12/19/2013 04:21 EST | Updated 02/18/2014 05:59 EST

Government won't buy new $2B armoured vehicles for army

Defence industry sources say the government has decided not to proceed with a $2-billion program to buy new heavy armoured vehicles for the army.

It's not clear whether the government will announce tomorrow that it has cancelled the program, or whether it will simply run out the clock and allow the program to die once current industry bids expire on Dec. 23.

Three different defence contractors were bidding to build the close combat vehicle for the army: Nexter; BAE Systems Inc.; and General Dynamics Land Systems Inc.

General Dynamics is the London, Ont.-based manufacturer of the army's current fighting vehicle, the LAV III.

Some industry insiders suggest that the General Dynamics vehicle called the Piranha 5 was struggling in the competition against Nexter's VBCI and BAE's CV90.

The program to buy 108 heavy armoured personnel carriers for the army was conceived during the height of the Afghan war. Four years later it appears the government has reconsidered its commitment to the close combat vehicle program.

The CCVs were to be larger, more powerful and more heavily armoured then Canada's LAV III vehicles used extensively in Afghanistan. The LAVs frequently suffered mobility issues in Afghanistan and also were found to be too lightly armoured to provide adequate protection against roadside bombs planted by insurgents.

That led the military to plan for new vehicles that would provide enhanced protection.

Sources tell CBC News the army was recently asked to re-evaluate its need for the vehicles. That process allegedly led the army to restate its desire to buy the heavier fighting vehicles.