December 13, 2012–Enclosed in the first of three news items below is a photo from a press conference yesterday of the two Harper ministers handling the F-35 purchase fiasco. Minister of Public Works and Government Services Rona Ambrose looks ready to do serious harm to her cabinet buddy, Minister of Defense Peter MacKay.
Ambrose has been called in to oversee the fallout from the debacle. MacKay’s “damn the torpedoes, full steam ahead” approach on the aircraft purchase has ultimately caused serious political damage to the Conservative government and to all those promoting Canada’s new militarism.
Ottawa officially scraps F-35 purchase
$45-billion bill for 65 of the fighter jets sinks deal, no replacement announced. Stephen Harper’s Conservatives are officially recanting their 2 1/2 year-old decision to buy the cutting-edge F-35 fighter plane – but the federal government is still resisting calls to hold an open competition to pick Canada’s next jet purchase.
By Steven Chase, Globe and Mail, Dec 13, 2012
The Harper government on Wednesday officially announced it was backing off a sole-source plan to buy 65 F-35 Lightning jets as a replacement for Canada’s aging CF-18 Hornets. It was a rare U-turn for an administration that only infrequently acknowledges it was wrong – but one the Tories felt was necessary to repair their fiscal stewardship credentials.
“No decision has been taken on a replacement for the CF-18,” a senior government official told reporters in a not-for-attribution media briefing set up by the Tories so that top civil servants on the file could speak plainly about Ottawa’s new jet purchase policy.
The Conservatives have been dogged for months by a damning auditor general’s report last spring that said they selected the F-35 without due regard for price and availability. Back in July, 2010, the Tories announced to great fanfare they would forgo an open competition and would buy the Lockheed warplane because it was the only plane that would serve Canada’s needs. They defended the decision in the 2011 election and often excoriated critics who suggested they had made a mistake.
On Wednesday, Ottawa made a great show of backing away from that decision – while unveiling a full lifetime cost estimate for the Lockheed Martin plane that is five times greater than what the Tories originally advertised it would cost.
The “cradle-to-grave” bill to taxpayers for buying and operating the controversial F-35 warplane will exceed $600-million per jet – or $45-billion in total, the government announced Wednesday. The Tories originally sold the aircraft as a $9-billion purchase.
The $45-billion lifetime estimate may ultimately prove to be too low if the cash-strapped U.S. government cuts its own order for the F-35 – a move that would increase the average price.
Defence Minister Peter MacKay and Public Works Minister Rona Ambrose went to great effort Wednesday to distance themselves from the July, 2010, purchase announcement, an event where Mr. MacKay posed for photos in a dummy version of the fighter. “We are pressing reset on this acquisition in order to ensure a balance between military needs and taxpayer interests,” Mr. MacKay told reporters. “Let me be clear: The government of Canada will not proceed with a decision to replace the CF-18 fighter aircraft until all steps … are completed.”
Ottawa formally announced Wednesday it’s now shopping around to see if alternatives to the F-35 better meet its needs as a replacement for the aging CF-18 Hornets. The government has acknowledged, however, that it could again decide the F-35 is best for the job. “We’re undertaking a full-options analysis and the F-35 is obviously one of those options,” Ms. Ambrose told reporters.
Still, the government is holding off calling for open bids to build the plane – as opposition parties are demanding – saying they’ll wait for an options analysis led by the Royal Canadian Air Force first.
The new $45-billion F-35 price tag is based on the most expansive definition of costs over a 30year lifetime for each jet, including fuel as well as upgrades and maintenance. The bill includes 65 planes and as many as 11 spares – a cost that works out to more than $600-million per plane.
The new forecast, which was scrutinized by consulting firm KPMG, looks at costs incurred over a 42-year-period. Less than 20 per cent of the costs are for buying the initial 65 planes. The other 80 per cent are for keeping this fleet operating.
