The top public servant in National Defence told the Commons Public Accounts Committee that Cabinet was aware as early as 2010 that the project would cost a total of at least $25.1-billion including acquisition, sustainment, and operating costs over 20 years, but “decided” to publicly exclude the operational costs when it defended the program publicly.
National Defence Deputy Minister Richard Fonberg made the statement as he was being grilled by opposition MPs over the government’s response to a report last month from Auditor General Michael Ferguson that criticized National Defence for leaving out $10-billion in costs for the controversial project when DND told Parliament in early 2011, prior to the May 2 federal election, that the planes would cost a total of $14.7-billion.
Mr. Harper (Calgary Southwest, Alta.) and Defence Minister Peter MacKay (Central Nova, N.S.) were also citing the $14.7 billion figure as the election approached, in part because of a Liberal Party promise it would suspend the sole-sourced 65 F-35s, still in development and testing phases under the supervision of prime contractor Lockheed Martin at its Texas production facilities, in favour of an open competition.
Mr. Fonberg, in an exchange with NDP Malcolm Allen (Welland, Ont.) over a statement by Parliamentary Budget Officer Kevin Page that National Defence was keeping “two sets of books” for the project, one for public consumption and the other for internal use, disclosed that the department had informed Cabinet about the full $25.1-billion estimate to help it make a decision on the project.
Mr. Fonberg had just responded to a question from Conservative MP Laurie Hawn (Edmonton Centre, Alta.), about Mr. Page’s claim that DND had two separate estimates for the project.
“You said earlier to Mr. Hawn you didn’t have two books,” Mr. Allen said. “What exactly are those two estimates?”
Mr. Fonberg, as the government has maintained throughout the controversy, argued the difference rests on the fact the government had not publicly included nearly $10-billion in operating and personnel costs over its 20-year forecast. In late 2010, after former auditor general Sheila Fraser issued a scathing report about costs estimates for a major helicopter acquisition, National Defence agreed it would include those costs in future projects.
Mr. Fonberg's statement about a Cabinet decision to report the lower figure to Parliament takes on greater significance in light of statements Mr. MacKay made to the Senate National Security and Defence Committee on Monday.
Mr. MacKay told the Senate Defence Committee on Monday that Cabinet "signed off" on the figures that DND and the government cited publicly on the cost of the F-35 fighter jets, reiterating the government's argument that the lower figure does not include operating and personnel costs.
"Who would sign off on $14.7-billion rather than $25-billion," Alberta Liberal Senator Grant Mitchell asked Mr. MacKay.
Mr. MacKay replied: "Signing off would be done by the Cabinet, essentially."
Sen. Mitchell: "Everyone in Cabinet would have known?"
Mr. MacKay: "Everyone, the deputy minister, the chief of defence staff, brings forward information about a memorandum to Cabinet, and it ultimately goes to Cabinet."
Sen. Mitchell went on: "When DND and the general and his staff presented a figure for a report, was that figure $25-billion? Was it overruled politically and made $14.7-billion by Cabinet, or were they [Defence officials] saying that that was the figure?"
Mr. MacKay did not answer Sen. Mitchell directly.
"As you know, the figure of $14.7-bilion does not include the cost associated with operating a fleet of fighter aircraft," Mr. MacKay said, adding that the additional operational costs for such things as fuel, salaries, and upkeep are "what we are currently paying right now [for CF-18 fighter jets], essentially."
But Mr. MacKay said the difference in numbers was a matter of accounting.
"It is a difference of accounting that has been pointed out here," Mr. MacKay said.
The United States Department of Defence, which is leading the F-35 project and intends to acquire more than 2,000 of the stealth fighters, includes all operating and sustainment costs in its public estimates, tabled each year in the U.S. Congress.
Mr. Fonberg then explained that although the full $25.1-billion was not separated out for the public or Parliament, it was included in the base budget for DND.
“Are you saying the first one I quoted to you, the $25.1 billion, was that reported to the minister and cabinet?” Mr. Allen asked.
“Yes,” replied Mr. Fonberg.
“And was that reported publicly, in your view?” Mr. Allen asked.
“Was what reported publicly?” responded Mr. Fonberg.
“Twent-five-billion dollars, did you ever report it publicly?” said Mr. Allen.
