Auditor General Michael Ferguson, in his spring report released Tuesday, said the military's persistent failure to buy new search planes was a significant risk that affected the sustainability of Canada's rescue program.
Public Works Minister Rona Ambrose said the delay in purchasing the plane was a problem.
"It hasn't been acceptable to me."
The Fixed-wing Search and Rescue (FWSAR) program was launched in 2002, and funded to the tune of about $1.3 billion in 2004.
The first of about 15 planes was to be delivered by 2006. But more than six years after that the government has been unable to even get a bid out to tender.
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Public Works has now seized control of the purchase and is managing it through a special secretariat, similar to the one set up to manage the troubled purchase of new fighter planes.
"We initiated a new process that was open, transparent and will be very competitive," Ambrose said Tuesday.
But that process will take time, adding months to an already years long delay.
'Frustration' over delays
In March, MacKay told CBC News the delay was upsetting.
"I will express to you (...) no small degree of frustration that we have not been able to move this project forward," MacKay said.
"What I can tell you is that we are pushing very hard to have this procurement proceed. We need the support of the other departments to do this."
MacKay stiffened Tuesday at the suggestion that the Defence Department should be held accountable for the delay.
"Well, I would disagree that this has gone absolutely nowhere," MacKay said. "It's complicated in that we have a number of departments that touch on the file, for the delivery of the aircraft itself.
"The reality is, while the process is underway, it has not delivered the aircraft we need, and that our [search and rescue technicians] and our forces deserve," he said.
But that perspective flies in the face of the commonly held view within parts of Canada's defence industry. There, it's widely-accepted it was the Defence Department that had botched things by effectively drafting its requirements to favour just one possible contender, the Alenia C-27J Spartan.
The whole process stalled after allegations of favoritism were made and the military's requirements were sent to the National Research Council for review. It agreed the military's specifications were far too specific and needed to be broadened in order to ensure competition.
Although industry insiders agree dealing with Public Works can be cumbersome and costly in terms of time, in this instance, they say, it's likely still the Defence Department that's holding things up.
The military has spent years fighting that allegation and trying to deal with the consequences.
Last year, after a long delay, the program to buy new planes started moving again, under the strict control of that secretariat inside the Department of Public Works.
This would mean a contract by 2015 — with possible delivery at 2017 — making it 15 years between the launch of the plane program, and the launch of an actual plane.
Ambrose wouldn't specifically call out the military, but she stressed Tuesday her department's role in ensuring the purchase would be fair and competitive.
Asked if she was dissatisfied with the way the military has handled this, Ambrose paused and said: "I would say we have worked with the military to ensure this is done in an open, fair and competitive way."
An earlier suggestion that Ambrose and MacKay were pointing fingers at each other has been declared "inaccurate" and "wrong" by officials in the Public Works minister's office.
But others familiar with discussions around the delay tell CBC News that Ambrose and Public Works officials are tired of being made out as the bad guys, when they believe it's clear the Defence Department has botched the process.
The dispute has even come up at dicussions between cabinet ministers.
One source suggested the debate was getting "nasty" but that Ambrose felt it necessary to stick to her guns.
"Enough is enough," one source said.
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