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C-130J Hercules Purchase  –  Government News Release  –  January 2008 Canadian Forces Lockheed Martin C-130J Hercules Purchase Public Works  C-130J  News Release  &  ACP-T Backgrounder On 16 January 2008,  the  Government of Canada announced  an order for 17 C-130J Hercules aircraft to satisfy the drawn-out  Airlift Capability Project – Tactical project. Lockheed Martin will receive about $1.44B for the purchase of  the 17 new 'J-model Hercules. The cost of  a separate  in-service support contract has yet to be released although details of its conditions were announced. The actual purchase contract for the C-130Js was awarded to Lockheed Martin on 20 Dec 2007. Media reports suggest that a 20 year in-service support contract will be worth an additional $1.7B.  However, the actual ISS contract will not be signed until 2009. Nevertheless, these new numbers do not match those previously given. When the ACP-T was announced in June 2006, the aircraft cost was listed at $3.2B "plus an estimated contract value of  $1.7 billion for 20 years of  in-service support to be carried out  by Canadian industry". Active Canadian participation in  ISS has now been removed in favour of unrelated  Industrial Regional Benefits (set at 75% of the value of the contract). Naturally, the Canadian aviation industry is less than pleased with IRBs but it is odd that Government Ministers were not crowing about an apparent drop of  more than half the purchase cost of  the 17 x C-130J airframes. What is known is that the first Canadian Forces C-130J is to be delivered within 36 months of  the contract award (20 Dec 2010) and  the last within 60 months (20 Dec 2012). Not mentioned in the PWGSC press release (at the time of writing, there has been no DND/CF press release) is the exact model of Hercules ordered. According to Flight International, all 17 CF aircraft are to be long-fuselage C-130J-30 models. The 16 Jan 2008  PW&GSC News Release / Backgrounder are reproduced below. Government of  Canada Awards Tactical Airlift Contract For immediate release GATINEAU,  January 16, 2008  –  The Honourable Michael M Fortier,  Minister of Public Works and Government Services Canada, along with the Honourable Peter Gordon MacKay, Minister of National Defence, today announced that the govern- ment  has awarded a contract  to  Lockheed Martin Corporation for the acquisition of the Canadian Forces new tactical lift aircraft. "Canada  has  long  been in dire need of  renewed  tactical airlift capabilities," said Minister Fortier. "The government is now delivering on commitments it has made to ensure the Canadian Forces are properly equipped with aircraft necessary to support its operations." "The airlift  requirements of  the Canadian Forces is a top priority," said the Hon- ourable Peter Gordon MacKay, Minister of  National Defence. "We are confident that the C-130J will provide Canada with a cost-effective, operations-proven tactical airlift capability." Tactical airlift is the lifeline of  the Canadian Forces,  providing  reliable aircraft to quickly and  safely carry passengers,  heavy equipment  and  supplies over  long distances  in  support of  operations,  or in response to crises,  such as natural disasters. The purchase contract for  17  C-130J Hercules aircraft  is valued at approximately $1.4 billion U.S. [or $1.44B Canadian at current exchange rates], with an additional amount to be added in 2009 for at least 20 years of in-service support. Under the contract, Lockheed Martin Corp. is required to invest in the Canadian economy, dollar for dollar, what the Government of Canada spends in procuring and maintaining the aircraft over the life of the contract. "We are continuing to make sure Canada's aerospace and defence industries obtain maximum benefit so they can build and sustain capacity to support these aircraft over the long-term," Mr. Fortier said. "Under the in-service support [ISS] portion, the contractor will be required to spend in Canada 75 per cent of the total cost in direct industrial regional benefits [IRB]  –  well above the 60-per-cent ratio negotiated by the previous government for purchases of this magnitude." The Honourable Jim Prentice, Minister of Industry, believes Canadian firms will play a significant role in the project's progress. "Through the government's industrial benefits policy, we are delivering maximum, high-quality economic benefits to Canadians while providing the military with the best equipment for its needs," said Mr. Prentice. Delivery of the first aircraft is expected in winter 2010. PWGSC Backgrounder 1. Tactical Airlift (C-130J Hercules) Procurement process A two-phased approach was adopted for this procurement. First, PWGSC advert- ised the opportunity to industry through a Solicitation of Interest and Qualifica- tion (SOIQ) document posted on MERX, the government's electronic tendering service. Potential bidders were able to study the SOIQ and had to demonstrate their ability to meet the mandatory, high-level performance criteria before being invited to submit a formal Request for Proposal (RFP). This process reduces cost to industry because potential suppliers do not have to invest the time and money to develop a full proposal before being sure they can meet mandatory require- ments. [ The SOIQ document posted on  MERX  took  the form of a request for Letters of Interest to meet the requirments of the Airlift Capability Project – Tactical project.] To further streamline this particular process and reduce risk to the government, the aircraft must be certified to Canadian aviation certification standards by the contract award date, rather than being certified at the time the aircraft is delivered. Schedule A Request for Proposal was issued in August 2007 [this was the SOIQ mentioned above]. The [C-130J] purchase contract, valued at $1.4 billion U.S. was awarded on 20 December 2007. The first aircraft is to be delivered within 36 months of contract award. The last aircraft will be delivered within 60 months of contract award. Trade agreements This requirement was excluded from the North American Free Trade Agreement (NAFTA), the World Trade Organization – Agreement on Government Procure- ment (WTO – AGP)  and  the Agreement on Internal Trade (AIT). ...