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Minister of National Defence Peter MacKay leaves the House of Commons after speaking with the media on Parliament Hill in Ottawa, Thursday September 29, 2011. (Adrian Wyld/THE CANADIAN PRESS)
Minister of National Defence Peter MacKay leaves the House of Commons after speaking with the media on Parliament Hill in Ottawa, Thursday September 29, 2011. (Adrian Wyld/THE CANADIAN PRESS)

National defence

Does the government's defence of the F-35 purchase fly? Add to ...

Peter MacKay’s latest defence of Ottawa’s F-35 fighter-jet plans is raising new questions over whether Ottawa is truly changing its ways after last week’s damning Auditor-General’s report.

The House of Commons is on a two-week break after a heated few days triggered by Auditor-General Michael Ferguson’s finding that Ottawa knew the full cost was closer to $25-billion, even as the department reported costs of $9-billion and then $14.7-billion.

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The opposition insists heads should roll, but Mr. MacKay, the Defence Minister, and Chief of the Defence Staff Walt Natynczyk are seeking to minimize the fallout with assurances that the Department of National Defence was acting in good faith.

With the clock ticking for Canada to make a decision on how to replace its current fleet of CF-18 fighters, debate is narrowing to a few key points. The Globe and Mail asked three independent defence experts – former DND assistant deputy minister Alan Williams, the University of Ottawa’s Philippe Lagassé, and military procurement historian Randall Wakelam of the Royal Military College – for their reaction to the latest government lines.

‘SUNK’ COSTS

The government line: Mr. MacKay says it’s standard practice to weed out ongoing spending on operational costs such as staff, fuel and maintenance when reporting the expected cost of a major procurement.

“This is the way that accounting has always been done for major procurements whether it’s tanks, trucks, ships. We do not calculate as part of the acquisitions costs what we pay military personnel. Or the fuel. Or the cost of keeping that existing equipment running,” he said Sunday on CTV’s Question Period.

The commentary: The experts say the minister is technically right that such costs are usually left out. However, when the opposition and the Parliamentary Budget Officer are asking for the total cost – and the Auditor-General says cabinet knew what these costs were – they say the government should have coughed up the figures.

“He doesn’t really explain why both were not mentioned publicly,” Dr. Wakelam said.

20 YEARS VS. 36 YEARS

The government line: The minister says 20-year projections are standard practice, even though the Auditor-General found the short timeline “understates” the total costs of a fleet that could last twice as long. The minister says his department will start producing 36-year costs.

“This is the way that procurement has always been done,” he said. On Monday, the government pointed to a 2004 helicopter purchase under the Liberals as an example.

The commentary: Technically true, the experts say. However, with other countries reporting full life-cycle costs over longer periods for their planned F-35 purchases, Ottawa should have provided the most accurate numbers, they say.

“I disagree with them. Even if people used to do 10 [years of estimates] that doesn’t make it right,” Mr. Williams said. “Why hide it? I don’t buy that at all.”

F-35 OR WHAT?

The government responded to the Auditor-General’s report by creating a new “F-35 secretariat.” The title alone suggests the Conservatives are still planning to give National Defence the fifth-generation fighter it wants.

Mr. MacKay: “We are in a process that has been under way for some time, there would be costs associated with withdrawing from that in terms of our place in the production line and the delivery of new aircraft.”

The commentary: The three experts say there’s still time to hold the open competition that Ottawa has so far resisted, but the window is closing fast.

Dr. Lagassé says the opposition is allowing murky questions of accounting to overshadow the larger questions raised by the Auditor-General’s report, such as whether DND’s handling of the file has locked Canada into buying a jet that will be even more expensive than it currently admits.

“That’s my main concern,” he said. “Did DND underestimate the per unit cost for too long?”

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