The government has earmarked tens of billions of dollars in recent budgets for new fighter jets, navy frigates and other military equipment.

Auditor General Sheila Fraser in her report looked at the military's latest 11 billion-dollar purchase of 15 CH-147 Chinook medium to heavy-lift and 28 CH-148 Cyclone maritime helicopters.

Both experienced significant cost increases and schedule delays.

"National Defense underestimated and understated the complexity and developmental nature of the helicopters it intended to buy," Fraser said.

"The contract award process was not fair, open and transparent," she said.

Public Works, one of several departments involved in the procurement of the helicopters, disagreed with the auditor general's assessment, saying rules were followed.

Defense Minister Peter MacKay, however, told parliament he accepts Frasier's recommendations for "streamlining these complex acquisitions."

According to Fraser, the helicopters were described to cabinet as using "off-the-shelf" technologies, but significant modifications to the basic models resulted in one "aircraft that never existed before" and a "new variant" of the other.

As a result of modifications to the Chinook, for example, the helicopters cost 70 percent more than originally quoted by Boeing in early 2006, and will be delivered in 2013, five years later than planned.

Fraser blamed the military for not precisely defining its needs and priorities at the outset, as well as a lack of oversight in the new sole-source procurement process it followed.

Because maintenance costs were not disclosed upfront, the military may now find itself short of funds to operate and support the helicopters long-term, she said.

"Moreover, without sufficient funds, National Defense may have to curtail planned training and operations," she concluded. "This is cause for concern."

Fraser told a press conference she would next review other military purchases such as F35 fighter jets.

Opposition parties, meanwhile, used her report to criticize the government and National Defense over a "pattern of abuse of taxpayers' money."

In both the helicopter and F35 cases, "the Conservatives didn't take the procurement to tender, they haven't accounted for full life-cycle costs, they didn't identify the operational needs of the military before announcing the purchase, and the maintenance contracts won't be signed until after the purchase, after we've lost all our bargaining power," said Liberal MP Dominic LeBlanc.

"This kind of waste has become a pattern," he said.

New Democrat MP Jack Harris, meanwhile, said Fraser's report "paints a very troubling picture indeed of a department not able to handle large military equipment purchases."

In her report, Fraser also praised regulatory agencies' supervision of Canada's banks, and bureaucrats for successfully designing, delivering, monitoring and reporting on a multi-billion dollar stimulus program.

As well, the auditor general found that the Canadian Food Inspection Agency's readiness to respond to animal disease emergencies is adequate, but "challenges remain."

"For example, the agency has significant work to do to enhance readiness for foot-and-mouth disease," said Fraser's report.

The agency also lacks a systemic approach to ensure that all key lessons from animal disease emergencies and training exercises are compiled, tracked and acted upon, it said.

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