The Canadian government is still assuming the United States will buy a large order of the jets. In one of the documents Ottawa released Wednesday, it said it’s expecting the U.S. and partners will purchase 3,100 jets – a number that’s expected to fall as Washington, heavily in debt, trims its order.
Also, the Harper government has redrawn the list of independent monitors who will oversee the hunt for alternatives to the F-35 Lightning fighter after retired general Charles Bouchard bowed out. He is replaced by former senior civil servant James Mitchell of consulting group Sussex Circle.
Our commitment, colleagues, to procure the F-35 is part of the overall strategy to give the Canadian Forces the tools they need in order to deliver security to Canadians. … This is the right plane. This is the right number. This is the right aircraft for our Canadian Forces and for Canada.
–Peter MacKay on Sept. 10, 2012
What’s important here is that we act on these recommendations, that we deliver to Canadians the certainty, the surety they require that they’re getting the right aircraft for our country for the long term and that we’re being responsible with taxpayers’ dollars.
–Peter MacKay on Dec 12, 2012
Questions surround stealth aircraft project
After confirmation of $46-billion price tag, Ottawa’s next move in F-35 saga remains a mystery
By Lee Berthiaume and Mark Kennedy, Postmedia News, published in the Vancouver Sun, December 13, 2012 http://www.vancouversun.com/news/Questions+surround+stealth+aircraft+project/7692407/story.html
Key questions remained Wednesday over the Conservative government’s promise to consider all available options to replace Canada’s aging jet fighters after an explosive new report put the full cost of buying, owning, replacing and disposing of 65 F-35 stealth aircraft at almost $46 billion. But it’s not known whether the government is really prepared to walk away from the F-35 if a better alternative is found.
Conservative ministers noted the new Department of National Defence report still put the actual purchase price for the F-35s within its $9-billion budget. The remaining $37 billion is for development, maintenance, operating costs and disposal when the aircraft reach the end of their usefulness, expected around 2052.
The government also said it is too early to determine whether an open competition between the F-35 and its rivals is a viable way to determine the best fighter for Canada at the best price. The government had initially planned to sole-source the contract.
Rather, the government says it has restarted the entire procurement process by ordering the defence department to reassess what missions Canada’s next aircraft will be required to fly, what threats it will face and what technology and capabilities are available to Canada.
The government is also planning to reach out to other aircraft manufacturers such as Boeing and Eurofighter to determine what their aircraft are able to do and how much they will cost compared to the F-35.
This work will be reviewed by a panel of independent experts comprised of former fighter pilot and senior bureaucrat Keith Coulter, University of Ottawa defence expert Philippe Lagasse, former bureaucrat-turned-consultant James Mitchell, and former federal comptroller general Rod Monette.
The government is also looking at whether extending the life of Canada’s current CF-18 fleet is possible. “We are pressing ‘reset’ on this acquisition in order to ensure a balance between military needs and taxpayer interests,” Defence Minister Peter MacKay said. “And to do so, we need to have all viable options on the table for the replacement of the CF-18.”
But other fighter aircraft manufacturers have indicated they will not co-operate unless there is an open competition. And opposition parties say unless the Harper government holds a competition, its claims to have pushed the “reset” button on the F-35 are empty.
“This is a charade,” said NDP MP Jack Harris. “This is not a new process. The reset button does not create anything more than another version of a sole-source contract. They’re not going to put it out to a fair and transparent public tendering process.”
Harris said the government has merely promised to do a “market analysis” of jets other than the F-35 – which he equated to a “shopping expedition.” By comparison, said Harris, a true tendering process would ultimately deliver Canadians what they need. “You get the lowest price, you get the product that you need, at the right price with the industrial benefits that are required.”
The opposition also accused the government of showing no remorse after it originally told Canadians the F-35 would cost tens of billions of dollars less than the $45 billion over 42 years outlined in the National Defence report released Wednesday. When it announced its plan to buy the aircraft in 2010, it cited a figure of $16 billion over 20 years, and later admitted that the figure would be around $25 billion.
