Sunday, October 9, 2011

Ottawa Citizen>Blogs >News>Defence Watch Canadian Government Bungling on F-35 Acquisition Provides Boeing and Other Competitors With New Ammunition, Says Former ADM Materiel

The debate about Canada’s proposed purchase of the F-15 continues. Last night the CBC had a piece about the varying costs of the F-35; depending who you talk to it will be under $65 million for Canada or it could be $133 million for each plane. Former ADM Materiel Alan Williams wades in on another topic in the F-35 debate:
By Alan Williams
Defence Watch Guest Writer

Until now there was little anyone could do to challenge the government’s decision to sole-source the F-35’s. The regulatory and legislative framework that prescribes when sole sourcing may or may not be considered only applies to contractual arrangements. The government’s plan to acquire the F-35, not through a contract with the private sector but rather through an agreement with the US government left it essentially unassailable.
However, a recent response by the government to a question on the F-35 may have dramatically and inadvertently changed the landscape. As Colin Horgan recently reported, in June 2011, Liberal MP Frank Valeriote put some questions to the offices of Associate Defence Minister Julian Fantino and Public Works Minister Rona Ambrose. Valeriote wanted to know when and how often DND submitted justification for the legal authority to use an exemption to competitive bidding as defined in Section 3.15 of the government’s procurement strategy.
Frankly, the government’s response shocked me. Rather than simply reflecting what I noted above and responding that in these circumstances there are no legal restrictions, the government referenced the Treasury Board contract regulations as the basis for their bypassing competition. Specifically, the government responded,
“The Government Contracts Regulations (GCRs) require the competitive soliciting of bids before any contract is entered into; however, contracts may be entered into without soliciting bids when:
  1. .   (i)  the need is one of pressing emergency in which delay would be injurious to the public interest;
  2. .   (ii)  the estimated expenditure does not exceed $25,000;
(iii) the nature of the work is such that it would not be in the public interest to solicit bids; or,
(iv) only one person is capable of performing the contract.”
The response continued, “..on 1 June 2010 DND provided the rationale for a potential exception to competitive procurement in that there is only one entity capable of providing a fighter capability that meets ail of the Next Generation Fighter Capability mandatory requirements, specifically Lockheed Martin and its F-35A Joint Strike Fighter. PWGSC validated that assertion with a market review and also concluded that only one entity (Lockheed Martin) can provide a fighter capability meeting all of the Canadian Forces’ mandatory requirements and that this exception is in accordance with the Government Contract Regulations exception (iv) above. This information was incorporated into the documentation provided to the Government of Canada regarding potential procurement options for the Next Generation Fighter Capability project.”

Of course, we now know this claim to be false. On Nov. 4, 2010 Mr. Kory G. Mathews, vice-president, F/A-18 program, Boeing, appeared before the Standing Committee on National Defence. In his opening comments, Mr. Mathews stated that the Super Hornet incorporates the latest defence technology advancements, including an integrated display of fused data from a new wide array of sensors, making it the newest combat fighter attack aircraft in operational service today with the United States forces.
He then goes on to reveal that the Canadian Air Force never learned about the high technology of the aircraft. Here is what he told the committee:
“Although some preliminary discussions between Canadian Air Force and United States Navy officials took place in 2008 and early 2009, to our knowledge Canadian officials have not yet received the full complement of Super Hornet performance data from the United States Navy, including those about the aircraft’s stealth characteristics.
While security constraints preclude us from having even the most general discussion of this matter in this forum, I can assure you that the Canadian experts will find these briefings most informative and enlightening. I would respectfully suggest that you request this data from the United States Navy, if only to ensure that you make a fully informed decision as part of any next-generation fighter selection process.”
Further, in a response to a question from Dominic Leblanc, he reinforced these comments and said, “that a full complement of capabilities for this weapons system has not been provided.”

If challenged, the government may now have difficulty in extricating itself from its flawed application of the regulations in order to move to the more solid justification that a government-to-government arrangement is not constrained. The government’s bungling has provided Boeing and the other contenders with an unexpected opportunity. It remains to be seen whether they will be able to benefit from it.
(Alan Williams was Assistant Deputy Minister, Supply Operations Service, for the Department of Public Works and Government Services Canada.  He also served as Assistant Deputy Minister (Materiel) for the Department of National Defence (DND). In April 2005 Williams retired from the Public Service.  He is now President of The Williams Group, )