Although the review of the National Defence figures says the current average cost of the Lockheed Martin fighters still in early production and testing stages in the U.S. is an average of $88.5 million—the figure most often cited by the government—the review and a National Defence update to Parliament both forecast a price tag of $95.2-million per aircraft if acquisition of the first round of F-35 jets goes ahead in 2017 under a timetable that still exists despite the government’s temporary suspension of the program last year.
The review of National Defence estimates by the accounting firm Raymond Chabot Grant Thornton notes that the U.S. Defence Department office coordinating the F-35 program in partnership with eight other countries including Canada pegs the current per-jet flyaway cost at $88.3 million (U.S.), current production costs on which National Defence bases its own current cost estimates. The review, as well as the National Defence update, reveal that the price for each aircraft, including propulsion systems, sophisticated mission and vehicle systems as well as what are described as “engineering change orders” will be nearly $7-million more per aircraft if the government decides to go ahead with the existing F-35 acquisition timetable after a review of other options that began last year is complete.
“Once adjusted for inflation and foreign exchange forecasts, the total estimated URF (Unit Recurring Flyaway) cost is approximately $6.2-billion or 72 per cent of the total estimated costs of $8.6-billion,” the review states.
While the U.S. Government Accountability Office earlier this year noted production costs of the sophisticated jet have declined marginally, its report to Congress cited difficulties with key elements, including the development of a computerized pilot sensor helmet that is crucial to combat and surveillance that are essential to the plane’s success.
The total estimated cost to Canada if the F-35 acquisition goes ahead is now $46-billion, including acquisition costs and sustainment, operation, personnel and eventual disposal of each plane. The figure also includes $1-billion for eventual replacement of seven to 11 jets expected to be lost through attrition.
Although the total estimated acquisition cost of $8.9-billion, including other elements such as ammunition, training, infrastructure and initial spares, comes in below an acquisition ceiling of $9-billion the government set in 2012 following a scathing report on the project by Auditor General Michael Ferguson, the Raymond Chabot Grant Thornton review is critical of the fact that National Defence slashed an acquisition contingency budget of $602-million nearly in half to remain within the spending limit.
A former head of procurement at National Defence, retired bureaucrat Alan Williams, on Thursday also criticized the contingency budget cut, which both the National Defence update and the independent review warned could eventually force the government to significantly reduce the number of F-35 it acquires, possibly to the point the fleet could not meet Canada’s defence strategy requirements.
“It’s insane to do what they’re doing to stay within the $9-billion,” Mr. Williams told The Hill Times.
He argued, however, that the cost of sustainment over more than 35 years, since the planes would be acquired through stages over four to five years, is more critical.
“The more important issue about this is that $9-billion in fact is irrelevant,” Mr. Williams said. “What is better, buying a plane that costs eight and a half billion but $40-billion to sustain, or one that’s $10-billion but half of that to sustain? … You should be looking at the total cost, and the only reason the government focuses on this [the $9-billion acquisition cost] is that the former minister [now Justice Minister Peter MacKay] made a big point about this a number of times, in his news releases and stuff like that, saying, ‘No matter what, we’re not spending more than $9-billion.’”
Original Article
Source: hilltimes.com
Author: Tim Naumetz
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