Mackay urged to resign amid F-35 fallout
Government returning to the drawing board on fighter plan
OTTAWA – The opposition called on Defence Minister Peter MacKay to resign Friday as the government began dealing with the political fallout from its reported decision to scrap its plan to sole-source the F-35 stealth fighter.
But that may only be the start. National Defence and Public Works are conducting a complete rethink of what Canada’s next jet fighters will be required to do and assessing what options are available to get the job done — with stealth only one of several considerations.
Yet the government has not said whether it will terminate involvement in a 2006 agreement that established this country as a key F-35 partner and committed Canada to hundreds of millions of dollars in development costs.
The clock on that decision is ticking as Canada is due to contribute another tranche of money in May if it wants to stay in the international program — though taxpayers will also be on the hook if the government decides to bail.
Conservative cabinet ministers gathered in Ottawa on Friday wouldn’t respond to Postmedia reports the government has backtracked from its plan to sole-source the F-35 after an independent audit put the program’s costs at more than $30 billion, and perhaps above $40 billion.
The National Post puts the cost at $45.8 billion. That’s the number that will stand out when the Harper government releases KPMG’s report on the cost of the F-35 program early next week.
The National Post has seen sections of the report, including the cost estimates calculated by the accountancy firm charged with forecasting the entire 42-year life cycle cost of buying 65 new fighter jets.
According to KPMG, it will cost Canadian taxpayers nearly $46 billion to replace the fleet of 77 aging CF-18s with the F-35s — nearly twice the numbers circulated by the Department of National Defence and roughly what the province of Ontario spends on health care every year.
When MacKay did come out of the Commons, he wouldn’t say what the government has decided to do with the multibillion-dollar purchase. Nor did he respond to Liberal and NDP calls to step down.
“There’s been a lot of speculation over the last 24 hours,” MacKay said. “What I can tell you is we’re following the seven-point plan as we have been now for some months, and into next week there’ll be an open and transparent discussion about the next steps that are going to follow in the CF-18 replacement.”
Some of those steps are already underway.
National Defence has gone back to the drawing board to figure out what missions Canada’s next fighters will be called on to do over the coming decades, what threats they will face and what capabilities will help them succeed.
At the same time, Public Works is preparing to reach out to other fighter aircraft manufacturers, such as Boeing and Eurofighter, to assess the costs and capabilities of their respective jets as compared to Lockheed Martin’s F-35.
This is expected to produce a range of options for the government to choose from, including running an open competition. The Conservative government has repeatedly stated that it will not deviate from its $9-billion budget for acquiring a replacement aircraft for Canada’s CF-18s.
At the same time, however, Canada remains an international partner in the F-35 stealth fighter program by virtue of its continued involvement in a key memorandum of understanding signed by National Defence in 2006.
Prime Minister Stephen Harper’s spokesman Andrew MacDougall confirmed Canada remains involved in the agreement, which committed Canada to contributing $551.6 million US over the course of the program.
But MacDougall and other government officials would not say whether Canada has or is planning to give notice of its intention of withdrawing from the agreement, which would formally end Canada’s involvement in the F-35’s development.
Canada has so far spent $231 million on the F-35’s development, including at least $125.7 million toward the $551.6-million commitment in the 2006 agreement, according to Public Works.
This included $27 million in March 2012, only a few weeks before Auditor General Michael Ferguson released a scathing report on the F-35, prompting the Conservative government to freeze all spending on the program. Yet insiders say Canada’s next payment under the 2006 agreement is up in May unless the government decides to withdraw.
The government could opt out of the agreement if it feels Canada will not be moving ahead on the F-35s, but even that would entail penalties as the 2006 MOU says partners can still be held liable for a variety of costs associated with pulling out. In addition, if Canada does decide to purchase the F-35s at a future date, it would likely have to do so as a third party, meaning it will pay more for them.
NDP defence critic Jack Harris suggested the government should pull out of the agreement, even as he blasted the Conservative government for putting Canada into an eitheror situation.
“I don’t think we got any answers today. I mean we’ve got someone reading out the seven-point plan when we all know that there’s something very significant going on,” Harris said. “The whole process is in shambles, frankly.”
Former Defence Department procurement chief Alan Williams, a vocal critic of the government’s handling of the F-35 file, was also critical of the new review being undertaken by National Defence and Public Works.
“Studying options accomplishes little,” he said. “Unless there is an open competition suppliers are precluded from providing sensitive info.”
While the future of Canada’s involvement in the F-35 program was front and centre, much of the focus was also on reports the aircraft will cost at least $30 billion and perhaps more than $40 billion, and not the $16 billion as initially outlined by the government.