NORTH Vancouver MP Andrew Saxton says he agrees with the conclusions of a damning auditor general's report on the federal government's handling of the multi-billion-dollar F-35 fighter jet program.
As parliamentary secretary to the president of the treasury board, Saxton is the government's point man on Parliament's public accounts committee, the panel that receives and reviews the auditor's findings.
"I represent the government, I represent the minister on this committee," Saxton told the North Shore News this week. "When it comes to the conclusions and recommendations of the auditor general, the government agrees with those. I think the auditor general has been extremely helpful. That's his job, to find ways we can improve the process as a government."
In his recent "Replacing Canada's Fighter Jets" report, auditor general Michael Ferguson accused the government of failing to run a genuinely competitive procurement process and failing to tell Parliament or the public the true cost of the warplanes.
"National Defence did not exercise due diligence in managing the process to replace the CF-18 jets," wrote Ferguson. "Full life-cycle costs were understated in the estimates provided to support the government's 2010 decision to buy the F-35. Some costs were not fully provided to parliamentarians. There was a lack of timely and complete documentation to support the procurement strategy decision."
Although Ferguson noted that defence department officials didn't bring in their public works department colleagues until "late in the decision-making process," the department "did not demonstrate due diligence in its role as the government's procurement authority."
Defence Minister Peter MacKay announced plans in 2010 to buy 65 F-35 aircraft for $9 billion, with an additional $5.7 billion budgeted for operating costs. A similar figure was given to parliamentary budget officer Kevin Page in March of 2011. According to Ferguson's report, this figure conceals $10.44 billion for fuel, pilot salaries and contingencies such as accidents or loss of aircraft in combat. Based on past experience, Ferguson wrote, Canada will need to purchase 14 additional F-35s over the next 36 years to maintain its fleet.
The difference, Saxton argued, is purely a matter of accounting practices.
"Those are costs that would have been incurred regardless of whether we bought new jets or kept the old CF-18s," he said. "They are not specific to the F-35. This is the way it has historically been presented. What the auditor general has asked is for the operational costs to be included in the life-cycle costs."
Canada has spent more than $300 million on development so far, but Saxton said that is offset by as much as $400 million in contracts for Canadian industry, and the promise of "billions more" if the purchase goes ahead.
Ferguson also told the committee that Canada was sucked into the nine-nation, U.S.-led development program without fully examining alternatives such as modernized F-18s or the Typhoon II flown by several European allies.
By 2006, he wrote, the public works department "endorsed the key decision to sole-source the acquisition of the F-35 in the absence of required documentation and completed analyses. By that time, practically speaking, Canada was too involved with the aircraft and the (Joint Strike Fighter) program to run a fair competition."
Saxton reiterated that the government accepts Ferguson's conclusions and in addition to the public accounts committee review, will set up a jet fighter secretariat along the lines of the one that awarded two massive shipbuilding contracts in 2011 - one of them in North Vancouver.
"We intend to take that model and apply the same criteria to the fighter jets," Saxton said. "There is going to be regular reporting to Parliament. There will be independent outside experts advising on the costing of the jets going forward."
In order to defend Canadian airspace and defend Canadian interests overseas, Saxton said, the aging CF-18 fleet must be replaced, and his government is committed to spending no more than $9 billion on that purchase, which could translate into fewer aircraft if the per-plane cost rises.
"If we want to continue to have an air force, we have to find a replacement," Saxton said. "Our objective is to find the best value but also the type of equipment similar to what our partners have so we can participate with our partners should the need arise.
"We will have to consider those options. At the end of the day we have to make sure we have the right equipment. All nine countries are going through the same decision-making process right now and considering their options."
With the F-35 essentially still in development, several of those nine nations have developed varying degrees of cold feet. Australia scaled back its initial order of 100 planes and has since bought two dozen modernized F-18s. Great Britain switched its order to a cheaper variant and London says it will hold off on a firm purchase decision until 2015. Israel is investigating refurbished F-15 Eagles, Italy has cut its order from 130 planes to 90, and Japan is reconsidering its entire 42-plane order as prices continue to spiral upwards. Norway and Turkey, however, remain committed to buying 152 F-35s between them.
In addition to the auditor general, the public accounts committee has summoned several senior bureaucrats to testify regarding how the procurement was handled.
Saxton agreed with Ferguson that at this point, no one really knows what the F-35's price tag will be.
"These are all estimates. We don't know the final cost. There's a lot of technology involved, and it should really be emphasized that until the plane is available for sale we don't know the final cost. But at the same time we have a budget of $9 billion and we will work within the budget."
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