Tuesday, November 15, 2011

Washington could scrap its F-35 jet purchase

Ottawa— Globe and Mail Update
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The U.S. government is threatening to cancel its F-35 Joint Strike Fighter program unless Congress approves a credible deficit reduction plan, a move that would risk derailing Canada’s plans to purchase 65 of the next-generation stealth jets.

U.S. Defence Secretary Leon Panetta includes the F-35 program in a detailed list of items that could be on the chopping block should a so-called “super committee” fail to deliver on a plan to find $1.2-trillion-in savings over the next 10 years.

The bi-partisan committee – officially called the Joint Select Committee on Deficit Reduction (JSCDR) – must reach a deal by next Wednesday. Should they fail, across the board cuts to government spending, described as “sequestration,” would kick in almost immediately.

In letters to Senators John McCain and Lindsey Graham, Mr. Panetta outlines what these cuts could look like.

“If the JSCDR fails to meet its targets and sequestration is triggered, [Department of Defence] would face huge cuts in its budgets,” Mr. Panetta writes in a letter dated Nov. 14.

“Decisions related to major programs could include: Terminate Joint Strike Fighter; minimal life extensions and upgrades to existing forces,” the letter states, describing this measure as a potential savings of $80-billion U.S.

The likelihood of this scenario is unclear at the moment. Mr. Panetta’s letter is clearly an attempt to pressure the committee to avoid these cuts by approving a plan in advance of the deadline. Commentary in the United States suggests there is a high degree of uncertainty as to the odds the committee of Senators and members of the House of Representatives will come up with a plan.

In Canada, National Defence currently plans to spend $9-billion to acquire 65 F-35 fighter jets between 2016 and 2022.

Ottawa estimates its jets will cost between $70-million and $80-million each, even though the government acknowledges the current unit cost of the jets is “well over $100-million U.S.”

The reason Canada expects to get a better price is that it predicts the jets will be flying off the assembly line by the time Ottawa is ready to buy them. Mr. Panetta’s letter suggests that may not be the case.

“Canada’s [cost] is estimated to be in the mid-$70M due to the delivery times that will be at around the peak of production efficiency as shown on the graph,” states the National Defence and Canadian Forces website.

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