Monday, 29 December 2008

Contracts and Promises

Are made to be broken.

Sometimes, you get both at once:

Backgrounder: Sikorsky was contracted to deliver the replacement Cyclone for the Sea-King helicopter sometime this year. Now the new helicopters will be delivered 2010. Maybe.

Contract:
there were severe consequences if the firm [Sikorsky] didn't deliver on time. The clause allowed the federal government to charge the company $100,000 a day for every day it was late. The maximum penalty was $36 million.

Promise:
In January, Defence Minister Peter MacKay brought up the penalties after news reports suggested Sikorsky would fail to deliver the aircraft on time. "There are penalties and clauses that will kick in," he warned.

In June a response from Prime Minister Stephen Harper's office to reports there were problems with military equipment projects, including the Cyclone deal, noted that "all companies are expected to live up to their contracted obligations and our suppliers are expected to provide what was agreed to."


That was then, this is now:

The Conservative government has decided that U.S. aerospace giant Sikorsky won't have to pay $36 million in late penalties.
...
Instead the government has cut a new deal with Sikorsky, resetting the clock on when the firm would be liable for late penalties, if at all. The U.S. company has been given another two years before facing any sanctions.


And the kicker?

Under the new deal, Canadian taxpayers will now pay Sikorsky $117 million extra for improvements to be made to the Cyclone as well as changes to the long-term in-service support package for the aircraft.

Quite the negotiating team we have up in Ottawa huh? Sign a contract that has punishing late fees with a supplier. When the promised product is late, waive the late fees and offer more money instead.

What a bunch of fucking clowns.

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