09/05/2013 17:33 EDT | Updated 11/05/2013 05:12 EST

'Other options' sought for Sea King helicopter replacements

The federal government is considering "other options" to replace the aging fleet of maritime helicopters after an independent assessment obtained by CBC News Network's Power & Politics found fundamental flaws with the procurement process.

Amber Irwin, spokeswoman for Public Works and Government Services Minister Diane Finley, said the report from Hitachi Consulting on the contract to buy 28 CH-148 Cyclone choppers "is not yet finalized," and that the government will carefully consider its recommendations once complete.

But, she added, "simultaneously the government is considering other options for the maritime helicopter project."

"We are conducting an analysis of price and availability of other [aircraft] manufactured by other vendors. The government of Canada is committed to ensuring that our armed forces have the equipment they need at the best value to the taxpayer," Irwin told Power & Politics in a statement.

To date, primary supplier Sikorsky has accrued $88.6 million in "liquidated damages" — or penalties — for its failure to meet the terms of the agreement, Irwin added.

The company was to begin delivery of the fleet to replace the 50-year-old Sea Kings in 2008, but so far only four "interim" aircraft have been delivered.

Responding to the Hitachi report, Sikorsky spokesman Paul Jackson told CBC News on Thursday that the company fully co-operated with the team carrying out the review but had not yet seen the final report.

"Sikorsky’s singular focus is on working closely with the government to deliver a world-class maritime helicopter to the Canadian Armed Forces," he said.

"We have a dedicated team of senior executives, experienced engineers, technicians and support staff working with the Canadian government to deliver the world's most technologically advanced and capable maritime helicopter to the men and women serving in the Canadian Armed Forces."

'Re-scope' helicopter procurement

A summary of the independent report by Hitachi Consulting said the Sikorsky project was doomed from the start but could be made "viable and operationally relevant" if the federal government urgently adopts a new approach.

The independent evaluation concludes the government can get the problem-plagued program back on track by negotiating with Sikorsky to "re-scope" the project's structure, specifications and delivery approach.

"[The] project could be viable and operationally relevant with a new structure and governance model as described in our recommendations," reads the report.

The assessment, which was commissioned by Public Works, urges the government to "sacrifice less important requirements in order to deliver relevant capability" to the Royal Canadian Air Force.

It also recommends a review of "lessons learned" to determine if systemic issues exist that could be addressed in order to avoid future problems with major capital acquisition investments.