Perhaps Louis Chenevert knew more than he was letting on. During a conference call in early December, the chairman of United Technologies, parent company of Sikorsky Aircraft, assured investors and analysts that Sikorsky was “continuing to have productive discussions with the Canadian government” on the future of the maritime helicopter replacement program.
On Friday, the government announced that it had reached a “Principles of Agreement” (POA) with Sikorsky on December 31 and would continue negotiations to deliver 28 Cyclones as it begins to retire the venerable Sea Kings in 2015.
The decision is based, in part, on a report from Hitachi Consulting, contracted in the fall to “determine the viability of the program.”
“The government accepts the recommendations in the third-party report, which found that the program would be viable with a different project structure and governance model,” the government said in a press release.
There had been speculation for much of the fall that the government would seek another supplier for the program after refusing to accept any of the four interim Cyclones that had been provided for training purposes to 12 Wing Shearwater.
“The Royal Canadian Air Force has been providing guidance in determining operational priorities through the newly established Integrated Product Teams comprised of team leaders from Sikorsky and General Dynamics Canada, as recommended by the third party,” said Rob Nicholson, Minister of National Defence.
Under the terms of the POA, Canada will receive helicopters with operational capability “sufficient to begin retirement of Sea Kings in 2015.” Those capabilities will be enhanced over the next four years to ensure “a fully capable CH 148 Cyclone” in 2018.
Diane Finley, Minister of Public Works and Government Services, said the government would “only issue further payment to Sikorsky upon capability delivery,” adding that Sikorsky had agreed to pay $88.6 million in liquidated damages for non-delivery.
As part of the government’s release, Mick Maurer, president of Sikorsky Aircraft, stated: “As the pre-eminent helicopter manufacturer in the world, we regret that we have not executed this program to the satisfaction of the Government of Canada and that no aircraft were delivered in 2013. We recognize that we and our sub-contractors must do better. We have completely restructured our approach, and added considerable new resources and technical expertise. As a result of the third-party review commissioned by the Government of Canada, we believe we have the right plan in place to deliver the most capable maritime helicopter in the world.”
The restructured program will see the continuation of the initial training and testing of the Cyclone now underway in Shearwater. Hitachi Consulting will remain engaged in the project to ensure delivery of a fully capable maritime helicopter.
