F-35 delivery could be delayed to save money

Canada may delay its purchase of new F-35 joint strike fighter jets to get a better price, the minister in charge of military procurement says.

Julian Fantino, associate minister of national defence, says if Lockheed Martin is late on its proposed production schedule, Canada will adjust the timing of its purchase to hit peak production.

Fantino says the government has some flexibility with the CF-18 fleet, so Canada can wait to order the F-35s if Lockheed Martin reaches full-scale production later than planned.

"This means that we have the flexibility to shift our orders within the production schedule to achieve the best results for Canadian taxpayers," he told a Canadian defence and security industry audience in Ottawa on Friday.

"Our intention is to receive the F-35 when it is most cost-effective and development is complete. And this is currently between 2017 and 2023, but this is something that we can and will adapt in order to achieve the best cost results." 

The government planned to buy the jets at full-scale production, when it's cheaper to build them compared to when they first roll off the line. But with delays in developing and building the jets, and Canada's CF-18s getting close to the end of their lives, the possibility of rising costs is increasing.

The CF-18s will be more expensive to maintain as they get older.

Canada has budgeted $9 billion for the purchase, training and maintenance of the jets. The government plans to buy 65 F-35s, but Fantino said there are "a lot of variables."

"The only thing that's possible is that I am not in a position to speculate or to in any way, shape or form speak to information about which I'm not quite certain right now," he told reporters.

'A pile of money'

A former CF-18 pilot and operational fleet manager says it will cost a lot of money to use the CF-18s past 2017.

Steve Fuhr says the Canadian Forces originally extended the life of the CF-18s to 2017, giving the jets upgrades to systems, weapons and sensors, as well as structural upgrades. But other parts of the aircraft, like the engines and fuel tanks, weren't addressed.

"Aircraft fatigue is probably the most significant factor when determining the life of an aircraft," he said in an email to CBC News.

Officials thought some of the planes could last until 2020 if fatigue is managed very carefully, Fuhr said. But making it to 2023 is "a stretch" that is most likely to come at the cost of reduced flying hours.

"This is significant because pilots are already flying the minimum hours to meet their mandatory requirements," he said. 

"In my opinion, stretching the CF-18 to 2023 will have significant operational consequences in terms of aircraft availability. It will also cost a pile of money."

But senior Air Force brass say the CF-18 modernization and structural life extension programs will allow the jets to keep flying far beyond 2017.

"The Royal Canadian Air Force's flexible approach to planning means that the CF-18 will be able to operate safely and effectively into the early 2020s timeframe," said Maj.-Gen. Yvan Blondin, deputy commander of the RCAF, in a comment emailed to CBC News.

No contract yet

Fantino says all nine partner countries, including the U.S., Norway, Italy and Australia, are still committed to developing the F-35, despite the challenges of getting a new plane rather than buying one already in existence.

On Tuesday, Fantino told the House defence committee that the government hadn't counted out the possibility of backing out of the program.

"None of the partners have. We are not. And we’ll just have to think it through further as time goes on, but we are confident that we will not leave Canada or our men and women in uniform in a lurch, but it’s hypothetical to go any further right now."

Fantino also said the government won't decide on the purchase until it knows how much it will cost, pointing out Canada hasn't yet signed a contract. There's a memorandum of understanding between the partner countries, but nothing that binds Canada to a purchase.

The official in charge of military equipment told the committee the same day that there's a team in place at the Department of National Defence to look for alternate options. But it doesn't appear there are any, Dan Ross told MPs.

The National Post reported Friday that a report by Auditor General Michael Ferguson will say defence officials misled Parliament on the F-35 deal. Previous reports on defence procurement by former auditor general Sheila Fraser took defence officials to task over the information they gave the minister's office about the purchase of Cyclone and Chinook helicopters. Fraser said the years-late and over-budget choppers were presented as simple or off-the-shelf purchases when they were more complicated.

Prime Minister Stephen Harper on Friday echoed Fantino's comments about there being no F-35 contract.

"Obviously, at some point, the [CF-18] planes will reach the end of their useful life," he said in Montreal. "At some point we will have to make a final decision, but obviously we have not signed a contract so that we can retain our flexibility in terms of ensuring the best deal for taxpayers."

That flies in the face of his past comments, however.

Harper backtracks on whether contract exists

In April 2011, Harper said in Esquimault, B.C., that Canada had signed a contract that protected the government from increased costs.

"A lot of the developmental costs you're reading in the United States, the contract we've signed shelters us from any increase in those kinds of costs," he said. "We're very confident of our cost estimates and we have built in some latitude, some contingency in any case. So we are very confident we are within those measures."

A few months before that, in January 2011, Harper told an aerospace industry audience to speak out to challenge opposition parties who were asking for the government to have companies bid for the right to the fighter jet contract.

"I find it sad that some in Parliament are now backtracking and talking about cancelling contracts," Harper said. "We have to take opposition threats to cancel these contracts seriously. They have done it before … and they will do it again unless you make your voices heard."