Ottawa Citizen: Tories forgive $36M in late penalties for helicopter contract

The Conservative government has decided that U.S. aerospace giant Sikorsky won’t have to pay $36 million in penalties even though the maritime helicopter it is building for the Canadian Forces is being delivered two years late.

The late penalties were put in place when the contract was signed in 2004 as a way to ensure the aircraft would arrive on time.

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Duff Conacher, co-ordinator of Democracy Watch, said the decision by the Conservatives not to enforce the contract penalties is “practicing politics as usual just like the Liberals would.”

Mr. Conacher said the announcement timing, on the night of Dec. 23, and the fact the original press release did not mention the Conservatives were setting aside the fines, is another indication the government is trying its best to hide the deal.

“I’m am amazed the Conservatives rolled over on this one so easily because they had made such strong statements before about using the financial penalties,” he added.

Severe financial penalties for late delivery of military equipment are common in some other nations, but in Canada such sanctions are not usually imposed. Some in the defence industry doubted from the beginning that Sikorsky would ever face any kind of penalty, while others stated that a maximum $36 million fine was little deterrent on a project worth $5 billion.

Under the new deal, Canadian taxpayers will now pay Sikorsky $117 million more for improvements to be made to the Cyclone, as well as changes to the long-term in-service support package for the aircraft.

The government is not discussing the exact nature of those improvements. The Defence Department and Mr. MacKay’s office declined comment, referring inquiries to Public Works and Government Services Canada.

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http://www.ottawacitizen.com/Tories+forgive+late+penalties+helicopter+contract/1120933/story.html

So it's always been an empty threat.