OTTAWA — Canada is planning to spend $1.24 billion to upgrade its fleet of military search-and-rescue helicopters — about $200 million more than originally planned.
Defence Minister Anita Anand and Procurement Minister Helena Jaczek announced the sole-sourced deal to upgrade the military's Cormorant helicopters late Thursday.
The federal government has been planning to upgrade the Cormorant fleet for years, which will include modernizing its 13 existing helicopters and buying three new ones.
But negotiations between Ottawa and Leonardo, whose subsidiaries built the original helicopters, broke down in 2019 after the European company's proposal was deemed too expensive.
The government had initially budgeted $1.03 billion for the project when it was announced in 2018.
Asked about the cost increase, Defence Department spokeswoman Jessica Lamirande said negotiations were restarted in December 2021 "to attempt to reach an acceptable and affordable solution."
The two sides eventually decided that upgrading the existing fleet to Norway's standards for its version of the Cormorant was the most cost-effective approach, she added.
It was not immediately clear how Norway's variant, which the Scandinavian country recently acquired for its own search-and-rescue services, differs from what Canada originally wanted.
However, Lamirande said the Cormorants will meet the Canadian military's high-level requirements.
Canada will consider adding additional capabilities "as financial risks are retired, including inflationary and foreign exchange fluctuations," she added.
The contract announced Thursday also includes the purchase of a simulator from Montreal-based CAE Inc.
Then-defence minister Harjit Sajjan first announced plans to modernize the Cormorant fleet in August 2019, nearly 20 years after the helicopters entered service.
The first aircraft was supposed to be delivered this year.
But the Defence Department publicly revealed in an update in May 2021 that "negotiations with the contractor were put on pause due to the proposals being unaffordable."
It warned at the time that alternative solutions may not meet the military's full requirements.
The Cormorants are currently used to conduct search-and-rescue missions out of Comox, B.C., Gander, Nfld., and Greenwood, N.S. The addition of three more helicopters is expected to see the fleet expand to include operations out of Trenton, Ont.
This report by The Canadian Press was first published Dec. 22, 2022.
Lee Berthiaume, The Canadian Press
Note to readers: This is a corrected story. A previous version said Canada is planning to spend $1.8 billion to upgrade its fleet of military search-and-rescue helicopters, nearly double its original budget.