Public Works and Government Services Canada

Public Works and Government Services Canada

January 16, 2008 16:02 ET

Government of Canada Awards Tactical Airlift Contract

GATINEAU, QUEBEC--(Marketwire - Jan. 16, 2008) - The Honourable Michael M Fortier, Minister of Public Works and Government Services Canada, along with the Honourable Peter Gordon MacKay, Minister of National Defence, today announced that the government has awarded a contract to Lockheed Martin Corporation for the acquisition of the Canadian Forces new tactical lift aircraft.

"Canada has long been in dire need of renewed tactical airlift capabilities," said Minister Fortier. "The government is now delivering on commitments it has made to ensure the Canadian Forces are properly equipped with aircraft necessary to support its operations."

"The airlift requirements of the Canadian Forces is a top priority," said the Honourable Peter Gordon MacKay, Minister of National Defence. "We are confident that the C-130J will provide Canada with a cost-effective, operations-proven tactical airlift capability."

Tactical airlift is the lifeline of the Canadian Forces, providing reliable aircraft to quickly and safely carry passengers, heavy equipment and supplies over long distances in support of operations, or in response to crises, such as natural disasters.

The purchase contract for 17 C-130J Hercules aircraft is valued at approximately $1.4 billion U.S., with an additional amount to be added in 2009 for at least 20 years of in-service support.

Under the contract, Lockheed Martin Corp. is required to invest in the Canadian economy, dollar for dollar, what the Government of Canada spends in procuring and maintaining the aircraft over the life of the contract.

"We are continuing to make sure Canada's aerospace and defence industries obtain maximum benefit so they can build and sustain capacity to support these aircraft over the long-term," Mr. Fortier said. "Under the in-service support portion, the contractor will be required to spend in Canada 75 per cent of the total cost in direct industrial regional benefits - well above the 60-per-cent ratio negotiated by the previous government for purchases of this magnitude."

The Honourable Jim Prentice, Minister of Industry, believes Canadian firms will play a significant role in the project's progress. "Through the government's industrial benefits policy, we are delivering maximum, high-quality economic benefits to Canadians while providing the military with the best equipment for its needs," said Mr. Prentice.

Delivery of the first aircraft is expected in winter 2010.

For more information, see the Tactical Airlift backgrounder available at: www.forces.gc.ca.

For more information on the status of other major military procurements, see the backgrounder available at www.pwgsc.gc.ca.

Backgrounder

Major Military Procurements

This backgrounder describes the procurement process and status of eight major military procurements now underway to help rebuild Canada's armed forces and strengthen Canada's sovereignty. Public Works and Government Services Canada (PWGSC) is responsible for the purchase of these goods and services on behalf of the Department of National Defence (DND), which determines the government's requirements for military goods and services.

1. Tactical Airlift (C-130J Hercules)

Procurement process

A two-phased approach was adopted for this procurement. First, PWGSC advertised the opportunity to industry through a Solicitation of Interest and Qualification (SOIQ) document posted on MERX, the government's electronic tendering service. Potential bidders were able to study the SOIQ and had to demonstrate their ability to meet the mandatory, high-level performance criteria before being invited to submit a formal Request for Proposal (RFP). This process reduces cost to industry because potential suppliers do not have to invest the time and money to develop a full proposal before being sure they can meet mandatory requirements.

To further streamline this particular process and reduce risk to the government, the aircraft must be certified to Canadian aviation certification standards by the contract award date, rather than being certified at the time the aircraft is delivered.

Schedule

A Request for Proposal was issued in August 2007. The purchase contract, valued at $1.4 billion U.S. was awarded on 20 December 2007. The first aircraft is to be delivered within 36 months of contract award. The last aircraft will be delivered within 60 months of contract award.

Trade agreements

This requirement was excluded from the North American Free Trade Agreement (NAFTA), the World Trade Organization - Agreement on Government Procurement (WTO - AGP) and the Agreement on Internal Trade (AIT).

