Reports Are That Canada Not Happy With C-130J Maintenance Costs

Last Updated Sep 11, 2009 5:41 AM EDT

It is being reported that the Canadian Government is unhappy with the amount being quoted by Lockheed Martin to provide contract logistics support (CLS) for a new fleet of C-130J transports. Seventeen of the aircraft were bought in early 2008 to provide support to the troops in Afghanistan as well as conduct internal missions. Normally as part of the procurement contract a support contract would also have been let. Lockheed had promised that a great deal of the cost of the aircraft would be offset by this maintenance contract.

The support contract was set for negotiation after the aircraft had already been purchased. The government estimate for this contract was in the realm of $1.7 billion over twenty years. Unfortunately it has turned out the the prices currently being quoted are over this. There is also concerns that not enough of the work will go to Canadian companies.

Lockheed is obligated to offset some of the cost of the procurement in Canada. The original intent was that this would be directly related to the aircraft. This could have been parts of the aircraft for manufacturing or support after they enter service or maintenance activities. When Lockheed felt that this was too hard the government changed it to just be investment in other Canadian companies and economic activities. This idea has caused Canadian companies to feel slighted as they had hoped to have a role in the production of the C-130J.

The Canadian government is going to have to come to some sort of support contract for the aircraft. It does not have the resources right now to provide organic support so some CLS will be needed. Depending how the contract is negotiated it may end up limiting how much the aircraft can be used and how they are used. There really should be no limits on this as they are vitally important to conducting combat operations in Afghanistan.

If there is no support available then the aircraft will just sit at some base. This is obviously an unacceptable situation although it has happened in the past that new equipment could not be used due to shortages of parts or safety reasons. If this were to happen it would be a major embarrassment to Canada. One would assume that Lockheed Martin would also be motivated to get to a price that is affordable to the user so that it could maximize its revenue from the sale.

  • Matthew Potter

    Matthew Potter is a resident of Huntsville, Ala., where he works supporting U.S. Army aviation programs. After serving in the U.S. Navy, he began work as a defense contractor in Washington D.C. specializing in program management and budget development and execution. In the last 15 years Matthew has worked for several companies, large and small, involved in all aspects of government contracting and procurement. He holds two degrees in history as well as studying at the Defense Acquisition University. He has written for Seeking Alpha and at his own website, DefenseProcurementNews.com.