Defence Minister Bill Blair signed off on the transfer last January. He said negotiations between Armatec Survivability in Dorchester, Ont., and the Canadian Commercial Credit Corporation (CCC), an arm of the federal government, are still ongoing.
News of the holdup comes after Canada announced earlier this month that it would send Ukraine almost 100 retired armoured vehicle chassis, which can only be used for spare parts.
Ukraine has been quietly pushing Canada to complete the deal with Armatec. It hopes that U.S. interest in the company's restoration techniques can open up access to thousands of retired American military armoured vehicles.
Blair declined to identify the obstacles that are preventing the deal from going forward, citing the confidentiality of contract talks.
Defence Minister Bill Blair says there are 'unresolved issues' in negotiations between Armatec and the government.
"I am told that it's very much a work in progress, that there are some unresolved issues that need to be addressed, but I have shared with them a sense of urgency," Blair told CBC News.
Last year, the Department of National Defence (DND) acknowledged it has 195 LAV II Bisons and 149 Coyote armoured reconnaissance vehicles that are in the process of being taken out of service.
Some of the chassis earmarked for spare parts in Ukraine were sourced from of that pool of vehicles, as were the troop carriers now awaiting conversion at Armatec.
Karl Pfister, president and CEO of Armatec, said he couldn't discuss the issues that are holding up the work.
Pfister said the company is using a revolutionary — but proven — restoration process. He said his engineers have literally taken armoured vehicles off the scrap heap and rebuilt them to standards of safety and armament that are higher than those for the original vehicle.
"It's not just a rebuild to its old capability it originally had. It's a new capability, which we need on the battlefield today," Pfister said.
He said Armatec has built a demonstration vehicle for the Ukraine project that features an improved cannon and a remote weapons station that helps to protect the crew.
Pfister said that since receiving the two dozen retired light armoured vehicles in January, his company has had to turn aside other projects while it waits for the federal government to live up to its verbal commitment.
"We can't take on any other work because that would take capacity away for this Ukraine project," he said. "So we counted on this project very much."
Blair said he couldn't state when an agreement will be reached. He highlighted how the federal government recently expedited delivery to Ukraine of brand-new armoured vehicles manufactured by General Dynamic Land Systems-Canada (GDLS) in London, Ont., which has been the federal government's go-to source for troop carriers for decades.
"There are 40 additional LAVs that we have ordered for Ukraine," Blair said in reference to the GDLS contract. "We've been able to move forward the production schedule by about eight months, and I'm told that early in the new year they'll get them. And I've shared that information with the Ukrainians."
Ukrainian soldiers sit on an armoured vehicle in Bucha, near Kyiv, Ukraine, on Thursday, Sept. 8, 2022. (Emilio Morenatti/The Associated Press)
He was more cautious about the Armatec proposal, saying Canada, the United States and other allies routinely discuss Ukraine's tank and troop carrier needs through a NATO coalition.
Blair was asked directly whether GDLS-Canada opposed the Armatec bid.
"They've never mentioned to me any opposition to that, but the only thing I talk about with GDLS is the delivery of the things that we're buying from them," he said.
"They have never suggested to me any concerns about any other approach to this issue that the Government of Canada may take. It's never come up in conversation, and, quite frankly, I've never sought their opinion."
Over the last several months, lobbyists for GDLS-Canada have been meeting with government officials, including senior members of Blair's staff and opposition members of Parliament. The federal lobbyist register identified 14 separate meetings since January on a range of procurement issues.
General Dynamics Land Systems Canada was asked for comment on the Armatec proposal and declined to answer. Instead, it referred to a written statement about its long-standing relationship with the Canadian government.
"General Dynamics is a strategic industrial partner for the Government of Canada and has, for over 47 years, proudly worked in close co-operation with the Canadian Armed Forces," said spokesperson Jay Hancock, CDLS-Canada manager of corporate affairs.
"General Dynamics Land Systems-Canada is proud to support the Government of Canada in its efforts to provide military aid, including Armoured Combat Support Vehicles (ACSV)."
A new armoured combat support vehicle (ACSV), constructed by General Dynamics Land Systems - Canada. (Department of National Defence)
Canada donated new 39 ACSVs to Ukraine and is in the process of procuring and delivering an additional 50 of the troop carriers, including ones that can be used as ambulances.
The Canadian Commercial Credit Corporation was asked for comment. It said that it's "bound by certain confidentiality obligations" and could not disclose much about the project, or the reasons for the delay.
"Based on instructions from the Department of National Defence (DND), CCC is currently in discussions with Armatec Survivability Corp. regarding a potential purchase by the Government of Canada for donation to Ukraine," said Susannah Denovan-Fortier, senior director of marketing and communications at CCC, in a written statement.
"CCC is an executing agency for the delivery of Canada's in-kind aid to foreign governments. For all projects, CCC balances the need to work as quickly as possible while ensuring we respect our due diligence process and government guidelines."
