The Australian government has decided to cancel the 1 billion-dollar Seasprite helicopter project, Defense Minister Joel Fitzgibbon said on Wednesday.
Fitzgibbon said in a statement that "after careful consideration of all the issues involved, the government has decided that it intends to cancel the project."
The decision was not taken easily but the new Labor government was left with little option, the minister added.
He said "discussions will be commenced immediately with the contractor in relation to the legal and financial arrangements to facilitate this."
Details of arrangements with the contractor Kaman will be announced once mutual agreement has been reached, subject to any confidentiality issues.
Under a contract signed in 1997 and now worth about 1 billion dollars (920 million U.S. dollars), the navy was to acquire 11 Kaman Seasprites. They were scheduled to enter service around 2001-02.
A Senate estimate committee heard last month the helicopters were still three years from service and might never meet aviation safety standards.
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