Auditor General Michael Ferguson disclosed the Department of National Defence expected that because of aircraft attrition it would have to later acquire an additional 14 F-35s, on top of an initial purchase of 65 planes, in a scathing report to Parliament earlier this month.
Former National Defence procurement official Alan Williams, a vocal critic of the way the government has handled the acquisition, told The Hill Times last week National Defence was being “deceitful” by not including the cost of the 14 additional F-35s the department anticipated because of fleet attrition when it reported to Parliament on the program last year and insisting on treating the cost as part of a separate project.
Mr. Williams estimates the extra 14 jets would have added $1.1-billion to the purchase price alone for Canada, and at least $2-billion to $16.4-billion in lifetime cost for sustainment and operating costs Mr. Ferguson disclosed. Mr. Williams' cost estimates for Canada are based on a schedule of estimated costs the U.S. Department of Defense recently submitted to Congress. The Armed Services Committee of the U.S. House of Representatives provided The Hill Times with a copy of that report last week.
The Commons Public Accounts Committee is scheduled to hold a planning session on Tuesday to select witnesses for an inquiry into the Auditor General’s report, following a heated confrontation last week between Conservative MPs and the opposition over a witness list that Liberal MP Gerry Byrne (Humber-St. Barbe-Baie Verte, Nfld.) had proposed. The Conservatives voted down Mr. Byrne’s witness motion, and the committee agreed to begin from the start this week.
In Mr. Ferguson's report on F-35 costs—which was published and tabled in Parliament after exchanges between the Auditor General’s office and National Defence that gave the department the opportunity to correct facts and challenge findings—a section on costs National Defence did not account for says the department expects to lose F-35s through attrition over the fleet’s life and “Canada may need to purchase up to 14 additional aircraft over the next 36 years” as replacements.
The Auditor General's report also says that National Defence informed the government of the need to consider the requirement for attrition aircraft at a later date.
“The cost of replacement aircraft is not included in the life-cycle estimates for this project and will be treated as a separate project in the future,” the report says, even though all F-35s Canada acquires will be purchased under a memorandum of understanding that guarantees Canadian firms the opportunity to bid for maintenance and supply contracts, along with participating countries who also signed the memorandum of understanding.
A spokesperson for Associate Defence Minister Julian Fantino (Vaughan, Ont.) indicated to The Hill Times on Monday that the government has ruled out consideration of any additional F-35s in the future.
“There is no plan to purchase additional aircraft after an initial order,” said Chris McCluskey, Mr. Fantino’s communications director. “The government will not spend more than $9-billion on aircraft to replace Canada’s aging CF-18s.”
Mr. Fantino, a former Toronto Police chief, took over responsibility for procurement from Defence Minister Peter MacKay (Central Nova, N.S.) when Prime Minister Stephen Harper (Calgary Southwest, Alta.) named Mr. Fantino associate defence minister last May after the federal election. Up to that point, he had been a junior minister responsible for seniors following his first election to the Commons in a November, 2010, byelection.
Critics have challenged the 2011 $9-billion figure the government is using as a purchase price, particularly after a U.S. Department of Defense Selected Acquisition Report to Congress last month revealed significant increases in development and production costs for the F-35. Mr. Williams calculates that the report reveals that Canada’s purchase price, not counting subsequent sustainment and operating costs, will be a minimum of $10-billion. His calculation is based on an estimated cost of $88.7-million for each plane compared to the $75-million the government uses.
"Are they locked into their $9-billion figure?" Mr. Williams said to The Hill Times on Monday when told of Mr. McCluskey's statement. "The government will have to determine how much it will cost to buy the jet they decide on, including attrition. If the price of these aircraft exceeds $9-billion, the government has a number of options."
The government would have to either buy fewer aircraft, which Mr. Williams said could undermine the military's ability to perform it missions, or it could select a less expensive aircraft to fit in the budget or it could increase the funding for the project.
The other costs Mr. Ferguson said National Defence and the government failed to disclose to Parliament were for upgrades and weapons. His report said upgrade costs were not known in 2010, but have since been estimated at $1.2-billion over 20 years. Mr. Ferguson did not include a cost for new weapons that will eventually have to be acquired for the sophisticated aircraft, but said they would be addressed during the fleet’s lifetime and were not included in National Defence estimates.
Liberal MP Ralph Goodale (Wascana, Sask.) criticized the government on Monday for being uncooperative when it comes to releasing information to the media and Parliament about the F-35 project. Although a Liberal government in 1997 approved Canada’s participation in production and development, with the option of acquiring the planes at a later date, the Harper government announced in July, 2010, it had decided to acquire 65 of the aircraft, after earlier consideration of buying 80.
“They have obviously just tried at least to slam the lid on every source of information pertaining to the F-35s,” Mr. Goodale said. “This is a government in complete paranoid damage-control mode.”
The government has frozen the spending envelope for the project and promised to establish a secretariat of bureaucrats within the Public Works Department to oversee it in the future. Mr. Fantino has told defence industry officials the government will buy F-35s at the most opportune time as far as purchase price goes, when they are in peak production by the project's prime contractor, U.S, military supply giant Lockheed Martin.
Source: hill times
Author: Tim Naumetz