During the 2015 election campaign, when he was only the third party leader in the House of Commons, Justin Trudeau promised that a government led by him would never buy the F-35 fighter jets enamored with Stephen Harper’s conservatives.
Now, seven years — and three elections — later, the Trudeau administration announced it would order 88 of these planes to be built by American Lockheed Martin, at a total cost of $19 billion.
How did we get here? It all starts in 2010. Canada must replace its aging CF-18s, which will reach the end of their useful life in ten years. Ottawa has been contributing to an international partnership between eight countries for the development of the F-35 since 1997. Through significant government investment (to date exceeding US$600 million), Canada presents opportunities for its companies to win contracts under this initiative.
This partnership in no way obliges Ottawa to ever purchase these planes, but it was the choice of the then Secretary of Defense, Peter MacKay, without launching a tender. In the middle of the summer, the latter proudly poses, thumbs up, in an F-35 replica that Lockheed Martin mercifully trucked to Ottawa. The staging will be widely mocked. At the time, Ottawa planned to purchase 65 F-35s for $9 billion.
But the program stalls: The maintenance costs of this state-of-the-art fleet are much higher than what the government supported. At the time, the F-35 was still an aircraft in development, a kind of prototype, which caused a lot of uncertainty.
Conservatives reset the counters in 2012 and restart the selection process for the Canadian military’s new jet fighter. While they do not rule out the possibility of purchasing F-35s, they are no longer committed to it.
Thus, when Justin Trudeau announced in 2015 that he would not buy the F-35, he was not exposing Canada to cancellation fees as Jean Chrétien had done in 1993 by tearing up the Mulroney administration’s helicopter purchase agreement. Justin Trudeau’s promise mainly consists of no longer acting unilaterally and of issuing a real tender to replace the CF-18s. What he will do in 2017.
From the outset, European manufacturers complained that the process biased them and favored their US competitors, Boeing and Lockheed Martin. With the CF-18s getting older and more unpredictable, Ottawa is considering purchasing 18 Boeing Super Hornets in the meantime. Many believe that by doing this, Canada beats the dice, making it inevitable to complete the fleet with Super Hornets.
If that’s the plan, things get out of hand when Boeing accuses Bombardier of uncompetitive business practices (in a separate case). Canada is therefore forgoing the purchase of Super Hornets (it buys used aircraft from Australia instead) and finally excludes Boeing from the tender. Only the Swedish Saab and the American Lockheed Martin remain. Ottawa chose the latter’s fighter jet this week.
Could it have gone differently?
The defense community almost unanimously denounces Canada’s slowness in bringing about its military acquisition projects. The parliamentary budget official recalled in a recent report that the National Defense was unable to spend on time the $164 billion allocated to it over 20 years.
This is what several specialists say, in anticipation of next Thursday’s budget, that Defense does not necessarily need more money immediately. It would already be an improvement if she spent the money allotted to her over the years!
But why is it taking so long?
Former Defense Secretary and ex-soldier Gordon O’Connor said he didn’t understand why he had to ask suppliers for a tailor-made proposal every time he needed new equipment. Why, if he needed helmets, couldn’t he just put all the existing helmets on a table and pick the best one?
David Perry, president of the Canadian Global Affairs Institute, explains that turnkey solutions are rarely a solution. European equipment, he gives as an example, has European electrical connections. Which means adapters would be needed everywhere to connect Canadian devices! Not very practical. The weather also weighs heavily on the balance: devices designed for Europe or the United States can’t handle Canada’s arctic cold. They need to be changed.
For David Perry, the problem lies rather in this obsession with putting out tenders for every acquisition. These competitive processes can certainly guarantee better prices. But they also guarantee that everything will take much longer. The tender that ended this week was seven years in the making, and Ottawa is giving itself seven months to negotiate a formal contract. “It’s expensive to wait until later to buy new equipment,” says Perry. First, inflation drives up the bill, as does the maintenance of old equipment that needs to be replaced. “We have to become more strategic,” he says.
There was also the issue of economic spin-offs. Typically, major defense contracts are covered by the Industrial and Technological Benefits Policy: the lucky company to receive the Canadian dollars must commit to conduct commercial activities of equal value in Canada for a specified period of time. In 2010, Ottawa’s agreement with Lockheed Martin was exempted from this obligation, sparking controversy. This time, Defense says it has required each bidder to submit an “economic benefits” (and not “commercial activity”) plan equal to the value of its proposal to qualify. Details, it is said, will be announced later.
Canada is therefore committed to purchasing 88 F-35 aircraft at a unit price of $216 million, well above the $138 million of the 2010 agreement (or $175 million today).
It is Peter MacKay who must enjoy his revenge on history. Mocked in 2010, here he is as an oracle. Last Monday he wrote in the Toronto sun that it was necessary to “forget the exaggerations about costs and the scandals made up by the bureaucrats, the politicians and the commentators” and choose the F-35. A week later, the government agreed with him.
All eyes are on the April 7 budget. Will Canada Increase Its Military Spending? To have. But it should be borne in mind that this week’s announcement cannot be seen as contributing to increased spending. Because this cost was already budgeted more than ten years ago!