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DND prompted MacKay to tout F-35 as cheapest option Add to ...

In the weeks after Canada first announced it would acquire the controversial F-35 Lightning fighter, Defence Minister Peter MacKay was instructed by his department to describe the jet as the least expensive option on the market, documents obtained by The Globe and Mail show.

It was a brazen claim to make in the summer of 2010 about a cutting-edge fighter that was still being developed and tested – one that has since been plagued by cost overruns.

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It’s another example of the Department of National Defence’s tendency to play down the costs of the jet – a problem red-flagged by Canada’s Auditor-General last week.

Even as it tried to lowball the F-35’s price tag, the department conceded in separate documents that same year that asking jet-makers to compete for the contract could have lowered the cost of the planes. A 2010 DND briefing document said one of the advantages of an open bidding process would have been that “some companies may lower [their]price.”

The Harper government announced to Canadians in July, 2010, that Canada would be buying the F-35 without holding a competitive bidding process. Mr. MacKay was forced to defend that decision in September, 2010, before a Commons defence committee – and briefing notes drafted to prepare him demonstrate how the department tried to portray the purchase as a bargain.

“The Joint Strike Fighter is the least expensive of all fourth and fifth generation mission-ready aircraft,” said the summer 2010 notes obtained under Access to Information law.

That statement tells the minister the F-35 is not only the cheapest next-generation fighter available but also the best buy among the current generation of planes.

As Auditor-General Michael Ferguson found last week, however, the United States had warned DND in February, 2010, that “developing the F-35 would cost more and take longer to finish than planned and that the U.S. Department of Defense was reassessing its cost projections.”

DND’s talking points told the minister that the F-35 represented a bargain because of the economies of scale that would result from the volume being sold to allies.

“The cost remains relatively low because of the sheer numbers being produced,” the briefing notes said. “The costs of sustainment and follow-on development will be shared among the JSF partner nations and not borne by Canada alone.”

The Harper government has vowed to hit the reset button on the fighter purchase after the Auditor-General last week criticized DND for withholding information on the jet purchase from political decision makers.

The Conservatives signalled they no longer trust Defence to manage the process and have set up a new secretariat inside the Department of Public Works to relaunch the purchase.

The secretariat, overseen by a committee of deputy ministers, has already begun meeting with an eye to “revisit every decision” made so far in the procurement of the jets.

DND – and the military – are making it clear they still have their hearts set on the F-35. “I can put my hand over my heart and say I’ve provided the government and Canadians with the very best military advice,” Chief of the Defence Staff General Walt Natynczyk said Monday of his recommendation in favour of the Lockheed-Martin Lightning.

The Harper government has spent the last few days trying to counter the notion that it hid the full cost of the F-35 program from Canadians. Last week, Mr. Ferguson said the full price tag, including fixed costs, should be counted as $25-billion rather than $15-billion.

Mr. MacKay said this $10-billion discrepancy is merely the fixed cost of operating jets – such as fuel and pilot salaries – that are incurred regardless of which one Canada buys. The department didn’t consider these costs part of the F-35 price tag because they don’t need to obtain approval during the jet acquisition process to spend them.

“As we sit in this boardroom, there are CF-18 pilots whom we are paying. There’s maintenance crews on the runways filling them with fuel in Cold Lake and Bagotville and whatever aircraft we bought, these costs are going to be operational costs, no matter what we fly and so it’s not part of the acquisition of a particular aircraft,” Mr. MacKay said.

“Just as we pay our military personnel, whether they’re training on the base or in a place like Afghanistan. Their salaries are fixed, they’re sunk costs.”

Nevertheless, Mr. MacKay said, the department will provide these fixed costs for future acquisitions.

“It’s clear to me that there is a new way of doing business, and we will do it in compliance with the Auditor-General’s recommendation, with his conclusions,” Mr. MacKay said.

“That’s how we’ll proceed, but do note that this is not the way it was done by previous governments.”

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