Canadian Manufacturing

Turbulent F-35 prices are set to soar

Delays and reduced orders for the much-anticipated F-35 stealth fighter are forcing the purchase price to skyrocket.

OTTAWA—Delays and reduced orders for the much-anticipated F-35 stealth fighter are forcing the purchase price to skyrocket.

The Pentagon didn’t say how much more the aircraft will cost, but is “encouraging” other nations who are part of the program not to panic and bail out.

Frank Kendall, the Pentagon’s acting chief of acquisition, said the U.S. is counting on international sales to keep program costs stable over the next few years.

“We’re encouraging them to stay with the program,” Kendall said Tuesday in Arlington, Va., following a defence industry conference.

Prime Minister Stephen Harper, Defence Minister Peter MacKay and junior defence minister Julian Fantino lined up to defend Canada’s planned purchase of 65 radar-evading jets.

Fantino has suggested in media interviews that the program is evolving, but didn’t elaborate. MacKay skirted the question of whether Canada will follow Italy—and possibly Britain—in cutting the size of their planned orders.

“The entire program has not been without problems both in terms of timeline and cost estimates,” he said following a meeting with German Defence Minister Thomas de Maziere.

“We’re committed to buying aircraft that are going to give the Canadian Forces the chance they need to perform mission success.”

Harper told the House of Commons the jets will be delivered and the project will come in at the advertised $9-billion.

“There is a budget for that. The government has been clear. It will operate within that budget,” Harper said in response to questions from the NDP.

The Conservative government has insisted for almost a year that it will pay only $75 million per aircraft and has stuck to that claim despite a flurry of reports and estimates projectioning the price will be between $110 million and $115 million.

Canada’s parliamentary budget officer, Kevin Page, ignited the debate almost a year ago with a report that suggested the Defence Department’s estimates were wrong and based almost exclusively on estimates from the manufacturer, Lockheed Martin.

The continuing fiscal crisis in Washington and repeated delays in the program have forced the Pentagon itself to drop 13 aircraft from its 2013 purchase order and to postpone buying an additional 179 jets between 2013 and 2017.

Since the price per aircraft is tied to the overall number of planes purchased each year, allies are getting nervous. MacKay confirmed Canada will soon convene a meeting in Washington with other F-35 nations to talk about problems with the program.

That get-together is a pre-cursor to a bigger international meeting in Australia where delays and development problems with the jet will be thoroughly hashed out.

Air force planners have insisted that in buying 65 jets, the country is purchasing “the minimum acceptable fleet size.”

A 2010 briefing intended for the chief of air staff said the military should “be prepared to manage the operational risk should the fleet drop below 65 due to attrition.”

The government doesn’t have to sign a contract until next year.

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