Buyer beware

Amidst the welter of cash flying out of Ottawa over the past few weeks, you might not even have noticed US$70 million that flew south to help design and build a fighter jet Canada isn’t committing to buying yet.

The federal government is in the midst of sorting out a contract for a new fighter to replace Canada’s aging CF-18s, and the U.S.-built F-35 stealth fighter is one of the three candidates.

But, whatever aircraft wins, we’re already spending money on the F-35. The US$70 million was just the latest contribution.

There are good reasons for spending the money, even though we haven’t committed to buying any of the aircraft: being part of the team of countries involved in the development of the aircraft means Canadian manufacturers can bid on contracts related to the now US$428 billion aircraft construction project. (The entire acquisition and operations budget for the aircraft is now US$1.6 trillion.)

Buying in could be seen as simple government pragmatism; Canada’s put US$541.3 million into the stealth fighter’s development since 1997, but the government says that spending has landed US$1.8 billion in contracts for Canadian companies.

Pragmatism aside, the F-35 is a fascinating business case. That’s because the aircraft and its failures, delays and budget overruns have kept U.S. federal government watchdog auditors very busy.

The U.S. Government Accounting Office issued its latest report on the aircraft’s troubles last Tuesday. The GAO pointed out the U.S. Defence Department “began development of the F-35 aircraft in 2001 without adequate knowledge of its critical technologies or a solid design, as we reported in March 2005.”

Testing on the aircraft found 3,200 deficiencies in the aircraft’s weapons systems. The GAO also found that the aircraft was not meeting its reliability and maintainability performance targets, meaning aircraft would need more hours of maintenance than expected for every hour of operation. The aircraft also had multiple cyber-security vulnerabilities.

But biggest of all? A key component of the aircraft doesn’t work properly and is being replaced. Not an engine, or a weapons system — but the hardware and software that are needed to track maintenance, training, mission planning and a host of other systems.

Users of the aircraft break its main component parts down into the airframe, engines and the aircraft’s Autonomous Logistics Information system. Even though 550 of the aircraft have already been delivered (even before completing full testing) the ALIS is now going to be replaced with a new Operational Data Integrated Network (ODIN).

Right now, the development of ODIN is only in the planning stages, and its costs are unknown.

It might be a good thing to stay part of procurement team.

Going a step further and buying the aircraft? Maybe it’s better to wait until all the bugs are worked out.