Canada To Join Talks With Thales Over $4B Naval Support Deal

VICTORIA, British Columbia - The Canadian government will begin negotiations next week with Thales for a $4 billion contract for long-term maintenance on two new navy fleets.

Thales has been selected as the winning bidder to provide 35 years of support to the Royal Canadian Navy's new Arctic Offshore Patrol Ships and its Joint Support Ships. The contract is expected to be worth (CAN) 5.2 billion ($4 billion).

Public Services and Procurement Canada, the federal department handling the procurement, said it would now enter into negotiations with the winning bidder in the competition.

It has declined to confirm Thales is the high bidder, citing commercial confidentiality. But numerous industry sources say that the Thales bid came out on top.

"Negotiations are scheduled to commence next week," Jean-François Létourneau, a spokesman for Public Services and Procurement Canada, said.

Thales did not respond to requests for comment.

If the government and Thales cannot reach an agreement on the financial aspects of the contract within an allocated 45 calendar days, then Canada will invite the next-highest ranked bidder to enter into negotiations.

The Canadian government has declined to name which firms bid on the contract. But previously, Saab and BAE said publicly they intended to bid.

Canada expects the actual contract for the in-service support project to be awarded by the fall, said Pierre-Alain Bujold, a spokesman for Public Services and Procurement Canada.

The Arctic Offshore Patrol Ships are being constructed by Irving Shipbuilding in Halifax, Nova Scotia. The first ship is to be delivered in 2018, and six vessels are to be eventually built. Construction has not yet started on the Joint Support Ships. The first of those supply ships, to be built by Seaspan in Vancouver, British Columbia is expected in 2021.

The competition to provide in-service support, including refit, repair and maintenance and training for the Arctic Offshore Patrol Ships and the Joint Support Ships was launched on July 7, 2016.

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