Bombardier warns Ottawa against going with Boeing on military plane contract

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This article was published 31/05/2023 (1204 days ago), so information in it may no longer be current.

MONTREAL – Warning about sole-source contracts and the “fallacy” of an urgent need to buy now, Bombardier Inc. said Wednesday that Ottawa would be erring if it opts to go with Boeing when it replaces Canada’s aging military patrol planes.

The Montreal-based business jet maker joined forces this year with U.S. rival General Dynamics on a surveillance aircraft with submarine hunting technology. The plane would be a modified version of the Global 6500 jet, equipped with tech and sensors from General Dynamics Mission Systems Canada — an Ottawa-based subsidiary of the Virginia defence contractor.

Both partners are calling on the federal government to launch an open procurement process to supplant the Armed Forces’ 14 CP-140 Aurora maritime patrol planes, built by Lockheed Martin and set to retire in 2030 after a half-century of service.

The federal government has said it is still weighing its options for the multibillion-dollar contract. But in March it stated that Boeing’s P-8A Poseidon is “the only currently available aircraft that meets all of the CMMA (Canadian Multi-Mission Aircraft) operational requirements” — particularly around intelligence gathering, surveillance and anti-submarine warfare.

The statement followed a letter of request for an offer on 16 Poseidons, sent via the U.S. government’s foreign military sales program. That February 2022 ask “does not commit Canada to purchasing the P-8A Poseidon and the project remains in options analysis,” the government said. The final decision will be based on capability and pricing as well as benefits to Canadian industry, it added.

Nonetheless, Bombardier saw the letter and subsequent actions as tantamount to a sole-source bidding process.

“Boeing is saying they have a much better platform. If that’s really the case, I fully encourage Boeing to tell the Canadian government we should go into competition,” Bombardier Defense executive vice-president Jean-Christophe Gallagher told reporters in Ottawa on Wednesday.

“Our platform not only burns 30 per cent less fuel; it flies further, faster, higher, it delivers on all of Canada’s requirements and it does it better than the American aircraft,” he claimed.

The remarks come after Boeing Defense president Ted Colbert told La Presse in an interview Tuesday that the fledgling Bombardier-General Dynamics plane is not in the “same class” as its P-8A Poseidon.

Gallagher swung back the next day with a dose of humour, calling the comment “fully correct — we have a modern aircraft and their aircraft is built out of a 1970s design.” Taking media questions at a defence trade show, he deemed the P-8 an “end-of-the-line aircraft,” while Bombardier spokesman Mark Masluch referred to the “undue urgency” around securing a replacement plane as a “fallacy.”

Boeing has said it may retire the plane within a couple years if Canada doesn’t place orders.

At a presentation on the tarmac of the Ottawa airport attended by U.S. ambassador David Cohen, Colbert said Tuesday that Boeing offered an aircraft that is “already available” rather than being “in development” — though Colbert did not mention any companies by name.

Like Bombardier and General Dynamics, Boeing also sought to tout its Canadian bona fides.

The aircraft giant’s P8-A would sustain more than 2,900 jobs and generate $358 million in economic output in Canada annually, according to a Boeing-commissioned study by management consultants Doyletech Corp.

“In strong collaboration with our Canadian industry P-8 partners and our extensive supply chain in-country, we appreciate the opportunity to build upon our more than 100-year relationship with Canada and grow our Canadian partnerships and investments,” Colbert said in a statement Tuesday.

The federal government has noted the P-8’s prevalence among Canadian allies.

“This platform is a proven capability that is operated by several of Canada’s defence partners including all of its Five Eyes allies — the United States, United Kingdom, Australia, New Zealand — as well as Norway, and South Korea. Germany has also recently purchased this platform,” Public Services and Procurement Canada said in its March 27 statement.

Bombardier and Boeing have clashed before. In 2020, the former sold its remaining stake in the A220 jetliner program, marking the end of its failed bid to take on the commercial aircraft duopoly of Airbus and Boeing.

In 2018, a U.S. trade panel ruled that Boeing suffered no harm due to competition from Bombardier, despite the U.S. plane maker’s claim that its northern rival sold C Series jets to Delta Air Lines at “absurdly” low prices while enjoying subsidies from the federal and Quebec governments.

The spat was spiralling upward before the decision, with Ottawa threatening to ditch plans to purchase 18 fighter jets from Boeing.

This report by The Canadian Press was first published May 31, 2023.

Companies in this story: (TSX:BBD.B)