Auditor-General Karen Hogan says F-35 costs soar amid project delays, pilot shortages.
The Canadian Press
The cost of replacing Canada’s aging warplanes with U.S.-made F-35 stealth strike fighters is expected to cost nearly 50-per-cent more than the estimate Ottawa provided Canadians, a report from the federal Auditor-General says.
These findings arrive as Prime Minister Mark Carney’s government is weighing whether to scale back Ottawa’s order for the F-35s and instead buy European-made fighter planes to reduce Canada’s reliance on U.S. military equipment.
The federal government, which finalized a deal to buy 88 F-35 Lightning fighters from Lockheed Martin in December, 2022, said the acquisition would cost about $19-billion. But Auditor-General Karen Hogan’s office said Tuesday it found this figure was based on outdated information and that by 2024, estimated costs had increased to $27.7-billion.
The additional costs of $8.7-billion are almost as much as the $9.3-billion in extra defence funding that Mr. Carney announced Monday he would inject into the Department of National Defence this year.
The warplane replacement program also faces significant risks that could jeopardize the introduction of a new fleet of fighters, the Auditor-General found. Construction of two new fighter squadron facilities in Cold Lake, Alta., and Bagotville, Que., to accommodate the F-35s is more than three years behind schedule and the Canadian Forces are facing a possible shortage of qualified pilots, the watchdog said Tuesday.
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Inflation, fluctuations in foreign exchange rates and heightened demand for munitions are three factors that have driven up the cost of acquiring the F-35s, the Auditor-General found. The Department of National Defence “was supposed to closely monitor inflation and foreign currency exchange rates because of the potential impact but did not always do so,” the report said.
The Office of the Auditor-General said even the updated $27-billion-plus price tag for the F-35s does not include essential Forces’ infrastructure upgrades and advanced weapons that would add at least another $5.5-billion to the total cost of acquiring the fighters.
Auditor-General says inflation, fluctuations in foreign exchange rates and heightened demand for munitions have driven up the cost of acquiring the F-35s.Sean Kilpatrick/The Canadian Press
Defence Minister David McGuinty on Tuesday played down the nearly $9-billion increase in costs for the F-35 fleet. “In a project this big, it’s normal for costs to fluctuate over time,” he told the House of Commons.
In a separate statement, the minister said he takes the Auditor-General’s findings seriously. He committed to updating Canadians regularly on acquisition projects and blamed the huge cost increase on “external economic conditions driven by the COVID-19 pandemic, including global supply chain disruptions, work-force shortages, and increased inflation and foreign exchange rates.”
Canada’s current fighter aircraft fleet of CF-18s is reaching the end of its service life and must be replaced in a timely manner to meet operational commitments such as the defence of Canada and North America, the Auditor-General’s office noted. CF-18s are the primary Canadian aircraft assigned to the bilateral North American Aerospace Defence Command and are supposed to be on continuous alert to respond to potential aerial threats to the safety of North America, it said.
The CF-188 Hornet first entered service in the 1980s. The operating life of the Hornets has been extended through a refurbishment initiative known as the Hornet Extension Program, or HEP.
CF-18s are supposed to be gradually withdrawn from service between 2025 and 2032 and replaced with F-35s.
Speaking to reporters later Tuesday, Mr. McGuinty defended the F-35 acquisition and declined to offer any indication that Ottawa might reduce the U.S. warplane order.
Shortly after Mr. Carney took office in March, the Prime Minister said Ottawa would weigh trimming its F-35 purchase plans to buy an alternative aircraft that would be more cost-effective and could deliver additional industrial benefits domestically instead of sending more dollars to the U.S.
He spoke favourably of the F-35s. “I’ve just come back from the NATO meeting where I believe 30 of the 32 NATO partners are participating in the F-35 program,” he said, adding later: “It is a fifth-generation fighter jet at a time when the world is looking for fifth-generation fighter jet capacity right across NATO.”
Mr. McGuinty said the review of the F-35 order will be finished this summer and added he wouldn’t prejudge its findings.
Johannes Christo/Reuters
Speaking at a news conference Tuesday, Ms. Hogan said that while some of reasons for higher costs, such as inflation and currency fluctuations, are out of the government’s control, Ottawa is responsible for higher costs related to delays in building the infrastructure required for the new aircraft.
“I think that’s my biggest concern here,” she said. “This is a really long project, and in order to be ready to receive those planes, something needs to happen to fill the gap for trained pilots and to have the infrastructure ready. Because right now, the interim measures are only going to see additional costs.”
Andrea Charron, director of the Centre for Defence and Security Studies at the University of Manitoba, said there has not always been sufficient attention to big-ticket procurements both within the Department of National Defence and elsewhere, such as Treasury Board and Public Works.
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“Canada has lost many procurement specialists, and they tend to rotate positions, especially who is the lead on the F-35 and so there is not necessarily consistent, persistent attention to a very complicated file,” Prof. Charron said.
“Multiple eyes are supposed to be on these contracts, so where is the accountability of the other departments as well?”
Conservative Party Leader Pierre Poilievre said the government needs to spend defence money wisely and joked that Canada could end up spending 5 per cent of its gross domestic product on the military - a proposal from U.S. President Donald Trump - if cost overruns keep occurring.
“If you have another 10 or 15 boondoggles like this, you can probably hit the 5 per cent so the question we have to ask ourselves: ... Is the goal to push out as much money as possible, or is the goal to have the best equipped, the best trained and the best quality of life for our military?”
With a report from Bill Curry