Monday, March 19, 2012

John Ivison: F-35 bid process was ‘hijacked’ by DND, former official says

Mar 19, 2012 – 9:24 PM ET | Last Updated: Mar 19, 2012 9:26 PM ET

Lockheed Martin/Handout

Lockheed Martin/Handout

The federal government's decision to purchase F-35s has been plagued with controversy from the beginning.

We know that the new Auditor-General, Michael Ferguson, is going to turn his attention to the purchase of the troubled F-35 fighter aircraft in his first report early next month. We suspect he is going to be unhappy that the military insisted on buying the fighter plane Holt Renfrew would sell, when it could have bought one cut-price from The Bay.

We don’t know precisely the nature of his criticism — and his office isn’t saying. But a conversation with the man who inked the initial deal on the F-35 project, as a senior official with the Department of National Defence, offers some clues about the nature of the Hadron Collider of censure that is likely coming down on the heads of the senior soldiers, bureaucrats and Conservative politicians involved in the saga.

Alan Williams is a retired assistant deputy minister, responsible for procurement at DND in the early years of the F-35 project, and recently he shared his thoughts on the shortcomings of the tendering process with the Office of the Auditor-General.“The whole process was twisted to suit the needs of the military, with the acknowledgment and support of ministers. It was totally unacceptable,” he said.

He thinks the government should write a new statement of requirement and put the whole project out to an open competition.

“You could run a competition today and have it done within two years,” he said. “You’d have to be blind and deaf not to know how much this project has gone off the rails.”

He said that in his experience, maintenance costs on sophisticated military equipment run at two to three times acquisition costs. He believes the eventual cost to taxpayers for the F-35s is likely to be $25- to $30-billion — double the current government estimate.


The 33-year public servant has no skin in this game, no clients, no political allegiances. “The only reason I’m doing this is to set the record straight and tell Canadians they’ve been misled,” he said. “The [F-35 purchase] process was completely hijacked and bastardized.”

In theory, the defence procurement process is simple — the military sets its requirements and then the procurement experts find the product that best meets those requirements.

However, in the case of the F-35, Mr. Williams said, the military “wired the specs” — that is, chose the plane it wanted and made sure none of the other contending planes met the requirements. “What you do is simply include a couple of mandatory criteria that only one product can deliver. Then you can sole source without saying you sole sourced,” he said. Both the civilians running the procurement process after Mr. Williams left DND and successive Conservative ministers have gone along with the military.

The government has stuck to its line that the contract has been tendered; that Canadian companies are profiting from industrial benefits; that our allies have the F-35, so we need it too; and that it’s the best aircraft available.

Mr. Williams said every one of those arguments is flawed. For example, more industrial and regional benefits (IRBs) would accrue to Canadian companies from an open competition. “All bidders would have to provide IRBs equal to, or greater than, the value of the contract,” he said.

He has never downplayed the technical capabilities of the F-35, he said, but suggested we have sole sourced a plane without knowing what it can do or what it will cost to buy and maintain.

The F-35 experience does suggest a process that is out of control. And we know that it is not an isolated incident. Mr. Williams said that former Chief of the Defence Staff, General Rick Hillier, once indicated to him that he wanted Chinook heavy lift helicopters. “I said to him, ‘don’t tell me that you want Chinooks, tell me your requirements’. Almost the day I left, they ordered Chinooks,” he said. These are the same Chinooks that are at least three years behind schedule and 100% over budget — the aircraft where former auditor-general Sheila Fraser said the deliberate understatement of risk by DND was “totally unacceptable.”

Chris Wattie/Reuters

Defence Minister Peter MacKay (R) and Industry Minister Tony Clement in front of a F-35 Joint Strike Fighter during a news conference in 2010 to announce the government's intention to purchase some of the jets.

Mr. Williams is outraged that the government wants to spend $30-billion of taxpayers’ money without even publishing the statement of requirement, which says what the air force needs and why it needs it. “It is unacceptable for any government not to share this information,” he said.

The whole F-35 saga reads like an episode of Yes, Minister, where the politicians pirouette to the tune played by the bureaucrats. Peter MacKay, the Defence Minister, was once asked how he knew the F-35 is the best aircraft available. The response was he read it in briefing notes provided by DND. Of course he did. The word on defence policy comes from Defence Department headquarters and it is home-made. Let’s hope the Auditor-General reminds the uniforms who pays the bills.

National Post

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