$100M contract for drones quietly awarded
Controversy sparked over changes to tendering guidelines
Allison Lampert
Canwest News Service
Wednesday, July 16, 2008
FARNBOROUGH, England - The federal government has quietly chosen the winner of a $100-million contract to supply critical unmanned drones to Canadian troops in Afghanistan.
However, the choice of the winner -- MacDonald Dettwiler and Associates Ltd. and Israeli Air Industries Ltd. -- is sparking controversy in Canadian aerospace circles because the tendering guidelines were changed midway through the bidding.
While competitors were initially asked to demonstrate proof of past experience, that requirement was later dropped, industry sources said.
Defence Minister Peter MacKay said the tender was conducted in a "competitive and transparent way" and a winner would be announced shortly.
"The bidding process itself is meant to attract as many bidders as we can," said Mr. MacKay, while attending the Farnborough Air Show. "Obviously, this is a very important capability. The transportation of people and goods to various forward operating bases is a critical capability that we want to secure as quickly as possible."
Unmanned aerial vehicles are desperately needed to replace the Canadian Forces' aging Sperwar drones.
The UAVs are used in theatre to spy on insurgents. A key use is the tracking of improvised explosive devices -- the biggest killer of Canadian soldiers in Afghanistan.
Miki Bar, special adviser to the CEO of Israeli Air Industries, said he was delighted with Canada's choice of his company's Heron UAV over the Hermes 450 drone put forward by L-3 Communications MAS (Canada) Inc. and Elbit Systems Ltd. of Israel.
Mr. Bar said Canada simply chose the better bid, which would provide around six UAVs. He wouldn't entertain speculation that the change in criteria benefited the Heron, which is used by Israel, India and Turkey.
A contract with Canada is a boon for Israeli Air Industries, which wants to increase sales in the North American market.
"I am not part of any speculation," he said. "We have a smart customer; they know what they want."
But rival Elbit said its chances were hurt since the company works with Thales U.K. supplying Hermes 450 drones to the British army in Afghanistan and Iraq.
"We felt we had a very good solution for Canada. We are actually doing this in the U.K. where we are operating very successfully, so this was a disadvantage for us, to say the least," said Danny Israeli, Elbit vice-president of business development and marketing. "We are waiting for the Canadian government to debrief us as soon as possible."
"We are very disappointed," added L-3 MAS president Sylvain Bédard. "We are urging Elbit to keep all their options open."
Mr. MacKay couldn't explain the change in the bidding criteria.
"I don't get into the technical details," he said. "I leave that, obviously, to the experts in the air force and rely on their advice. There was a lot of technical requirements to be met. It was a competitive process. It was transparent. The information will be made available when all the contracts are announced."