Public Works Minister Rona Ambrose warned that “there’s no doubt that applying a full life-cycle costing is clear that any aircraft the government chooses will come with a significant price tag.”
And MacKay defended the government’s original decision to limit cost estimates for the F-35 to 20 years and exclude operating costs, even though the auditor general had recommended including all costs in future military procurement programs back in 2010. “This 20-year time period was in keeping with past practice for the procurement of major military programs,” MacKay said. “And, officials inform us, in keeping with Treasury Board guidelines.”
MacKay also skirted questions over whether he regretted attacking opposition critics and others who questioned the Harper government’s handling of the F-35 file and its cost estimates.
Interim Liberal leader Bob Rae said the government is making no moves to correct its past mistakes. “This is not an admission of failure or of wrongdoing,” said Rae. “I didn’t hear a nanosecond of contrition from this government.”
Rae said the government has not begun a “genuine competitive process” and that the people looking at other options are the same as those who chose the F-35 without looking at alternatives. “You can dress it up with committees but I don’t think people are looking seriously at what needs to be done.”
Wednesday was the first time Canadians have got a clear look at the full estimated cost of buying and operating a fleet of F-35s as the government tabled the Defence Department’s most recent projections with several other reports in the House of Commons. At $45.8 billion, the figure far surpasses all previous estimates. But the numbers also aren’t set in stone and there is a very real chance they could increase – or possibly decrease – by billions of dollars.
Among the variables are inflation, fuel prices and exchange-rate changes, with a one-cent change in the Canada-U.S. exchange rate affecting the projections by as much as $139 million.
Long-term cost of F-35 jet fighter almost $45 billion
By The Canadian Press, published in the Vancouver Sun, December 13, 2012
OTTAWA – The cascading multibillion-dollar cost of the celebrated F-35 stealth aircraft has prompted the federal government to “hit the reset button” on its controversial effort to replace Canada’s aging fighter fleet. Public Works Minister Rona Ambrose said Wednesday the entire process would be reviewed in the face of a long-awaited KPMG report that warns the Lockheed Martin-built F-35s could cost Canada as much as $45.8 billion over 42 years.
The report says National Defence neglected to build a large enough financial cushion into the plan, and that the paltry-by-comparison $9 billion the department set aside likely won’t be enough to cover the planned purchase of 65 jets.
Ambrose and Defence Minister Peter MacKay both insisted no decision will be made until the review is complete. “The next step is a full review of options,” Ambrose told a news conference following the release of the report, which came after a question period dominated by F-35 questions. “We have hit the reset button and are taking the time to do a complete assessment of all available options.”
MacKay said the government would ensure “that balance is maintained between the military needs and taxpayer interests.” “Ultimately, our government will get the best plane for the armed forces, for our pilots and for Canadian taxpayers.”
The NDP’s opposition critics were unmoved, however, insisting the government was steadfastly refusing to admit the whole process has been fumbled. “You can’t move on, you can’t move forward until you’ve admitted that you’ve got a problem and that you’ve made mistakes,”said Matthew Kellway, the party’s procurement critic.
“What we’ve heard today is that the minimum price for this plane is three times higher than anything that this government has publicly disclosed to date. That’s tens of billions of dollars higher. What we haven’t heard today is what we wanted to hear, that there will be an open competition for a replacement for the CF-18.”
The KPMG report said uncertainties in the oft-delayed program could force the air force to cut the number of planes to 55 — or force the Conservatives to spend more, anywhere from $1.5 billion to $2.5 billion.
The Conservatives, who have insisted the F-35 is the only available aircraft that meets Canada’s specific needs, continue to insist the $9 billion ceiling is a firm one. But the various cost figures cited in a series of reports released today are based on a number of variables, including the notion that other allied nations will buy as many jets as they’ve promised.