Canada drops $36M late fine for 'copters

Dec. 29, 2008 at 11:08 AM

OTTAWA, Dec. 29 (UPI) -- The Canadian government has dropped plans to fine the U.S. Sikorsky helicopter manufacturer $36 million for late delivery of military aircraft.

Under a deal struck in 2004 for 28 maritime Cyclone helicopters to start arriving in November, the government contract stipulated a fine of $100,000 a day for every day it was late up to a maximum penalty of $36 million, the Ottawa Citizen reported.

However, design upgrades to increase payload and fuel capacity were reported a year ago, indicating delivery would be delayed. On Dec. 23, Canada's Conservative defense minister announced Sikorsky had been granted a 2-year reprieve from penalties, the newspaper reported.

That reportedly adds $117 million more to the cost of the deal.

In 1993, the Liberal government of Prime Minister Jean Chretien canceled the original helicopter deal because of the cost and a large deficit, but ended up paying a $500-million penalty for the cancellation.

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