John Ivison: F-35 purchase in jeopardy with upcoming KPMG report on full cost of fighter jet
The federal government's planned purchase of F-35 jets may fly into the sunset with a new report disclosing its full cost. (Tom Reynolds/Lockheed Martin)
Before the House of Commons breaks for Christmas, KPMG’s review of the price tag for the F-35 fighter jets will be tabled in Parliament, breathing new life into Opposition claims of ballooning costs and Conservative mismanagement.
The report could sound the death knell for Canada’s involvement in the troubled project.
In the wake of a critical audit last spring by the Auditor-General, the accountancy firm was asked to give full-life-cycle costs for the F-35 – the all-in price of purchasing and operating the jets until 2052, not just the 20-year estimate the Department of National Defence provided.
The revised timeline will inevitably bloat the costs from the current $25-billion National Defence estimate.
Defence sources suggest that, were the same criteria applied to the widely admired $33-billion shipbuilding procurement process for the navy, costs for it would soar to over $100-billion.
As well, critics say, KPMG will not provide a comparator estimate for the F-35’s rivals, making it a “meaningless factoid,” in the words of one person familiar with the process.
Regardless, the impending arrival of a headline number several billion dollars higher than National Defence’s estimate has already set off a turf war within government between Defence officials and Public Works employees, who now run the fighter jet procurement process – not to mention their respective ministries.
In the eyes of National Defence, Public Works is already engaged in a butt-covering exercise by launching a “market analysis” of what alternatives exist to purchasing the F-35s.
Defence Minister Peter MacKay (R) and Industry Minister Tony Clement at a news conference to announce the intended purchase of F-35 Joint Strike Fighters, July 16, 2010. (Chris Wattie/Reuters)
As the National Post revealed last week, the Harper government is set to ask rival manufacturers about the cost and availability of their fighter jets.
That information will then be set against a risk analysis — weighing mission and capability requirements — to present to Rona Ambrose, the Public Works minister, and Peter MacKay, the Defence minister.
The current statement of requirement (SOR), which demanded the replacement for the current fleet of CF18s have stealth capability, will be “set aside,” according to Ms. Ambrose, while the options analysis is being undertaken.
However, in the House of Commons Tuesday, she let slip that the existing statement of requirement is not being set aside entirely — a bad omen for proponents of the F-35.
“The Secretariat [reviewing the CF18 replacement] will ensure the proper expertise is brought in to review the statement of requirement and do a full option analysis,” she said, in reply to a question.
This is significant, since there is no guarantee that stealth will be part of a new SOR – in fact, the thinking inside government is that it will not be. “I think military doctrine is changing fast,” said one source.
If the operational imperative for the F-35s is diminished, then its soaring cost may make it cost-prohibitive
An article in AOL Defence this week suggested that improvements in computing power may make stealth obsolete – radar systems will just become too powerful.
The article quoted Admiral Jonathan Greenert, the U.S. Chief of Naval Operations, as saying “sensors will start to circumvent stealth.”
If the operational imperative for the F-35s is diminished, then its soaring cost – to $137-million from $69-million a decade ago, for early versions of the fighter, according to U.S. government figures – may make it cost-prohibitive. U.S. lawmakers, teetering on the brink of a fiscal cliff, may yet look at the project as an easy target for savings, reducing the number of planes being ordered from the current 2,443, thus increasing the unit cost for everyone else.
That possibility has spurred the Pentagon and the manufacturer Lockheed Martin into pressuring U.S. allies to help pay for the project. The New York Times reported Thursday that both have stepped up phone calls to allies to ensure they don’t bail on the program. Italy has already cut its order, the British and Australians have delayed decisions on plane numbers and the Netherlands is questioning the cost.
In Canada, senior members of government are at pains to point out we are at a “pre-acquisition phase” in the fighter jet replacement cycle. This will be news to anyone who remembers the signing of the memorandum of understanding two summers ago, when Ms. Ambrose, Mr. MacKay and then Industry Minister, Tony Clement took part in a glitzy photo op and announced the government had exercised its option to “acquire” the F-35.
Cautious voices at the time were saying the F-35 might be the right aircraft but it was too early to tell.
They were over-ruled then but the odds are they won’t be ignored this time around.
If a technical and financial case can be made for a rival aircraft like Boeing’s SuperHornet, the Harper government is likely to grasp it.
Not even the F-35’s most enthusiastic advocates on the government side are going to be keen to campaign on its merits in 2015, once the Opposition has finished with the KPMG report.
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