OTTAWA - The government of Canada has finally inked a deal with Boeing Co. to buy four C-17 Globemasters, giant jets the Canadian Air Force will use to transport tanks and other large pieces of military equipment all over the world.
Â鶹´«Ã½ has learned that government officials will announce details of the contract on Friday at the National Defence Headquarters in Ottawa. Defence Minister Gordon O'Connor and General Rick Hillier, the Chief of Defence Staff, will be in Ottawa for the announcement.
The C-17s are to be used for tasks such as moving Canada's Disaster Assistance Response Team (DART) around the country or around the world. They can also be used to fly Canada's tanks anywhere they're needed.
To accomplish those tasks right now, Canada either rents big planes commercially or seeks help from allies, often the United States Air Force. It was a USAF C-17 that took Canada's Leopard tanks last fall to Afghanistan. The cost to do that was $1-million one way per tank, government sources said.
"We need that capacity on our own. It's vitally important to move things like DART, things like our own units, in a timely manner, and that's why we're buying the airplane," said Laurie Hawn, a Conservative MP from Edmonton. Hawn, a former CF-18 fighter pilot, is also a member of the House of Commons defence committee.
The government had earlier announced that it wanted to buy these jets from Boeing and had been negotiating most of last fall with the Chicago-based company on the terms of the deal.
The government had earlier said that it had set aside a budget of $3.4-billion for the project. Out of that budget, it has to pay for the planes themselves -- estimated to be about $1-billion -- and then a host of other equipment, facility upgrades and a 20-year support contract, all of which is needed to train aircrews and maintain the planes.
Denis Coderre, the Liberal defence critic, said that, were his party in power, he would cancel the contract.
"We don't need them. If I was Minister of National Defence, I wouldn't go for that. We don't need these C-17s. If I have a better deal to lease, then why do I need to buy these big planes?" Coderre said.
The last Liberal defence minister, Bill Graham, had convinced his cabinet colleagues to approve a $13-billion military spending spree which contained many of the same items that Conservatives have in their current $17-billion plan for new military gear. Planes like the C-17 were not on the Liberal list but are one of the must-have priorities of the Conservatives.
Government officials had been working towards a deadline of Dec. 31 to ink the deal with Boeing in order to take delivery of the first C-17 by June.
But several industry sources said those negotiations got tripped up by demands from Sen. Michael Fortier, the public works minister who is the Conservative political minister for Montreal.
Industry officials say the government hopes to take deliver of the first plane by the middle of the summer but to do that, Canada will require the co-operation of the U.S. government.
Essentially, the Canadians must ask the Americans if it can grab one off of Boeing's assembly line that is intended for the United States Air Force. It is understood that the Americans are willing to discuss that request but it is not automatic that they will let Canada do that.
Fortier had wanted Boeing to spend a significant portion of the contract buying goods and services from Quebec-based aerospace companies.
Under the terms of most military contracts, the Canadian government requires a vendor who wins a deal to supply Canada with military equipement to spend $1 buying goods and services from Canadian suppliers for every dollar it receives from the Canadian taxpayer. These are known in procurement circles as industrial regional benefits or IRBs.
Because the Quebec aerospace industry accounts for about 55 or 60 per cent of Canada's overall aerospace sector, Fortier had asked that Quebec firms get at least 40 per cent of the IRBs, according to industry sources.
But Â鶹´«Ã½ has learned efforts to make sure Quebec would receive as much a $1.4 billion in industrial benefits from Boeing have not been convincing and that the province will receive between $850 million and $1 billion or 25 to 30 per cent of the IRBs. Ontario aerospace firms and suppliers with links to Boeing can also expect about 25 per cent.
Western Canadian provinces, particularly Manitoba, can expect about 20 per cent of the IRB pie and Atlantic Canada can expect between five and 10 per cent.
But the government is not planning to provide any details about those benefits at Friday's press conference in Trenton. Instead, it will be up to regional ministers in each part of the country to schedule their own announcements over the next several weeks.
In Quebec, that task will be left to Industry Minister Maxime Bernier and not Sen. Fortier, govrnment sources said.
Vic Toews, the Treasury Board President and political minister for Manitoba, and Peter MacKay, the foreign affairs minister and political minister for the Atlantic region, had also made a pitch that their regions ought to benefit from the contract.
They wanted to make sure their regions will benefit from the contract, one of the largest the Canadian government has ever signed.
Mackay, though, rejected the notion that political considerations played any role in the awarding of the contract.
"It is wrong to allege that ... Fortier and myself are trying to force suppliers to provide regional industrial benefits from the purchase of new cargo aircraft for the Canadian Forces," Mackay said in a statement emailed to Â鶹´«Ã½.
"Our government has clearly stated there will be no political interference in the awarding of this contract. Assertions that Minister Fortier has refused to sign a contract due to a dispute over regional benefits are simply not true. Unfortunately, misleading assertions like this divide Canadians."
Fortier, too, had earlier rejected the notion that he stepped in on Montreal's behalf.
"Some media have even gone as far as to say that I had declared that I would not sign a contract to buy four Boeing C-17 cargo aircraft unless Quebec receives a greater share of the contract's proposed regional benefits. I never made such a statement," Fortier wrote in a letter distributed last week to several newspapers.
The Canadian Air Force has decided that it will station all four C-17s at CFB Trenton, in southern Ontario.
