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Canada  

Lockheed warship bid wins

The federal government is giving U.S. defence giant Lockheed Martin the first crack at inking a contract to design Canada's $60-billion fleet of new warships.

Government officials say Lockheed's proposed design beat out two rival submissions in what has been a long and extremely sensitive competition to design replacements for the navy's entire frigate and destroyer fleets.

While the announcement marked the start of an important new phase in the largest and most expensive military purchase in Canadian history, it could also prove to be extremely controversial as some had questioned why the bid was allowed in the first place.

Still, Lockheed executives may not be popping the champagne just yet. Negotiators for both sides as well as Halifax-based Irving Shipbuilding, which will actually build the vessels, must now work out details — including the final cost — before an actual contract is awarded.

The stakes will be high for both sides, with hundreds of millions of dollars in play as well as pressure to make up for lost time as numerous delays — including in the design competition — have pushed the schedule for construction.

Irving has warned that it could be forced to lay off hundreds of employees if work on the warships is not ready to start by the time it finishes building the navy's new Arctic patrol ships in 2021 or 2022.

The Defence Department's head of military procurement, Patrick Finn, acknowledged the need for urgency.

But he also noted the need for care as whatever decisions are taken during the negotiations could have ramifications on the navy and taxpayers for decades.

"So it behooves us to stop and make sure we do the final checks in all of the areas," Finn said this week in an interview.

Lockheed's victory is likely to be contentious as the federal government had originally said it wanted a "mature design," which was widely interpreted as meaning a vessel that has already been built and used by another navy.

But the Type 26 frigate, upon which Lockheed's proposal is based, is only now being built by the British government and has not been used on operations.

The federal government has reserved the right to walk away from the talks — if Lockheed drives too hard a bargain — and negotiate with the second-place bidder, which was not identified. However, officials hope that won't be necessary and a contract will be signed this winter.



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