Complexity significantly understated, resulting in increased costs and delays
Ottawa, 26 October 2010—National Defence and Public Works and Government Services Canada did not fully comply with key government and departmental policies and rules in the purchase of the Chinook and the Cyclone military helicopters, says Sheila Fraser, the Auditor General of Canada, in her Report tabled today in the House of Commons. National Defence will spend more than $11 billion to acquire two new types of helicopters, along with long-term in-service support, as it works to replace and upgrade its helicopter fleet.
“We understand that acquiring complex military equipment like these helicopters presents unique challenges,” said Ms. Fraser. “Nonetheless, the results of this audit are troubling.”
The audit found that National Defence did not follow its own rules governing the management and oversight of acquisition projects. Total estimated costs were not disclosed to Treasury Board at key points in the acquisition process, and key decisions were made without the required oversight and challenge by National Defence management boards. The manner in which Public Works and Government Services Canada used an advance contract award notice for the procurement of the Chinook helicopter did not comply with applicable regulations and policies. The audit concluded that as a result, the contract award process was not fair, open and transparent to potential suppliers. Public Works and Government Services Canada disagrees with this conclusion.
National Defence underestimated and understated the complexity and developmental nature of the helicopters that it intended to buy. Consequently, project risks were incorrectly assessed. Significant modifications were made to the basic models, which contributed to considerable project delays and cost increases. For example, delivery of the helicopters has been delayed—7 years for the Cyclone and 5 years for the Chinook—and each acquisition has entailed substantial unplanned costs.
The audit also found that National Defence did not develop full life-cycle plans and costs for the helicopters in a complete and timely way. This makes it difficult for the Department to plan for operating and supporting the helicopters over the long term.
“After lengthy delays and significant cost increases, National Defence still has not completely estimated what it will cost to operate these helicopters. Nor has it put in place all the elements, such as personnel, needed to maintain them over the long term,” stated Ms. Fraser. “This is cause for concern.”
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The chapter “Acquisition of Military Helicopters” is available on the Office of the Auditor General of Canada website.
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