F-35 procurement troubles may hurt military's relations with allies

The widening fallout from a botched program to replace Canada's aging CF-18 fighter jets may be damaging the military's relationships with its international allies.

A defence briefing note says hundreds of arrangements the military has with allies to share facilities and services are being called into question, and must be reviewed as if they were formal supply contracts.

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The arrangements now are subject to a time-consuming procurement process that is tying the department in knots and leaving the military sometimes unable to commit to joint operations internationally.

"Increasingly, Canada is viewed as a challenging partner with which to work," says the note, dated last August, outlining the problem for then deputy minister Richard Fadden.

"Canada often struggles to meet timelines to participate in international co-operative activities. Recently we have [been] excluded from some partnership opportunities due to our inability to commit in a timely fashion to joint efforts."

"This means additional costs will accrue to Canada going it alone."

CBC News obtained the briefing document under the Access to Information Act.

Under scrutiny are several hundred memorandums of understanding, or MOUs, that the Canadian Forces have signed with other militaries to share facilities, such as those on bases, or to jointly acquire goods and services.

These standing arrangements help bind allied forces together, save money and speed the provisioning of joint operations that are often under time pressures.

Net cast wide

But such arrangements have been caught in a wide net cast by Public Works and cabinet to ensure none of the mistakes in the CF-18 file are repeated.

Stung by the auditor general's 2012 report that lambasted the military's opaque process to buy F-35 fighter jets to replace the aging CF-18 fleet, the Harper government launched its own review, which found MOUs were at the heart of the problem.

The military signed three MOUs with the U.S. in 1997, 2002 and 2006 committing Canada in some measure to the new F-35 fighter jets, but had not enlisted Public Works, which vets federal procurements. Public Works got involved only in 2010, as the procurement process fell into disarray.

The finding has forced the military to review many of its other MOUs and send them to Public Works and the Treasury Board for vetting as possible procurement contracts in disguise.

Obviously, there's going to be a lot more work up front.— Dave Perry, defence analyst

In the six months following a February 2014 directive on the new vetting policy, the Defence Department sent 221 MOUs to Public Works and the Treasury Board for review, creating "administrative complexity," says the document.

The note cites one example, a Canada-U.S. arrangement in which each partner allows the other to use test facilities at reduced costs. The Canadian Forces have used American facilities 112 times since 2002, at a cost of $100 million.

Had the new vetting regime been in place, time-consuming procurement submissions to the Treasury Board would have been required in at least 71 such cases, as sole-source contracts above a certain dollar threshold.

The document does not identify any specific operations abroad that have been affected by the tighter rules. And defence spokeswoman Ashley Lemire did not respond to a series of requests for more details, providing only a general statement about MOUs.

Loss of trust

Dave Perry, senior analyst at the Canadian Defence and Foreign Affairs Institute, said the briefing note indicates the military has lost the trust of Public Works and the Treasury Board. That loss of trust by the centre was a key theme in Perry's study last month on how to repair the defence procurement process.

His study also found that National Defence has understaffed its procurement arm, and he said the new vetting process for MOUs will add further pressures.

"Obviously, there's going to be a lot more work up front," he said in an interview. "What this is doing is pulling everything up and putting it through the same kinds of checks and applications … that a formal procurement would have to do."

Although there may be benefits from the new policy down the road, Perry said, there's a risk it may be capturing too many MOUs.

It "wouldn't be the first instance with a procurement file where there's been an over-correction."

Last week, newly appointed Defence Minister Jason Kenney said he would improve the way military procurements are conducted.

"A working group of ministers will ensure a streamlined and co-ordinated decision-making — and that's not just talk," he told a defence conference in Ottawa.

"I will do everything I can in this office to advance these critical procurement projects."

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