$2.1B armoured vehicle purchase hangs in balance as army frets about cost

OTTAWA – It’s going to cost the Canadian Army more than planned to house new armoured vehicles, and commanders fear they won’t be able to afford basic upkeep of the fleet in the future, internal government documents say.

Reports prepared for former associate defence minister Bernard Valcourt lay out in stark detail the pitfalls associated with the purchase of 108 close combat vehicles — a program whose future is being debated at the highest levels of the Harper government.

Defence sources say cabinet may be called upon to ultimately decide the fate of the $2.1-billion program, which has apparently already passed through the federal Treasury Board.

The vehicles were conceived at the height of the war in Afghanistan as the army looked for better protection from increasingly powerful roadside bombs and booby traps, but some critics now say the program’s time has passed.

A report from the inter-departmental committee overseeing the program, dated Oct. 26, 2012, shows the contract was to be awarded to one of three bidders this month after extensive testing and a two-year project delay.

Bids were initially called in 2009 with great fanfare, but the competition was abruptly reset without explanation in late 2010.

Having yet another major military purchase go off the rails just as Parliament is about to resume would be a political black eye for the Conservatives.

Nonetheless, the overview committee was told infrastructure costs, the implementation of information systems, the cost of a support contract and the absence of a training simulator represented a “high risk” to the project, the documents show.

“The indicative cost estimate for infrastructure to support the fielded (close combat vehicle) is greater than was expected or planned for,” said the partially censored report.

“There is a risk that some of the requirements identified for infrastructure may be unaffordable, and that the (close combat vehicle) may be fielded with insufficient or less-than-ideal infrastructure.”

The vehicles need indoor shelter during the winter. The report suggested the army might have to seek extra funding for upgrades or new buildings.

Officials worry about the price tag of an electronic information exchange system between the contractor and defence staff. The extended maintenance contract is another red flag: the cost “may prove to exceed the expectations of the army” at a time when the branch is facing a 22 per cent budget cut.

One option under consideration was to include a termination clause in the contract in case there is “a future insufficient national procurement budget,” the documents say.

In addition, defence officials worried that training simulators — a vital step before handing a would-be driver the keys to a 36-tonne armoured vehicle — wouldn’t be available until well after the vehicles had begun arriving.

Since the end of the Kandahar combat mission, the army’s training budget has declined by more than 50 per cent. A special stipend for the mission ended in 2010, but there have also been reductions to the base funding, according to federal budget records.

Specific questions were posed to National Defence about the future of the program, as well as the concerns outlined in the documents. Public Works provided a terse response: “We continue to work with the Department of National Defence on this file.”

Defence researcher and political science professor Michael Byers, who recently wrote a report calling on the Harper government to scrap the purchase, said it’s astonishing there is any debate at all within government in light of the army’s red flags.

“It’s a sad reflection of the government’s priorities that it would even contemplate spending $2.1 billion just to save face,” Byers said.

“The army does not want these vehicles. Objectively, the army does not need these vehicles. This is a no-brainer, if there ever was one.”

But there are important political considerations at stake.

One of the bidders, General Dynamics Land Systems, is headquartered in London, Ont. Newly appointed Public Works Minister Diane Finley is the political minister for southwestern Ontario and recently gave a speech emphasizing the government’s determination to leverage defence spending in Canada.

Another contender, Nexter Systems, is a French government-owned weapons manufacturer. Last spring, the Harper government signed a security and defence co-operation agreement, which included an emphasis on the material sector and the efforts of both nations to modernize military hardware.

British defence giant BAE is also in the running.

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.