2. Strategic Airlift (C-17 Globemasters)

Procurement process

In July 2006 PWGSC issued an Advance Contract Award Notice (ACAN) on MERX, the government's electronic tendering service, for the purchase of the four aircraft.

An ACAN signals the government's intention to award a contract to a specific supplier for a specific requirement. Other suppliers then have an opportunity (at minimum 15 days) to submit a Statement of Capabilities clearly demonstrating how they can meet the mandatory requirements set out by the government.

This method of procurement fosters competition by giving suppliers the opportunity to respond to the government's requirements before a contract is awarded. It is typically used when the government believes there is only one supplier or product capable of meeting its needs. It is also open and transparent by letting suppliers know the government's intention well in advance of any contract award.

Schedule

An $869 million U.S. contract was awarded to Boeing in February 2007. The first aircraft was delivered in August 2007. The last aircraft will be delivered in 2008.

Trade agreements

This procurement was excluded from the North American Free Trade Agreement (NAFTA), the World Trade Organization - Agreement on Government Procurement (WTO - AGP) and the Agreement on Internal Trade (AIT).

3. Medium- to Heavy-Lift Helicopters (Chinooks)

Procurement process

In July 2006, PWGSC issued an Advance Contract Award Notice (ACAN) on MERX, the government's electronic tendering service.

An ACAN signals the government's intention to award a contract to a specific supplier for a specific requirement. Other suppliers then have an opportunity (at minimum 15 days) to submit a Statement of Capabilities clearly demonstrating how they can meet the mandatory requirements set out by the government.

This method of procurement fosters competition by giving suppliers the opportunity to respond to the government's requirements before a contract is awarded. It is typically used when the government believes there is only one supplier or product capable of meeting its needs. It is also open and transparent by letting suppliers know the government's intention well in advance of any contract award.

Schedule

A Request for Proposal (RFP) will be issued to Boeing by the spring of 2008. Contract award is expected by the end of 2008. Under the RFP, Boeing will be required to meet all of the high-level mandatory requirements including delivery of first aircraft 36 months after a contract is awarded. The last aircraft will be delivered within 60 months of contract award.

Trade agreements

This requirement was excluded from the North American Free Trade Agreement (NAFTA), the World Trade Organization - Agreement on Government Procurement (WTO - AGP) and the Agreement on Internal Trade (AIT).

4. Medium-Size Truck Fleet and Associated Logistics Equipment

Procurement process

In November 2007, PWGSC issued a Request for Proposal inviting suppliers to submit bids for the provision of Militarized Commercial Off-The-Shelf (MiLCOTS) trucks. The procurement of Standard Military Pattern (SMP) trucks and Special Equipment Vehicle (SEV) Shelters and Kits will follow in 2008. All the procurements will be fully competitive using the Request for Proposal process.

Schedule

A Request for Proposal for the provision of MiLCOTS trucks was issued in November 2007. The Request for Proposal closes in April 2008. A contract is expected to be in place in fall 2008. The first vehicle is to be delivered in 2009.

Trade agreements

The requirement for MiLCOTS was excluded from the North American Free Trade Agreement (NAFTA) and the World Trade Organization - Agreement on Government Procurement (WTO - AGP). It is however subject to the Agreement on Internal Trade (AIT).

5. Joint Support Ship Project

Procurement process

The government is procuring the ships through a competitive three-phase procurement process:

- Phase 1 - Pre-qualification - Identify industry teams capable of fulfilling the project requirements.

- Phase 2 - Project definition - Fund two industry teams to submit design proposals and recommendations for in-service support.

- Phase 3 - Project implementation - Select one industry team to design and build the ships, and provide long-term in-service support.

The three-phase procurement approach will confirm whether Canadian industry teams exist that are capable of building the ships in Canada. It will encourage the formation of strong industry teams to produce more refined and contractually enforceable schedules, cost and performance parameters. Having more than one solution before the final selection will mitigate the risk of not having an acceptable design or overall program.

