Scathing auditor's verdict on jets has watchdog rechecking F-35 math

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Ottawa's budget watchdog is preparing a new estimate of the full costs of owning the F-35 Lightning fighter in light of revelations the Department of National Defence withheld information on the jet from political decision makers

Parliamentary Budget Officer Kevin Page, who has previously been stymied in his attempts to get full information on F-35 costs from Defence, wrote the department this week asking for them to provide a fuller accounting of all the information necessary to produce the estimate.

He also implicitly criticized the DND in his letter, urging department brass to adopt a more widely-used measure of the cost of the F-35. It's one that pegs the per-jet cost of the planes at 75 per cent higher than what the Canadian government has previously acknowledged.

In a letter to Rob Fonberg, the beleaguered deputy minister of National Defence who's under fire for his department's conduct on the F-35 file, Mr. Page requests that Canada adopt the same pricing for the planes as that used by the U.S. Government Accountability Office.

The last public estimate Canada has provided for each F-35 plane puts the cost at $75-million per plane. This forecast price, which Canadian officials freely admit is outdated, is a relatively bare-bones estimate that includes merely the basic equipment on the plane, such as the airframe, the engine and the avionics.

The Harper government is unable to say when it will produce an updated estimate, insisting it must send bureaucrats to the Pentagon to discuss costs with the Americans.

But the U.S. Government Accountability Office's most recent forecast says the cost for all variants of the F-35 is about $137-million. That's the average cost when all three types of planes, including the jump-jet and carrier-launch models are included.

The GAO, an independent non-partisan U.S. agency, uses what's called the Average Unit Procurement Cost measure for pricing the F-35. This is the most commonly used method of describing a plane's cost and is a more comprehensive number including weapons.

It is the total procurement cost of the planes divided by the number of jets being purchased and frequently includes the initial cost of spare aircraft.

Mr. Page also requested that Mr. Fonberg use the same method of estimating sustainment costs – the price of keeping the planes flying for decades – as the U.S. Department of Defence.

"Thank for your attention to this matter," Mr. Page wrote to Mr. Fonberg. "Please let me know if any part of this request requires clarification."

The budget watchdog's concerns about the rising cost of the F-35 purchase – first voiced in March 2011 – were vindicated by Auditor-General Michael Ferguson's recent report. It repudiated months and months of attempts by Conservative government MPs and ministers to dismiss and play down Mr. Page's warnings.

In his first report as Auditor-General, Michael Ferguson said the Department of National Defence gambled on the F-35 fighter jet without running a fair competition, while lacking cost certainty or any guarantee the plane could replace the current fleet of CF-18s by the end of the decade.

He said the plan to buy new jets was conducted in an unco-ordinated fashion among federal departments, with key data hidden from decision makers and parliamentarians.

In response, the Conservatives vowed a more transparent and rigorous process for keeping a lid on costs in the fighter purchase, saying they would conduct an independent review of the F-35's purchase and support costs and make this public.

In recent weeks, the government has deliberately wavered on Canada's commitment to the F-35 – a move that aims to put distance between itself and an increasingly expensive procurement. The Tories are eager to create enough wiggle room so that they're not wedded to the plane if the procurement goes even more badly awry.

It's a dramatic change from July, 2010, when Defence Minister Peter MacKay stood beside a scale model of an F-35 and announced the government was acquiring the plane, calling it "the best aircraft we can provide our men and women in uniform to face and defeat the challenges of the 21st century."