Bombardier won't contest Ottawa's sole-source deal on new Boeing military planes

National Defence Minister Bill Blair speaks during a news conference on Thursday, November 30, 2023 in Ottawa. The federal government is buying at least 14 Boeing surveillance planes from the United States to replace the aging CP-140 Aurora fleet. THE CANADIAN PRESS/Adrian Wyld

MONTREAL — Bombardier Inc. will not contest the federal government's decision to replace the military's aging patrol planes with aircraft from U.S. rival Boeing Co., the Quebec jet maker says.

The government announced last month it would buy at least 14 Boeing surveillance planes from the United States in a sole-source deal to phaseout Canada's half-century-old fleet of CP-140 Auroras -- closing the door on Bombardier.

Defence Minister Bill Blair said on Nov. 30 that Boeing's P-8A Poseidon aircraft, which features submarine-hunting technology and anti-ship missiles, meets all the needs of the Air Force. It presents "the only choice" available, he said, given Bombardier's proposed alternative is not slated to roll off the line until the early 2030s.

In a statement, Bombardier said it remains "deeply disappointed" it was not allowed to bid on the contract, but will hold off on a court challenge.

"We are grateful for the strong interest and confidence shown in Bombardier Defense's capabilities by Canadians coast to coast to coast and by politicians. With that in mind, Bombardier takes note of the Canadian government's decision and will focus instead on building a stronger and strategic relationship between the talented women and men of the Canadian aerospace and defence industry and the Canadian Armed forces," the company said Monday night.

The statement closes a chapter on a promotional campaign by Bombardier CEO Eric Martel, who has argued that its aircraft -- currently a prototype -- would offer a cheaper and more high-tech alternative that's made in Canada.

The company joined forces earlier this year with a Canadian subsidiary of U.S.-based General Dynamics Mission Systems on a patrol plane that is a modified version of its Global 6500 business jet with submarine-detection gear. The Global 6500 is in use by several militaries, including in the United States and United Arab Emirates, but not yet for maritime patrol.

The Boeing deal will cost Ottawa more than $10.4 billion in total, with the new airplanes expected to land in 2026 and 2027.

Officials said Boeing has also pledged to provide $5.4-billion worth of business activities and investments in Canada over 10 years, which includes drawing on domestic suppliers and supporting 3,000 jobs.

Blair has said Boeing's Poseidon boasts a "proven capability with a track record of success." All other members of the Five Eyes intelligence alliance -- the United States, United Kingdom, Australia and New Zealand -- as well as Germany and South Korea fly the Boeing P-8, or plan to do so. That fact allows for "interoperability" -- smoother co-ordination on missions and easier parts replacement -- officials and experts say.

On top of seeking out submarines, the planes will be used for search-and-rescue operations and maritime patrols.

Bombardier and Boeing have clashed before. In 2020, the former sold its remaining stake in the A220 jetliner program, marking the end of its failed bid to take on the commercial aircraft duopoly of Airbus and Boeing.

In 2018, a U.S. trade panel ruled that Boeing suffered no harm due to competition from Bombardier, despite the U.S. plane maker's claim that its northern rival sold C Series jets to Delta Air Lines at "absurdly" low prices while enjoying subsidies from the federal and Quebec governments.

The government's recent decision to bypass Bombardier by foregoing an open procurement process stands in contrast to a recent move by the Canadian Commercial Corp. The Crown agency, which is mandated to help domestic companies bid on foreign government contracts, signed a memorandum of understanding last month to support export opportunities for the Bombardier plane.

This report by The Canadian Press was first published Dec. 19, 2023.

Companies in this story: (TSX:BBD.B)