Military, Products

Eurowatch: A Remarkably Consistent Record

By Giovanni de Briganti | September 1, 2004

With admirable consistency, successive Canadian governments have mismanaged their helicopter procurement programs over the past 14 years, spending far too much to buy too little, too late. But even by these dismal standards, Ottawa's June 23 decision to buy the Sikorsky Aircraft H-92 to replace its Boeing Sea Kings hit a new low in Canadian defense procurement practices.

In their determination to buy the cheapest helicopter at any price, Canadian ministers decided to spend C$5 billion (US$3.75 billion) on a helicopter that is yet to be developed and which is based on a commercial design that has not yet entered service. And, in their sudden hurry to get the new helicopter in service before too many of the 40-year old Sea Kings fall apart, Canadian ministers have given Sikorsky just 48 months to develop, integrate, manufacture and deliver the H-92--a recipe for disaster if ever there was one, especially when the integration of the mission equipment package and weapons is to be carried out by a company with no previous experience in the field.

Thus, Canadian Forces will have the doubtful privilege of being the H-92's first military customer--suffering all the technical, operational and financial problems that always accompany the service introduction of a new aircraft. Some will counter that Canada has included penalties in its contract, according to which Sikorsky could pay up to US$75,000 a day if it does not meet the delivery schedule, but in fact these are capped at US$27 million, which is not much when compared to the total US$3.75 billion value of the contract.

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Another point is that by choosing the H-92, Canada snubbed the two most advanced and successful naval helicopters now flying: the Anglo-Italian EH Industries EH101, of which nearly 100 are in service with the Italian and British navies with more having been ordered by Japan; and the NHIndustries NH90, of which 345 have been ordered by ten countries.

One of the more ironic aspects is that Canada already operates the EH101. It spent more than US$563 million in 1998 to buy 15 Cormorants (an EH101 variant) to replace its elderly Labrador SAR helos. It is obvious to any reasonably intelligent observer that buying the same helicopter would have led to substantial savings in spare parts, maintenance and training. But Canadian ministers took a different view.

According to Canadian newspapers, Defense Minister Bill Graham told reporters on July 23 that using a single helicopter would produce little in terms of savings as their missions require different equipment and training, thereby demonstrating a remarkable degree of ignorance about aircraft operations.

In fact, a 1997 report by the Maritime Helicopter Program Office dug up by the Ottawa Citizen estimated that a single-helicopter fleet would allow savings of about 15 percent in operations and support. This works out to about US$360 million on the basis of the US$2.4 billion that Canada will pay to support its H-92s over 20 years, but Williams and his colleagues ignored this.

Canadian officials are similarly vague about how much cheaper the H-92 is compared to the EH101, even though the cheaper price tag was, ostensibly, the prime reason for its choice. They dismissed news reports that there was only a 1-percent price difference between the two, saying it was closer to 15 percent, but refused to state the actual figures.

But this is not, and by far, the only questionable aspect of this contract. In the final analysis, the issue boils down to whether Canada was right to go for the "lowest-cost compliant" bid, i.e. the cheapest that fit the bill, or whether it should have gone for the one that offered best value, even if it was more expensive.

Nonetheless, did Canada have reason to buy the more expensive and more capable helicopter, even if it had no pressing operational need to do so? Minister Bill Williams pointedly noted that Canada did not necessarily need to buy the best--only what was good enough for its needs. "We don't spend a nickel more on anything that we don't have to, and we're minimizing the whole life cycle of costs," Williams said. "Because someone says this is more capable or this can fly faster or higher . . . if I don't need that, why should I pay taxpayers' money for that?"

One can, of course, take issue with the claim that the H-92 will "minimize the whole life-cycle of costs," especially since no one yet knows anything about what the H-92's life-cycle costs will eventually add up to, but can one blame Canada for buying the cheapest available helicopter?

In theory, no, as long as the H-92 proves able to do the job that Canadian Forces needs it to do. But here's another irksome fact: if the H-92 was that much cheaper, why did Canada buy only 28 to replace the 41 Sea Kings it originally bought back in the 1960s? Of course, with the end of the Cold War, Canada needs fewer naval helicopters and, because of its higher reliability, fewer H-92s can do the same job as more numerous Sea Kings. On the other hand, peacekeeping missions and other deployments since 1990 have shown that naval helicopters are in high operational demand. It is probable that the 28 Canadian helos will not prove enough.

There is no doubt the Canadian Forces needed a new naval helicopter--and now they will have one, even if it takes another five years for deliveries to start. For the Canadian military's sake, let's hope that the model picked by their political masters will not come back to haunt them.

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