“No, in June, 2010, we reported the regular column [in Mr. Ferguson’s report and totalling $14.7-billion], the left-hand column [totalling $25.1-billion] was for decision-making,” Mr. Fonberg replied.
“To be clear, you were telling the minister $25.1-billion, you were telling the Canadian public $14.7-billion? Is that correct to assume sir?” Mr. Allen asked.
“Mr. Chairman, what we told the Canadian public was exactly what the government has told the Canadian public,” Mr. Fonberg said.
Finally, after more pressing from Mr. Allen, Mr. Fonberg said it was Cabinet’s decision not to disclose the entire cost, including operating and personnel costs, while he still insisted there was only one set of accounts.
“There was one book, the column on the left hand side [$25.1-billion] went to cabinet for decision making purposes, and the government decided to communicate [the $14.7-billion total] exactly the same way they’ve communicated since 2004 on the acquisition of major air frame assets—acquisition costs and sustainment costs,” said Mr. Fonberg.
Despite his statement that National Defence provided Cabinet with the full $25.1-billion cost estimate, Mr. Fonberg said Mr. Ferguson was incorrect when he told the Public Accounts Committee last week that Cabinet had approved the budget.
“Life-cycle costing is not a simple issue,” Mr. Fonberg said.
As for Mr. Page, Mr. Fonberg and DND assistant deputy minister Kevin Lindsey, who accompanied Mr. Fonberg at the committee, claimed the Parliamentary budget officer’s estimate was based on aircraft acquisition costs that were more than twice what the department was estimating when it drafted its 2010 costs.
Canada joined the U.S. and several other countries in 1997 under the governments of then prime minister Jean Chrétien and U.S. president Bill Clinton to develop a state-of-the-art new generation of fighter aircraft to replace existing fighter aircraft by about 2020. Nine countries have since signed a series of agreements for development and eventual purchase, but none of the countries is committed to purchase, and several of the participants are reducing their acquisition plans because of rising costs.
The development of such a sophisticated plane, the first fighter jet to have stealth capabilities, and 24 million lines of computer codes to run its weaponry and flight and engine systems, has been beset by production delays and cost overruns.
The U.S. Department of Defense reported to Congress last March that operating and sustainment costs for the aircraft will be at least 42 per cent higher than the cost of maintaining its current F-16 fighters, even though Mr. Fonberg and other DND officials continued to insist at the House Public Accounts Committee the F-35 will cost roughly the same to maintain and operate as Canada’s aging fleet of CF-18 fighter jets.
“We were not seeking incremental funding from cabinet at the time for operating costs, nor do we expect to be seeking incremental funding for operating costs,” Mr. Fonberg said.
And , despite the government’s insistence in the wake of Mr. Ferguson’s report that it will consider all options as it establishes a new secretariat in the Public Works Department to oversee the project, the head of National Defence Air Staff told the committee the department still plans to acquire the F-35s.
“The best way to frame the answer here is the F35 is the aircraft that we assessed in 2010 and is the platform that met our needs, all our requirements,” Lt.-Gen. André Deschamps, said in response to a question from Mr. Allen. “The fact that it’s still doing testing and development is certainly what’s occupying a lot of our attention right now, and these issues of cost.”
“Basically, you’re saying we’re not looking at other options, is that fair to say?” asked Mr. Allen.
“Currently, from an Air Force perspective, we are focused on delivering the transition to the F-35,” responded Lt.-Gen. Deschamps.
Liberal MP Gerry Byrne (Humber-St. Barbe-Baie Verte, Nfld.) was furious when he addressed questions from reporters following the hearing, warning that because of the way the government has insisted on going ahead with the F-35 despite the delays and cost overruns, Canada may be without a fighter jets as the CF-18 fleet gradually falls out of service over the next decade.
“The government is continually dancing on the head of a pin,” Mr. Byrne said. “Somewhere, at some point in time, they are going to get pricked. We’re about to enter into a $25-billion boondoggle.”
Mr. Harper continued to dismiss the opposition attacks on Tuesday in the Commons, insisting that the inclusion of operating costs in the F-35 budget was comparing “apples to oranges.”
Original Article
Source: Hill Times
Author: Tim Naumetz
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