Feds select Boeing in sole-source deal for military planes, bypassing Bombardier

Power Play: One-on-one with Defence Minister Blair Defence Minister Bill Blair discusses budget cuts, recruitment issues and a lucrative contract with Boeing.

The federal government has landed on Boeing Co. to replace the military's aging patrol planes in a multibillion-dollar sole-source deal, closing the door on Quebec-based business jet maker Bombardier Inc., which had been pushing for an open bid.

Last week, cabinet green-lit the purchase of 16 P-8A Poseidon surveillance aircraft from the U.S. manufacturing giant to replace the half-century-old CP-140 Auroras, according to three sources who were not authorized to speak publicly on the matter.

Two of the sources, including a senior government official, said the Treasury Board held a special meeting Tuesday night and approved the contract, which a U.S. agency has listed at US$5.9 billion (C$8 billion). The rubber stamp came days before the offer was set to expire at the end of the month.

Defence Minister Bill Blair, Procurement Minister Jean-Yves Duclos and Industry Minister Francois-Philippe Champagne are expected to make the announcement Thursday, sources said.

The procurement department has stated that Boeing's off-the-shelf reconnaissance plane is "the only currently available aircraft that meets all of the CMMA (Canadian Multi-Mission Aircraft) operational requirements" -- particularly around submarine-hunting technology.

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

Earlier this month, a parliamentary committee also called on Ottawa to ensure an open tendering process, passing a motion that demanded the government put out a request for proposals.

Bombardier CEO Eric Martel has argued that its aircraft -- currently a prototype, and slated to roll off the line in the early 2030s -- 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 aircraft, 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.

Prime Minister Justin Trudeau declined to confirm whether a decision to bet on Boeing had been made.

"The ministers will address that issue in time," he told reporters in Ottawa on Wednesday.

Bombardier and Boeing declined to comment.

Some Canadian aerospace companies have pushed back against the idea that a Bombardier contract win would be best for the sector, saying that a deal between Ottawa and Boeing could be at least as lucrative for suppliers.

The sole-source route has the benefit of avoiding a drawn-out procurement decision. The competition process for which fighter jet would replace the CF-18 dragged on for more than seven years before the F-35 was chosen in 2022.

The other members of the Five Eyes Intelligence alliance -- the United States, United Kingdom, Australia and New Zealand -- as well as Germany, Norway and South Korea all fly the P-8, or plan to do so.

"From the military's point of view, that would allow it to work in a seamless fashion with a whole bunch of close allies. It would also give it access to a very large pool of spare parts and trained technicians," said Dave Perry, president of the Canadian Global Affairs Institute.

But Michael Hood, former commander of the Royal Canadian Air Force who Bombardier has hired as an adviser, said it's "baffling" that the government would rule out a Canadian firm by shutting the door on tenders.

"Everything's going to be engineered, built and maintained in Canada. And all of the salaries that go with it are going to be maintained," he said of a hypothetical Bombardier selection. In contrast, Boeing planes would be engineered and assembled in the U.S.

"France, the U.S., Brazil, they make no pretence about supporting their domestic aerospace industry."

An open bid could also bring down the price tag on the Boeing planes.

"When you buy through a foreign military sale -- the FMS -- you don't get the benefit of people sharpening their pencils for a competitive price," he said. "On the FMS, it's a take-it-or-leave-it.

"At the end of the day, maybe the P-8 is the best aircraft. But we'll never know without a competition," Hood said.

Bloc Quebecois Leader Yves-Francois Blanchet also called for open tendering and said the government is "rejecting" Quebec and Canada in favour of Boeing's "flying dinosaur."

Technically, the deal would be a government-to-government sale between the U.S. and Canada, rather than between Canada and Boeing.

This report by The Canadian Press was first published Nov. 29, 2023.

With files from Sarah Ritchie and Emilie Bergeron in Ottawa