Airbus chosen to build Canada's new search planes, ending 12-year procurement odyssey

More than a dozen years after they were first ordered, the program to buy new military, fixed-wing, search-and-rescue planes has cleared its last hurdle, with European defence giant Airbus coming out as the winner.

Defence Minister Harjit Sajjan, Public Works Minister Judy Foote and the Commander of the Royal Canadian Air Force, Lieutenant General Michael Hood, are at Canadian Forces Base Trenton today to make the announcement.

CBC News is carrying their press conference live.

The $2.4 billion purchase of 16 new aircraft has the potential of being the largest defence procurement announcement of the last few years.

The original project budget, including 20 years of in-service support, was pegged at $3.8 billion, but the Defence Department website warns "there is a risk that the winning bid could be above the budget that was established in 2011," and that the budget will be determined when government awards the contract.

There were three companies in the running: Alenia Aermacchi North America (now rebranded as Leonardo-Finmeccanica), Airbus Defence and Space, and Embraer, a Brazilian aerospace firm.

The hybrid procurement was intended to deliver not only aircraft, but recommendations on how many planes are needed and where to station them.

The companies were asked to submit prices and aircraft numbers for a fleet that would operate out of at least four main bases across the country — Greenwood, N.S., Trenton, Winnipeg and Comox, B.C. — and a separate proposal using only three airfields.

But defence and industry sources tell CBC News that tomorrow's announcement is expected to look more like a straightforward procurement with nothing "novel or radical" in terms of basing or the structure of search and rescue.

The high cost — political and financial — of dropping one of the main operating bases was, according to one defence source, a non-starter for the government, which is already being knocked around over its handling of the fighter jet replacement.

Defence Minister Harjit Sajjan said the Liberals were accomplishing what the previous Conservative government failed to do.

Replacing 50-year-old planes

Leonardo offered its C-27J aircraft, while Airbus put forward the C-295, which is in service in 15 countries as a military transport.

The new planes are meant to replace the air force's nearly 50-year-old CC-115 Buffalos and older model CC-130 Hercules transports currently assigned to search-and-rescue duties.

According to the federal government's defence acquisition guide, the new planes are not expected to be fully operational until 2023 — 19 years after they were originally ordered, although the first aircraft delivery could come by the fall of next year.

It was Paul Martin's Liberal government that started the competition in 2004.

"It boggles the mind," said Alan Williams, who was the head of military procurement when the federal finance department approached National Defence, saying it had $1 billion to spend on equipment for the Forces.

Fixed-wing search-and-rescue planes were an obvious choice, he said.

"The minister gets up in the House and basically says, 'We need new airplanes to find people who are lost and save them.' It was a no-brainer from that perspective," said Williams

Accusations of bid-rigging

But just before the Conservatives were elected in 2006, the program stalled over accusations from defence contractors that the air force had rigged the specifications in favour of Leonardo's C-27J.

The air force has long denied the allegation, but in 2012 the top brass pitched the former Conservative government on buying surplus U.S. C-27Js.

Williams says there's an important lesson in the long-drawn-out fiasco.

"The military has to know and has to be told" on this project and other that their job is to define requirements for equipment needs and it's the government's job to hold an open, fair tender and pick the winner, he said. "And that's it."

Protecting military from themselves

Commenting on the issue of new fighter planes, he said, "I have no doubt the air force wants the F-35. I can understand that. I have no doubt the air force wanted the C-27J. I can understand that, too.

"But that's why it's incumbent on the assistant deputy minister of material, the deputy minister and the minister to safeguard the process and protect the military — actually — from themselves."

Former defence minister Peter MacKay said in December 2008 that the search planes were his top procurement priority, but the effort bogged down and it was eventually referred to the National Research Council for analysis.

The council agreed the military's specifications were far too specific and needed to be broadened in order to ensure competition.