Open letter to Parliamentary Budget Officer Kevin Page
(Source: Liberal Party of Canada; issued July 21, 2010)
Mr. Kevin Page
Parliamentary Budget Officer
Library of Parliament
Ottawa, Ontario, Canada K1A 0A9
July 21, 2010

Dear Mr. Page,

I am writing to you regarding the Government of Canada’s recent decision to acquire 65 F-35 stealth fighter jets for $16 billion without first engaging in a competitive bidding process to determine if a competitor plane could meet Canada’s defence needs at a potentially lower price.

As you may know, the Government of Canada has recently chosen to forgo a competitive bidding process for several major defence procurement initiatives. For instance, the Auditor General is currently examining the decision to purchase CH-47 Chinook helicopters from Boeing without undergoing a rigorous and open competition. She is expected to report on that specific contract in the fall. Canada’s C-17 Globemaster military transports were purchased from Boeing without allowing Airbus to submit a bid explaining how its competitor plane could meet Canada’s defence requirements. In 2006, it was announced that the C-130J Hercules aircraft would be purchased from Lockheed-Martin without a call for competitive bids.

Taken together, assuming the estimates for the maintenance contracts on these four aircraft are correct, these contracts are worth $26 billion.

Alan Williams, formerly the Assistant Deputy Minister in charge of procurement at National Defence, recently said that when we sole-source large procurement contracts, “Often you can spend up to 20 percent more than needed.”

I found his assertion troubling, not only in light of the sole-sourced purchases I have mentioned above, but also because it appears the Harper government may be deliberately choosing not to save money at a time when it is running the largest deficit in Canadian history. If Mr. Williams is correct, Canadians could be paying an extra $5.2 billion because the government did not want to engage in competitive bidding processes.

Accordingly, I am writing to ask that you undertake a study comparing recent sole-sourced procurement projects in Canada and similar procurements in some of our allied countries. Specifically, I would like a comparative analysis of the costs and benefits that different countries have experienced when acquiring the same piece of military equipment, where one country engaged in a competitive bidding process and the other country opted to make the purchase through a sole-sourced contract.

Several areas that could be analyzed include the price for initially acquiring the equipment, the cost for ongoing maintenance of that equipment, as well as any domestic industrial benefits that the purchasing country received due to that purchase.

I feel that this kind of comparative analysis would be invaluable to Canadian legislators who are tasked with approving the expenditure of tax dollars in order to make major defence equipment acquisitions. Under Section 79.2 of the Parliament of Canada Act you are empowered to estimate the financial costs of this proposal and help all Parliamentarians better perform their duties.

Sincerely,

The Hon. Ujjal Dosanjh, MP
Liberal Defence Critic

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