Vimy Paper: The F-35 Program, Defence Procurement, and the CF-18 Replacement Debacle

The Conference of Defence Associates has published it's latest Vimy Paper. In it, Richard Shimooka outlines the troubled history of the RCAF's CF-18 replacement. Shimooka starts as early as 1997, but mainly focuses on the Harper Era in his paper, tracking the procurement of the CF-18 Replacement from 2006 to 2015. While Shimooka does not make a direct appeal to purchase the F-35 JSF; I believe there is a fair amount of bias in the article to indicate that he is calling for the government to learn from past procurement, and move forward with the purchase. 

Decide for yourself: 

"The Fourth Dimension: The F-35 Program, Defence Procurement, and the Conservative Government, 2006-2015"

 Executive Summary:

Since 1997, the Government of Canada has engaged in a process to replace its tactical fighter fleet of 122 CF-18 Hornets, which were acquired in the 1980s. Much of that history has been intertwined with a single aircraft: Lockheed Martin's F-35. The public discourse has largely been dominated by criticism of the selection process, as well as the aircraft's capabilities, cost, and attendant industrial benefits.

Inside of government, a very different view emerged. The federal bureaucracy, initially led by the Department of National Defence worked to undertake a proper evaluation of the CF-18 replacement program. Far from being exorbitantly expensive or technologically defective, it discovered the F-35 was the best option for Canada and recommended a sole source selection in 2010. Program troubles in the United States, two deeply flawed oversight reports by the Parliamentary Budget Officer and the Office of the Auditor General, as well as a series of errors by the government resulted in a loss of support for the project. Consequently, a new assessment process was launched in 2013, known as the Seven-Point Plan. However, it too endorsed the sole-source selection of the F-35, resulting in a series of culminating events leading up to the 2015 federal election.

This study is a history of these events. It is a story not of bureaucratic mismanagement or military bias, but one of civil-military relations and political dysfunction. The Liberal victory in the October 2015 election might have initiated a new phase of the CF-18 replacement program history. Yet the preceding several years should provide a number of lessons going forward. Few, if any, of the program's fundamentals have changed. Many of the considerations that underpinned the original analysis are still valid. The current government would do well to take heed of what occurred before.

To read the full Vimy Paper, see link below.

http://www.cdainstitute.ca/images/Vimy_Papers/Vimy_Paper_33.pdf

Lockheed Gets Sole-sourced Maintenance deal on CC-130 Hercules

By: Lee Berthiaume, Ottawa Citizen 

OTTAWA — Months before a mini-war of words over the F-35 stealth fighter, the federal government and Lockheed Martin quietly inked a deal for the U.S. aerospace giant to provide maintenance support and training for one of the military’s transport plane fleets.

The $500-million agreement, which extended an earlier contract to 2021, was never publicly announced or put to a competition. This was despite Defence Department auditors flagging a lack of transparency and raising questions about value for money in the original contract.

The government has cited national security to justify why other companies were not allowed to compete. It also says the new contract addresses the auditors’ concerns.

One former Defence Department official says it’s no surprise Lockheed and the government have continued to do business while wrangling over the F-35. “There are only so many big players out there,” said Alan Williams, former head of procurement at National Defence.

However, Williams said the way the deal was concluded doesn’t pass the smell test, and that it raises fresh concerns about waste.

“National security exemptions should be used in really exceptional cases where there really is a national security risk to Canada,” he said. “You shouldn’t use it to get around poor planning.”

In December 2007, the Conservative government inked a $1.45-billion deal for Lockheed to sell 17 Hercules military transport aircraft to Canada.

Two years later, the contract was amended to include seven years of maintenance support and training at a cost of $800 million. The support work was not put to a competition because National Defence had implemented a policy that year to award support contracts to the company that provided the equipment.

Then last June, Lockheed proposed extending the contract another five years. Public Procurement spokesman Pierre-Alain Bujold confirmed an extension was signed on Dec. 15 for $504.3 million. He said the contract was not put to a competition because it was “subject to a national security exemption.”

The new deal was signed the same month Defence Department auditors raised concerns with the original contract. In particular, Lockheed received full payment but only did half the work originally expected because a shortage of pilots and mechanics meant the Hercules were only flown half as much as planned.

Complicating matters, the auditors wrote, was the fact Lockheed closely guarded how much the work cost it to perform. That threatened to make negotiations difficult for government officials wanting to tailor any new contract to the air force’s needs.

Defence Department spokeswoman Ashley Lemire said Tuesday that the new contract includes enough flexibility to meet the military’s current and future needs. Williams, however, said the only way to truly ensure the government and Canadians are getting value for their money would be to run a competition.

“I don’t know if the deal with Lockheed was the best one,” he said. “I worry when you sole-source any type of contract, you’re wasting taxpayers’ money. And there may have been other players out there, equally capable, that would be in our best interest.”

In addition to the Hercules maintenance contract and the F-35, Lockheed is also hoping to secure billions of dollars of work as part of the federal national shipbuilding plan.

• Email: lberthiaume@postmedia.com