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Pullout by key U.S. manufacturer thins ranks of drone bidders
From Thursday's Globe and Mail
May 8, 2008 at 4:44 AM EDT
OTTAWA — The world's top manufacturer of aerial drones is pulling out of a $93-million competition to supply surveillance equipment that Canada must acquire by next February as a condition of keeping soldiers in Afghanistan.
The move by U.S.-based General Atomics, which makes the well-known Predator drones, reduces the competition for the contract and could leave Ottawa hostage to only one possible supplier: Elbit Systems of Israel and its Hermes pilotless aircraft.
It will also make it more difficult for the Canadian Forces when it comes to interoperability with their U.S. partners in Afghanistan, because the Americans use General Atomics Predator drones for the same mid-level surveillance.
Under a Canadian Forces program called Project Noctua - Latin for owl - the military is in a hurry to lease pilotless surveillance aircraft for at least two years to help soldiers battle the Taliban in Afghanistan.
Special Report: Canada's mission in Afghanistan
The schedule is tight, even though the military has been trying to acquire drones ever since Canadian soldiers moved to Afghanistan's southern Kandahar province in 2005.
A January report on the future of Canada's war effort in Afghanistan prodded Ottawa to act on the drones by saying their acquisition should be one of the conditions for extending the country's military mission to 2011.
After a drawn-out debate, Parliament approved an extension of the mission in Afghanistan to 2011 from 2009, as long as allies supplied 1,000 soldiers to help Canada and the military acquired helicopters and drones by February, 2009.
Last month, however, General Atomics wrote to John Sinkinson, an official at Canada's Public Works Department, informing him that it won't bid on the deal.
Sources say the deal breaker for General Atomics is that Ottawa wants the drones by January, 2009 - just six months after the contract is signed, which it contends is not possible.
General Atomics also warned Ottawa that the stipulations it has placed on the tender would expose a contractor to an unacceptable level of risk, adding that it's hard to believe any company that accepted its terms could provide the professional support needed for the program, sources say.
In combination with a hurried timeline, the contract includes big penalties worth hundreds of thousands or millions of dollars for missed deadlines.
Although Elbit and its partners plan to bid for the contract, it's not yet known whether a third company, Israel Aerospace Industries, might step forward.
The Department of National Defence declined to discuss the General Atomics withdrawal, referring questions to the Department of Public Works.
Public Works spokeswoman Lucie Brosseau said "it would be premature to speculate on how many bidders will apply and how many will qualify."
The call for bids closes May 20 and the contract is expected to be awarded by July.
The drones, also called unmanned aerial vehicles, are to be used for intelligence gathering, surveillance, target acquisition and reconnaissance.