Further, requiring an in-service support proposal along with the implementation proposal will allow the teams to provide innovative solutions and provide an incentive to balance the cost of the ships against reliability, maintainability, long-term supportability and operational costs, to minimize the through-life cost.

Schedule

Four viable industry teams were identified in June 2005, completing Phase 1 of this procurement. Two project definition contracts were awarded in December 2006 and are scheduled to be completed in March 2008. Award of the project implementation and in-service support contracts are currently planned for fall 2008, with target delivery of the first ship scheduled for 2012.

Trade agreements

This requirement was excluded from the North American Free Trade Agreement (NAFTA), the World Trade Organization - Agreement on Government Procurement (WTO - AGP) and the Agreement on Internal Trade (AIT).

6. Tank Replacement Project

Procurement process

Canada has concluded a no cost agreement with Germany for the immediate loan of 20 Leopard 2A6 main battle tanks and two special purpose armoured vehicles for use in Afghanistan. These tanks are currently operating in Afghanistan.

Canada also concluded an agreement valued at $120M with the Netherlands in December 2007 for acquisition of 100 surplus Leopard 2 main battle tanks. The agreement calls for the delivery of 20 Leopard 2 A6 no later than March 31, 2008 and 80 Leopard 2 A4 tanks within 12 months.

Schedule

The Dutch tanks will undergo modifications before being placed into service. A work schedule will be determined once DND determines the extent of the modifications to be performed.

Trade agreements

These requirements are exempt from the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement and the Agreement on Internal Trade.

7. Arctic Offshore Patrol Ships

Procurement process

The procurement of six to eight Arctic Offshore Patrol Ships will be acquired through a competitive two-phase procurement process:

- Phase I - Definition phase - A competitive process will be used to select a supplier to refine the requirements and assist with the development of the main Request for Proposal (RFP).

- Phase II - Implementation phase - A competitive process will be used to select a contractor for the detailed design of the ships, followed by their construction and the provision of maintenance and in-service support.

Schedule

The two-phased procurement approach targets the delivery of the first ship for 2013.

Trade agreements

The requirement is exempt from the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement and the Agreement on Internal Trade.

8. Operational Training System Provider

Procurement process

In July 2007 PWGSC advertised the procurement of a single supplier to provide aircrew training through a Solicitation of Interest and Qualification (SOIQ) document. The SOIQ was posted on MERX, the government's electronic tendering service. Potential bidders were able to study the SOIQ and had to demonstrate their ability to meet the mandatory, high-level performance criteria before being invited to submit a formal Request for Proposal (RFP). This process reduces cost to industry because potential suppliers do not have to invest the time and money to develop a full proposal before being sure they can meet mandatory requirements.

Only one respondent, CAE Inc. was found to meet the mandatory requirements of the SOIQ.

Schedule

A Request for Proposal (RFP) is expected to be issued to CAE Inc. in early 2008, and a contract award is planned for fall 2008.

Trade agreements

This requirement directly supports the Tactical Airlift (C-130J) and the Medium-to-Heavy-Lift Helicopter (CH-47 Chinook) projects. This requirement is therefore exempt from the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement and the Agreement on Internal Trade.

National Security Exception

The National Security Exception (NSE) has been invoked by the government for some of these procurements to ensure that Canada's military requirements, or other aspects of Canada's national security, can be met. An NSE can be invoked for a variety of reasons such as to ensure national security or to ensure that essential work is performed in Canada. An NSE has been invoked for the following requirements: Tactical Airlift, Strategic Airlift, Medium-to Heavy-lift Helicopters, the Joint Support Ship Project, the Tank Replacement Project, the Arctic Off-Shore Patrol Ships Project and for the requirement of an Operational Training System Provider.

Contact Information

  • Office of Minister Fortier
    Jacques Gagnon
    819-997-5421
    or
    Office of Minister MacKay
    Dan Dugas
    613-996-3100
    or
    Public Works and Government Services Canada
    Media Relations
    819-956-2315
    or
    Department of National Defence
    Media Liaison Office
    613-996-2353 or 2354