The federal government is refusing to say why it quietly cancelled a contract for refurbished military vehicles for Ukraine that the Canadian company involved says it is still “ready, willing and able to supply.”
Defence Minister David McGuinty told the House of Commons defence committee this week that his department had cancelled the contract with Armatec Survivability in Dorchester, Ont., near London, to refurbish 25 light armoured vehicles, but said he couldn’t explain the reason behind the decision.
Conservatives say the contract’s cancellation risks making Canada appear as an unreliable ally to Ukraine and undermines the Liberals’ commitment to bolstering the domestic defence industry.
“Until just in the last week, everybody thought this project was just delayed but was still on track for delivery, and Armatec was still saying that they just needed the funds to start flowing so they could start refurbishing the vehicles,” defence critic James Bezan said in an interview Thursday.
“I blame the government on this one.”
Conservatives tried to get answers from Stephen Fuhr, the secretary of state for defence procurement, at the House of Commons defence committee Thursday on why the contract was cancelled, but Fuhr deferred to McGuinty and the Department of National Defence (DND).
“I don’t know” why the contract was cancelled, Fuhr repeatedly said.
Conservative MP Scott Anderson asked Fuhr how much of the $250 million he said the contract was worth has been lost, and whether the money was included in Canada’s plan to reach two per cent of GDP in defence spending this fiscal year.
Fuhr said he didn’t know and that Ukraine military assistance contracts are not within the jurisdiction of the new Defence Investment Agency he’s been tasked to lead.
A DND spokesperson said the department could not comment on the contract with Armatec “due to confidentiality obligations.”
The Canadian Commercial Corporation, which has facilitated government procurement contracts for Ukraine aid, deferred questions to the DND.
Armatec has been awarded millions of dollars in Canadian defence contracts since 2007, according to government records. It mainly refurbishes and enhances military vehicles for the Canadian Armed Forces, and has also supplied parts to the U.S. military and other allies.
Armatec CEO Karl Pfister told Global News his company stands ready to keep doing that work, but would not comment beyond a written statement he said was approved by lawyers.
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“What I can say is Armatec is ready, willing and able to supply infantry fighting vehicle upgrades and associated technology to Canada and our allies in support of self-defence efforts and the need to re-arm Europe,” he said.
“I also can say that Armatec is a Canadian company using Canadian workers to advance Canadian innovation and technology with a view to the deployment of infantry fighting vehicles that surpass current Canadian capabilities.”
Bezan said the company is under a non-disclosure agreement with the government that prevents it from saying anything more, putting Armatec in “an impossible position” as its “long-term survivability” is in danger.
He said it’s the first time he’s seen a contractor prevented from speaking after a contract is cancelled.
“I’ve never seen the Government of Canada gagging a contractor that’s trying to deliver equipment to support Canada and our allies. This is bizarre,” he said.
“The question is, what are the Liberals trying to hide?”
Why could a defence contract be axed?
Richard Shimooka, a senior fellow at the Macdonald-Laurier Institute who studies defence policy and procurement, said there are several reasons why a contract like the one with Armatec could be cancelled, but couldn’t speak to the specific details.
He noted that most of the light armoured vehicles in question had previously been deployed by the Canadian military in Afghanistan, and were “probably pretty beat up” during the decades-long war there.
“It’s possible these vehicles are in much worse condition than was anticipated and (Armatec) may say ‘it’s no longer financially possible for us to do it under the contract terms,’ and the government put its foot down,” he said in an interview as an example of a factor that could spur cancellation.
“Given the Canadian penchant for operating vehicles well past their prime, so to speak, it’s worth asking what kind of material condition were they delivered in?”
Shimooka doubted the cancellation spoke to a broader cost-cutting strategy by the Liberal government or a shift in its approach to aiding Ukraine. Rather, he said it’s more likely the government wanted the project done “quickly” and decided that was no longer possible.
Bezan said clear answers are needed.
“Up until the summer, the Ukrainians were still waiting and wondering where these vehicles were, and still wanted them,” he said. “And there’s no commitment by the government to actually replace this with anything else.
“It just shows the hypocrisy of government that they say they support Ukraine, but don’t deliver. They say that they are going to support defence industry and are walking away from them, costing jobs. And, you know, this is about ensuring that we have the defence capability.”
The DND told Global News that Canada “remains unwavering in its support for Ukraine and its priority to provide military aid that is both timely and immediately operational for Ukraine’s Armed Forces.”
“As part of the $2 billion in additional military assistance announced by Prime Minister Carney, Canada is also looking at providing additional armoured capabilities to Ukraine,” the spokesperson said.
“We are expediting other contracts through the Canadian Commercial Corporation to get effective capabilities into Ukrainian hands as soon as possible.”
The Prime Minister’s Office says the additional $2 billion in military aid includes $835 million for armoured vehicles and other critical equipment.
Canada is in the process of delivering 50 armoured vehicles built by London, Ont.-based General Dynamics Land Systems-Canada under a separate $650 million contract signed in 2023.
The first vehicles were delivered to Europe in June 2024, and McGuinty said Tuesday that the remaining vehicles are on track to be delivered by the end of this year.
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