Tuesday, April 12, 2011

Harper still thinks fighter jet purchase 'a good deal'

By Colin Horgan, iPolitics.ca April 10, 2011
During a campaign stop in Quebec on Sunday, Conservative leader Stephen
Harper reiterated his faith that Canada's procurement strategy for the
F-35 fighter jets is sound.
"There have been detailed briefings from the Department of National
Defence on this, there's a memorandum of understanding . . . We are
sheltered from research and development costs," Harper told reporters.
One media report said Harper, speaking French, claimed the agreements
mean the U.S. will pay extra development costs and Canada will buy the
planes for a fixed price.
"This is a good deal for the country, the fantasy is on the other side,
that somehow they're going to come up with some airplane out of thin
air," said Harper. "We're very confident of our cost estimates."
The Conservatives have held firm that Canada will pay approximately $75
million for each of its planes.
However, with the program experiencing further delays, the U.S.
Government Accountability Office reported last week that the acquisition
cost of an F-35 jet as of June 2010 was $133 million U.S.. Since then,
the program has continued to undergo restructuring due to its cost overruns.
So far, cost overruns in research and development have been absorbed by
the Pentagon and Lockheed Martin.
While chiding the Liberals for a number of statements, a news release
sent out by the Conservative party on Sunday failed to address the U.S.
competitive pricing law. That law dictates that when the U.S. Department
of Defence has invested in a developmental military project, it cannot
offer to sell those materials to foreign nations for any price under
what the U.S. would pay itself.
That means that Canada will pay the same price for the F-35 that the
U.S. will pay.
"Michael Ignatieff's suggestion that the purchase of these jets impacts
the current fiscal situation is false. Major acquisition payments for
these jets will not begin until 2015-16, at the earliest," reads the
Given that acquisition normally takes place two years after the funding
year, this suggests that Canada might not begin receiving its jets until
approximately 2018, rather than in 2016 as the Conservatives have stated.
That date jives with one reported by U.S. air force Lt. Gen. Mark D.
Shackleford to the U.S. House armed services committee in March.
Shackleford and Lt. Gen. Herbert J. Carlisle stated that the Air Force
expects "up to a two year delay" in reaching initial operational
capability for the F-35A variant — the same that Canada plans to
purchase — from an anticipated date of 2016.
The Conservatives also warned that "Michael Ignatieff is not being
straight with Canadians."
"His comments and advertisements are intended to confuse Canadians into
thinking that he does not intend to buy military aircraft," read the
release. "That is not true. Ignatieff has repeatedly said he would buy
fighter jets."
The Liberals have stated that they would withdraw from the current
memorandum of understanding and hold an open competition for a new
fighter jet.
When Canada signed the JSF Memorandum of Agreement for the production,
sustainment, and development of the F-35, it committed $551 million to
the program, based on the estimated number of planes it would purchase.
As the Parliamentary Budget Office noted in its March report on the F-35
jets, the memorandum of understanding does not punish a nation for
withdrawing. Nor does it limit a country's ability to hold a competition
outside of the agreement.
"If you decide to buy another aircraft, you likely wouldn't want to stay
in the MOU," Williams said. "And depending on the status of your $551
million, you'd have to pay some or all, but there's no penalties."
There could be a delay in acquisition if Canada were to withdraw, said
Williams, but it's manageable if it's expected.
"Will we have to keep our F-18s a year or two longer? Maybe . . . That's
doable. Anything is doable, it's just a question of cost. But you've got
to know these things, and plan for these things, as opposed to be
surprised by these things," he said.
There should be a contingency plan for delays in the F-35 program, said
Williams, instead of counting on a firm delivery date.
"If you are going to keep all your eggs in one basket, that basket might
not be ready," Williams said.
With files from Andrew Mayeda, Postmedia News
© Copyright (c) 2011 iPolitics.ca

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