The Canadian Department of National Defence announced on 20 December the cancellation of its controversial $1.8 billion (C$2 billion) Close Combat Vehicle (CCV) project to acquire infantry fighting vehicles.
The recent upgrades to light-armoured vehicles have made new close-combat vehicles unnecessary, Canada's top soldier said.
"These capability improvements combined with an assessment of the most likely employment scenarios for the Canadian Armed Forces in the future were the most important factors in our analysis," Gen. Tom Lawson, the chief of defence staff was quoted as saying by CTV News.
"Based on this assessment and the fundamental principle that the Canadian Armed Forces do not procure capabilities unless they're absolutely necessary to the attainment of our mandate, we've recommended to the government of Canada not to proceed with the procurement process for the close-combat vehicle," Lawson added.
The program had been hanging in the balance for months after the army signalled it was worried about whether it could afford to train crews and operate and maintain the new vehicles in a time of tight money. Budget restraints have slashed baseline funding by 22 per cent.
Bids by three defence contractors -- Nexter, BAE Systems and General Dynamics -- had been set to expire today.
General Dynamics Land Systems which makes the military's current light-armoured vehicles, had mixed feelings about the decision to cancel the order for close-combat vehicles, adding "On the one hand, it's a great testimony to the upgrades that we're doing on the light-armored vehicles - LAV IIIs".
BAE Systems were disappointed and said it will now focus on selling its CV90 closed-combat vehicles to other countries.
"We also remain focused on other CV90 opportunities. These include a Danish competition for 2-400 vehicles and a joint development of a new family of vehicles for Poland with local company Polish Defence Holdings. The chassis for this will draw upon CV90 technology," BAE systems official was quoted as saying in the report.
The Nexter officials are claiming a compensation for the time and money it spent on the cancelled bid.
"Nexter has invested a great amount of time, energy and resources in the CCV program over the past four years," company executive Patrick Lier said in a news release. "Millions of dollars have been spent because we believed the competition would be fair, open and provide a rigorous assessment of the candidate vehicles with a view to acquiring the best possible medium weight infantry fighting vehicle for Canada."
In addition to the armoured vehicles, the Canadian National Defence and Public Works in the summer of 2012 cancelled and subsequently restarted a program to buy 1,500 trucks for the military.
Following news of the cancellation, the Canadian Association of Defence and Security Industries called for a review of the government's procurement process, the report added.