Canada deal for Boeing helicopters unfair: watchdog

Tue Oct 26, 2010 2:43pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada's decision in 2006 to award a sole-source C$4.9 billion (C$4.8 billion) helicopter contract to U.S. company Boeing Co broke government procurement rules, the country's auditor-general said on Tuesday.

Auditor-General Sheila Fraser said the sole-source deal for 15 Chinook medium- to heavy-lift helicopters would only have been valid had Canada bought off-the-shelf aircraft. In fact, she said, the Defense Department had intended from the start to ask Boeing to make major modifications.

The decision to avoid a competitive tender "did not comply with the letter or intent of the applicable regulations and policies and, consequently, the contract award process was not fair, open and transparent," Fraser wrote in a report.

The formal contract with Boeing was not signed until 2009. The delays pushed back the planned delivery date of the first Chinook from 2008 to 2010 and then to 2013.

Opposition parties gearing up for an election expected next year will use the report to attack the governing Conservatives, who only have a minority of seats in the House of Commons.

Fraser's findings are particularly timely, since the government has just announced plans to award a C$9 billion sole-source tender to Lockheed Martin for fourth-generation F-35 fighter jets.

"We expect to see a very rigorous justification for this choice of supplier," she told a news conference when asked about the F-35, saying her team would investigate the deal.

In an unusual move, the federal ministry in charge of contracts disagreed with the audit. Public Works and Government Services said competing firms had had enough time to make submissions once they learned of the sole-source plan.   Continued...