Liberal and NDP MPs say they are surprised at the sweeping nature of information the government is set to hand over to the private-sector firm that wins the contract—valued at between $1-million and $5-million—and argued Parliamentary Budget Officer Kevin Page has already provided an authoritative estimate on the controversial acquisition while performing many other costing tasks on behalf of MPs through the comparatively small $2.4-million budget his office receives for a full year of operations through the Library of Parliament.
Liberal and NDP MPs criticized the fact that details of the contract offer were not made available to MPs, and were posted on Merx, a government contracting website, only two days before the House of Commons adjourned for the summer last week.
The MPs and two experts on the topic told The Hill Timesthat the terms of work for the review might not result in a true picture of F-35 costs.
But the biggest bone of contention for the moment is that the federal Conservative government, after limiting a Commons committee investigation of the F-35 procurement to only seven hours of witness testimony and then attempting to shut the committee inquiry down, is going to a private-sector firm to validate information that Parliament should have been able to scrutinize.
The MPs noted Auditor General Michael Ferguson has already exposed costing information the Department of National Defence withheld in the past and said, despite a standoff between Mr. Page and the government over its refusal to provide Mr. Page’s office with details on the effects of the $5.2-billion in government spending cuts over the next three years—that the Parliamentary Budget Office Prime Minister Stephen Harper (Calgary Southwest, Alta.) established should have been tasked with the work.
“That would be truly independent, and truly would apply expertise to this exercise,” NDP MP Matthew Kellway (Beaches-East York, Ont.) told The Hill Timeson Monday. “They should go to Page and they should provide him with all the information for him to do his job as he is mandated to do. Instead, we’ve got him suing the government, on a different issue of course, but suing the government to do his job, to do precisely what these guys are asking somebody to do through this so-called independent process.”
Mr. Page, who clashed with Conservative MPs when he appeared at the Commons Public Accounts Committee inquiry into the F-35s, has obtained legal advice and said he will take the Harper government to court if 64 federal departments and agencies continue to refuse to disclose where the government’s spending cuts will take effect.
Liberal MP Gerry Byrne (Humber-St. Barbe-Baie Verte, Nfld.) also criticized the government for publishing details of the contract only two days before the Commons recessed for the summer, and for bringing in a private sector firm to in effect bypass Parliament.
“The timing cannot be considered coincidental,” Mr. Byrne told The Hill Times. “It was to prevent scrutiny of the process during question period or at the Committee. As a Parliamentarian, I resent that this information will be made available to private sector accountants but not Parliament.”
The criticism, aside from questions over how the government timed the contract to be made public so late in the Commons sitting period, centres on one of the key disputes between Auditor General Ferguson and the Department of National Defence over how much the fleet of 65 F-35 fighters would cost over its lifetime.
Mr. Ferguson, in a scathing report in April on how the Department of National Defence and Public Works and Government Services Canada have managed the procurement, said National Defence had failed to provide Parliament with full lifecycle costs for the acquisition, including acquisition, maintenance and operational costs, in a report to Parliament on its cost last year.
The auditor general also accused National Defence, which claimed an acquisition and maintenance cost totalling $14.7-billion over 20 years, of withholding more than $10-billion in operating costs over the same period. The DND report to Parliament in March 2011 was in response to an F-35 cost estimate from Mr. Page, who forecast total costs of $29.3-billion over 30 years.
Mr. Kellway said if the private firm is able to estimate the aircraft costs over the fleet’s expected lifetime of 35 years, the final bill will be nearly double what National Defence had estimated privately.
“I think what we’re going to end up with is a number somewhere north of $40-billion, just depending on that lifecycle time frame, whether it’s 30 or 36 years. I don’t see how they keep it below that,” Mr. Kellway said.
Mr. Kellway added that the details of the public tender make it clear the government intends to continue its acquisition plan for the F-35, despite earlier suggestions that it would consider “all options” while replacing Canada’s aging fleet of F-18 fighter jets.
“I wonder if we’re taking this a bit too seriously, this whole exercise,” he said. “It was obvious to begin with a bit of a tourniquet to stop the bleeding inflicted by the auditor general’s report.”
The Department of National Defence and Mr. Ferguson remained at odds over F-35 lifecycle estimates during a series of Commons Public Accounts Committee hearings into the auditor general’s report, with National Defence insisting it could forecast costs reliably beyond 20 years, while also arguing that $10-billion in operational costs, including personnel, were left out because those expenses would be similar to the costs of flying and maintaining Canada’s existing fleet of CF-18 Hornets.
The statement of work in the request for contract proposals the federal Treasury Board Secretariat posted on the Merx public tendering site states the contractor will develop all cost estimates for the F-35 “throughout its operational life.”
But former National Defence assistant deputy minister Alan Williams, who was in charge of procurement while the F-35 project was in its initial stages, noted the procurement documents do not specify a term for the F-35’s expected operational life of the fleet, although the contract calls for consultations with experts and other countries in that area.
“The first question any bidder would ask is, what should the expected lifecycle be?” Mr. Williams told The Hill Times. “The request for proposals specifies the number of jets [at 65], but it does not specify the number of years they will be expected to fly.”
The U.S. Department of Defence has established a 50-year forecast cost of $1.51-trillion for the 2,457 Lockheed-Martin F-35 fighters it intends to acquire over a period of 20 years, including $400-billion to develop and acquire the jets and the remainder for maintenance, sustainment and operations, with inflation taken into account.
A University of Ottawa expert on military procurement told The Hill Times the review plan also omits another key specification—the cost of acquiring replacement aircraft after the inevitable loss of original aircraft through attrition.
“If you have a baseline minimum of 65, that attrition factor becomes far more important and should likely be included in this case,” assistant professor Philippe Lagassé told The Hill Times.
“Each procurement needs to be tailored to the specifics of what it’s attempting to do, in order to be fully honest. In this case, if attrition isn’t factored in, that should raise a red flag,” he said.
Mr. Byrne, incensed that the government did not service notice of the terms of the request for proposals to Members of Parliament or the Public Accounts Committee, called the move an offence to Parliament.
“What I take particular offence to is that they’re engaging an accounting firm, and supposedly supplying an accounting firm with data that a Parliamentary committee has asked for and can’t get, and this accounting firm will actually start to set the parameters on which the Government of Canada defines [F-35] lifecycle costs,” Mr. Byrne said.
“They’ll give an accounting firm basically the same amount of money to do this one project as they’ll give the Parliamentary Budget Officer to operate for an entire year on every matter concerning Parliament. It just goes to show where they’re putting their priorities,” said Mr. Byrne.
The government has limited bidding to 16 pre-qualified firms, including the top national accountant firms in the country.
Original Article
Source: hill times
Author: Tim Naumetz
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