be sent to react to the Tsunami of 2006 had to wait and negotiate transport from the US and other countries as they didn’t possess aircraft with sufficient capability. See this story here.