Analysts react to Ottawa’s $7B fighter jet deal

Experts are warning against drawing conclusions on whether Canada is getting a good deal for the F-35, given the large startup costs associated with buying and fielding a new fighter jet, which include much-needed upgrades to the Air Force’s physical and digital infrastructure.

While a formal announcement has not been made, The Canadian Press reported on Dec. 20 that the Department of National Defence has received authorization to spend $7 billion on an initial set of 16 F-35s and associated gear.

While that works out to about $450 million per plane, which is about four times more than the publicly reported cost of the aircraft, the total includes weapons and spare parts, new facilities to house and maintain the fighter jets and upgrades to the military’s computer networks.

Experts say those infrastructure and network upgrades are necessary given the state of the Air Force’s current facilities and the advanced nature of the F-35 compared to the CF-18s, and they almost certainly account for most of the $7 billion.

“What’s occurred here is they basically front-loaded every single cost that wasn’t related to the acquisition of the aircraft,” said F-35 expert Richard Shimooka of the Macdonald-Laurier Institute. “Hangars, labs and support equipment. They’ll probably buy all of the terminals and support equipment right off the bat.”

The Liberal government has repeatedly promised to buy a total of 88 new fighters to replace Canada’s aging CF-18s, which sources say will occur in batches.

Many of the questions about the cost of Canada’s plan have revolved around an announcement last week that Germany has inked a US$8.4-billion deal to buy 35 F-35s and associated weapons, spare parts and support services from the United States. That works out to about C$11.4 billion, or $325 million per plane.

“The reported cost of this purchase, for only 16 jets, is outrageous,” NDP defence critic Lindsay Mathyssen said in a statement on Wednesday.

“Earlier this year, the government intended to purchase 88 fighter jets for $18 billion. Clearly today’s news suggests the government is not interested in getting the best value and is leaving Canadians on the hook to pay for their bad decisions.”

A report published by the Defence Department in August 2013 laid out the anticipated costs associated with replacing Canada’s CF-18s with F-35s. These included simulators, ground support equipment, repair facilities, a reprogramming lab and upgrades to various bases and airfields across the country.

Carleton University professor Philippe Lagasse, who previously served on an independent panel charged with assessing military procurements, said it is clear the $7 billion includes more than simply 16 F-35s.

“So you can’t just divide 16 by $7 billion,” he said. “We already know that involves infrastructure and involves upgrades, involves weapons systems. So there’s a lot bundling. And until we get the details, nobody can comment on what this involves in terms of per-unit cost.”

Retired lieutenant-general Andre Deschamps, who previously served as commander of the Royal Canadian Air Force, said the government would need to spend money to upgrade the country’s fighter jet bases in Cold Lake, Alta., and Bagotville, Que., no matter what aircraft it ended up buying.

“These are 1950s hangars that we built in Cold Lake and we built in Bagotville,” said Deschamps, who now works for Ottawa-based CFN Consultants, a lobbying firm whose customers include Lockheed Martin. “So there’s a major investment required no matter what fleet we buy.”