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Reality Check: Stephen Harper’s five biggest F-35 fictions

Posted on April 19, 2011

More proof Stephen Harper will have to cut health care to pay for his election promises
 

Mr. Harper consistently ignores evidence about the costs of his risky, untendered F-35 deal, which will cost at least $30 billion – at exactly the same time that the Health Accord will need to be renewed.

Here are Stephen Harper’s five biggest fictions on the F-35s – and the reality about the risky, out-of-control costs of this deal.

Fiction #1: The contract for a new fighter jet would be an “open, competitive, transparent process.” (Peter MacKay, openparliament.ca, May 27, 2010)

Reality:  There was never an open competition for the purchase of new fighter jets to replace Canada’s CF-18s.  In fact, other potential bidders were never given an opportunity to present their proposals.  At a Parliamentary committee meeting last November, Boeing vice-president Kory Matthews testified that the Conservative government never bothered to learn the full capabilities of the F-35’s main competitors: “What I am sharing with you here today, sir, is that a full complement of the Super Hornet’s capabilities from the United States Navy has not been provided to Canada.” (Standing Committee on National Defence, November 4, 2011) The Conservatives will pay billions more for the F-35 without considering alternative options on the market that could meet Canada’s needs.

Fiction #2: “The contract we signed shelters us from any increase in those kinds of costs, so we’re very confident of our cost estimates.” (Stephen Harper, Press Conference, April 8, 2011)

Reality:  No contract to purchase the F-35s has been signed – so Canada is not sheltered from any cost increases.  According to the Parliamentary Budget Officer’s report on the F-35s, “Canada has not signed any binding contract for acquisition, nor is it under any legal obligation—international or domestic—to go ahead with the purchase. The significant investment made in the development phase is a sunk cost, so a decision not to proceed with the acquisition would not result in any incremental financial costs to the Canadian government.”

Fiction #3: The F-35s will cost $75 million each.

Reality:  Mike Sullivan, a Director in the U.S. Government Accountability Office, recently told CBC that the $75 million (CAD) per fighter jet estimate frequently cited by the Conservatives is “not a number that I am familiar with at all.”  A report from Canada’s Parliamentary Budget Office also confirms that, “a figure of $75 million does not match other data points in the public domain.” Mr. Sullivan estimates that for the F-35 A variant Canada will pay “somewhere between $110 and $115 million” (USD) per fighter jet – an assessment in line with what other countries are estimating.

Meanwhile, Canadians have no details about the engines of Canada’s F-35s, who will provide them, or how much they will cost (“Engines not included in Canada’s $29B fighter jet deal,” Postmedia News, April 16, 2011).  In the U.S., the F-35 engine is purchased through a separate contract directly with Pratt and Whitney.  The F-35 engine contract will cost the United States an estimated $75 billion (USD), and is experiencing development cost overruns of $3.4 billion.  (“U.S. “not happy” with F-35 engine cost overruns,” Reuters, April 13, 2011).  

Fiction #4: We will pay less per plane than the U.S. government.

Reality:  There’s no contract in place that specifies the cost of the F-35, but even if there was, it would be against U.S. law for Canada to get a lower price.  According to the Parliamentary Budget Officer, “Under U.S. law, defence material cannot be exported at a lower price than that paid by the U.S. government itself (pg. 12)… Some provisions of U.S. law would also have had to be waived to make the deal possible, because laws covering defense exports specifically require that foreign customer prices are set on the same basis as U.S. purchases (pg. 48).”

Fiction #5: Canadian industry will have the opportunity to secure up to $12 billion in regional industrial benefits.

Reality:  Contrary to the Conservatives’ inflated estimates, the Pentagon originally estimated Canadian companies would receive approximately $3.9 billion in regional industrial benefits. In 2008, Canada’s Department of Defence estimated that Canadian companies stood to receive $5-$8 billion in contracts.

Canada secured industrial regional benefits in the competition to purchase our CF-18s equal to the cost of the contract, but the Conservatives have abandoned Canada’s traditional dollar-for-dollar regional industrial benefit policy and have shown no interest in negotiating guarantees for Canadian industry when it comes to the F-35s.

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