* Ottawa says Sikorsky failed to meet delivery deadlines
* Government says will levy significant penalties
* Sikorsky says trying to deliver as fast as it can
By David Ljunggren
OTTAWA, Feb 11 Canada will impose significant
additional financial penalties on United Technologies Corp's
Sikorsky unit for delays in delivering search and rescue
helicopters, Public Works Minister Rona Ambrose said on Monday.
Canada signed a C$5 billion ($5 billion) deal with Sikorsky
in 2004 for 28 Cylcone helicopters, the first of which was
supposed to be delivered by early 2009.
But the project has been plagued with delays, some of which
Sikorsky blamed on major modifications requested by Canada. In
December 2008, the deal was renegotiated to push back delivery
of the first helicopter to June 2012, but Canada is still
"Our government expects Sikorsky's obligations under this
contact to be met and to date they have not been met. In fact
they have missed every deadline and every timeline," Ambrose
told the House of Commons.
"We have already applied millions of dollars in liquidated
damages and we are going to be applying significant additional
charges that will begin to accrue against this company for
failure to deliver. We continue to aggressively insist that
Sikorsky meet its obligations."
The affair is the latest in a string of military procurement
problems for Canada's Conservative government. Last December,
Ottawa scrapped a sole-source plan to buy F-35 jets from
Lockheed Martin Corp after cost estimates ballooned.
The Sikorsky contract allows Canada to impose escalating
penalties the longer the company takes to deliver the first
aircraft. The charge could hit C$80.6 million if that helicopter
is not formally handed over by June 2013.
Sikorsky has already provided four helicopters for training
purposes, but the company said they remain on the firm's books
because Ottawa has yet to officially sign for them.
"The remaining 24 Cyclones are in production, assembly or
flight testing. Sikorsky and the government of Canada are in
discussions to try to reach an agreement that will provide the
remaining aircraft to the Canadian Forces as quickly as
possible," Sikorsky spokesman Paul Jackson said by e-mail.
The helicopters will replace Canada's creaking fleet of Sea
Kings, which first came into service some 50 years ago. In 2012,
Defence Minister Peter MacKay blamed what he called "the worst
procurement in the history of Canada" on the previous Liberal
The story started in 1993, when the then Progressive
Conservative government signed a deal with Finmeccanica SpA's
AgustaWestland unit for helicopters to replace the Sea
That government was defeated shortly afterwards and replaced
by the Liberals, who scrapped the deal on the grounds it was too
costly. It took the Liberals another decade to sign the initial
contract with Sikorsky.
In 2010 Canada's auditor-general rapped the military for
bungling the initial contract, saying officials wanted so many
changes they had in effect "entered into an agreement with
Sikorsky to develop a new helicopter."