Faced with the imminent release of an audit by accountants KPMG that will push the total projected life-cycle costs of the aircraft above $30 billion, the operations committee of the federal Cabinet decided to scrap the controversial sole-source program and go back to the drawing board, a source familiar with the decision said.
This occurred after Chief of the Defence Staff Thomas Lawson, while en route overseas, was called back urgently to appear before the committee, the source said.
The decision is sure to have ripple effects around the world, as any reduction in the number of aircraft on order causes the price to go up for all the other buyers. Canada is one of nine F-35 consortium members, including the United States.
The CF-18s currently flown by the RCAF are at the tail end of their life cycle and are not expected to be operable much beyond 2020 at the outside.
The fighter procurement process has been the responsibility of Public Works Minister Rona Ambrose since last spring, following an audit by Auditor General Michael Ferguson. It is understood that veteran senior bureaucrat Tom Ring, who handled the government’s much-praised shipbuilding contract process in the fall of 2011, is now steering the reframed fighter replacement process, from within Public Works.
Last spring, Ferguson ignited a political firestorm when he reported that the top-line cost cited by the Conservatives in the 2011 election campaign — $9 billion for 65 planes, or $15 billion including maintenance and other life-cycle costs — was $10-billion below the Defence Department’s internal estimate.
Even the internal figure of $25.1 billion was suspect, critics said, because it assumed a 20-year life cycle. The longevity of the Lockheed-Martin-built aircraft, according to the Pentagon, is 36 years.
KPMG’s audit, due out next week, has confirmed the contention, long made by critics such as former assistant deputy minister (materiel) Alan Williams, that the F-35 program’s real cost would be much higher than any previously stated government estimate, sources say.
Parliamentary Budget Officer Kevin Page predicted a cost of $30 billion over a 30-year life cycle.
Public Works Minister Rona Ambrose, who took on the F-35 file after Ferguson’s audit, has been signalling since last spring that she was unhappy with the procurement process. On Nov. 22 in the House of Commons, Ambrose said the government is committed to “a full evaluation of all choices, not simply a refresh.”
Lawson, in an appearance before the House of Commons defence committee Nov. 29, further opened the door when he confirmed what industry critics have long said: The F-35 is not the only modern fighter with measures to evade radar, though it is considered to be the most advanced in this respect. “Is there only one airplane that can meet the standard of stealth that’s set out in the statement of requirements?” Liberal defence critic John McKay asked.
Lawson’s answer: “No.”
The F-35’s unique stealthiness had long been advanced as the single most compelling argument for buying that plane.
Also in the mix, former industry minister David Emerson last week published a report on the aerospace and space sectors, calling on Ottawa to more aggressively press for Industrial and Regional Benefits (IRBs) and In-Service Support (ISS) contracts when inking procurement deals. Lockheed-Martin has in the past been reluctant to hand over its proprietary technology to clients. Industry insiders believe the Emerson report added impetus to the decision to start over.
Boeing’s Super Hornet, Dassault’s Rafale, Saab’s Gripen, the Eurofighter Typhoon, and the F-35, are seen as the leading contenders in any new contest to replace the CF-18 fleet.
Original Article
Source: ottawa citizen
Author: Michael Den Tandt
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