In a written response to questions in the Commons from Mr. Kellway (Beaches-East York, Ont.), Mr. Clement (Parry Sound-Muskoka, Ont.) informed the House on Wednesday that the independent F-35 cost audit by the accounting firm KPMG will be based on figures which Department of National Defence officials had as early as last March, based on an annual military acquisition report to Congress on the estimated current and future costs of the F-35 fighter jets, which the U.S. and seven other countries are also purchasing.
Though the Selected Acquisition Report on the F-35 project was presented to Congress in March, Canadian defence officials visited the F-35 Joint Strike Fighter Program Office near Washington, D.C., on May 1 to obtain the U.S.-calculated breakout of cost forecasts for the 65 Air Force versions of the F-35s that the Conservative government had decided to buy prior to a scathing report on the project from Auditor General Michael Ferguson on April 3.
Mr. Ferguson’s report, which cited $9-billion in acquisition costs for the F-35 fleet and a further $16-billion in sustainment and operating costs over 20 years, was based on internal government figures that were outdated by more than a year as soon as the Canadian National Defence officials received the new cost forecasts from Washington in May.
Those estimates, covering F-35 testing, development, and production to the end of 2011, put the cost of the aircraft that Canada intends to buy at $80-million per plane. The estimates have themselves already been superseded by rising costs and delays at the Lockheed Martin Corp. production plant in Fort Worth Texas. Because of the delays and pressure from the U.S. government, Lockheed Martin last week was forced to notify the U.S. Securities and Exchange Commons of a potential termination liability of $1.1-billion unless it received funding from the Pentagon for a sixth batch of F-35s before the end of 2012.
In response to Mr. Fraser’s report, which accused Canada’s Department of National Defence of withholding $10-billion worth of operating costs for the F-35s in a report to Parliament shortly before the 2011 federal election, Prime Minister Stephen Harper (Calgary-Southwest, Alta.) and his government promised to table the latest 2012 U.S. report on costs within 60 days of National Defence receiving them from Washington, D.C.
But another aspect of the government’s response said the government would obtain independent verification of the cost forecasts, through a contract that was eventually awarded to KPMG last August.
A delay in the contract process means the costs will not be tabled in the Commons until the end of November or possibly later, well after the July 1 deadline the government had promised in its response to Mr. Ferguson.
“The Treasury Board Secretariat will obtain the data regarding the F-35 life cycle costs from the Department of National Defence,” Mr. Clement’s Commons response to Mr. Kellway says.
“The unit cost of the F-35 airframe is provided to DND by the Government of the United States of America. The primary source of the costing data for the 2012 annual report to Parliament is the U.S. Department of Defence Selected Acquisition Report 2011. The cost estimates in this report are based on Canada acquiring 65 F-35s,” the response says.
Mr. Kellway told The Hill Times the government has wasted the $645,000 it is paying KPMG to review costs that have already been vetted by the U.S. Government Accountability Office in reports to Congress, as well as by the U.S. Department of National Defence.
The government is paying a further maximum of $200,000 to a separate private sector audit firm, yet to be hired, to review the same acquisition procedures and decisions that Mr. Ferguson’s auditors have already reviewed. That review formed the basis for Mr. Ferguson’s critical report last April.
Critics and MPs have accused KPMG of being in a conflict of interest because its parent KPMG accounting firm in the United Kingdom is the auditor for BAE Systems Corp., a major sub-contractor for production of F-35 air frames.
New conflict-of-interest allegations were raised when The Hill Times reported that KPMG Canada this year was hired by the Canadian Defence and Security Industries Association to prepare a report on the economic spin-offs and benefits from the defence industry, which includes the aerospace industry. The F-35 procurement agreement includes an opportunity for Canadian aerospace firms to bid on an estimated $9.8-billion worth of sustainment contracts in the expected sale of more than 3,100 F-35 aircraft around the world.
“What’s in it [Mr. Clement’s response] that jumps out at me is the fact that the Treasury Board Secretariat is using the numbers that are coming out of the Department of Defence in the U.S,” Mr. Kellway said.
“These guys have had the Joint Strike Fighter Program Office numbers, as vetted by the Department of Defence and the Government Accountability Office, and all the other places in the States that have looked at them, that’s what they’re sitting on, they’ve been sitting on them for a long time,” he said.
“They could have very easily lived up to their commitment, their seven point plan, releasing those numbers within 60 days [by last July 1],” Mr. Kellway said. “The question [to the government] remains outstanding, why didn’t you release those numbers in 60 days, which didn’t you release them to the Canadian public in 60 days as you committed to?”
“The reason they didn’t release them is because they’ve gone through this farce of hiring KPMG to verify Joint Strike Fighter Program Office, U.S. Department of Defence, costing figures on the F-35. How in the world is KPMG going to verify those numbers?” Mr. Kellway said.
The Commons Public Accounts Committee, which conducted eight hours of hearings during an inquiry into the F-35 acquisition, has yet to produce a final report to the Commons after eight committee hearings that it has held behind closed doors since Oct. 2.
A source told The Hill Times that the Conservative majority of MPs on the panel has consistently voted to strike out any references to evidence from another critic of the National Defence cost forecasts—Parliamentary Budget Officer Kevin Page.
Original Article
Source: hill times
Author: TIM NAUMETZ
No comments:
Post a Comment