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News Story
Lockheed gets $1.4B fed order for Hercules
By Leo Valiquette, Ottawa Business Journal Staff
Wed, Jan 16, 2008 4:00 PM EST

The Stephen Harper government has finally awarded the contract for new tactical lift aircraft for the Canadian Forces, opting to stick with the previous Liberal government's preferred plane.

Public Works Minister Michael Fortier and Defence Minister Peter MacKay announced Wednesday afternoon that Lockheed Martin will get the contract to supply 17 Super Hercules C-130J aircraft worth a total of US$1.4 billion. Lockheed will also be awarded 20 years worth of in-service support work, with details to be announced in 2009. Reports have suggested the support contract will be worth an additional $3.2 billion.

"Canada has long been in dire need of renewed tactical airlift capabilities," Mr. Fortier said in a statement. "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."

First deliveries are expected in winter 2010, not a moment too soon for an aging fleet who's ability to continue service past 2008 has been questioned for several years.

The C-130J will replace the old C-130 Hercules aircraft in service with the Canadian Forces, which have the dubious distinction of having the highest flight hours of any comparable fleet in the world, which is the aerospace equivalent of high mileage on a car, having been in service for about 40 years.

The previous Liberal government had already favoured the newer Hercules when the Conservatives came to power, but questions were raised over whether or not the Liberals had rigged the bidding process in favour of Lockheed. Over 2006, then defense minister Gordon O'Connor took a fresh look at the A400M from French firm Airbus, as well as Boeing's C17 Globemaster. However, one of the big points in favour of the Hercules has always been the speed in which it could be delivered to Canadian forces, given the age of the current fleet. It also has the benefit of being able to land in tighter spots, making it more versatile.

Supporters had argued that the A400M could fly further and faster, but it came with a price tag about 50 per cent higher per plane.

By June 2006, the Harper government had set its sights on the Hercules, but the contract award has been delayed by the process of ensuring that Canadian suppliers would get enough of the work on the U.S. built aircraft to fulfill requirements that stipulate much of the contract's value must be spent in Canada.

"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 Wednesday. "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."

But the choice of the Hercules hasn't left Boeing's Globemaster out of the running. A contract for four of those aircraft was awarded in February 2007 to serve as strategic lift aircraft, for more long-range missions beyond the capabilities of the Hercules.


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