F-35 Lightning II

On 07 June 2016 Defence Minister Harjit Sajjan indicated that the federal government was no longer committing to an open tendering process to buy new fighter jets. The government moved away from its commitment – repeated frequently since last November – to hold an “open and transparent” competition to replace the three-decade-old CF-18s. By June 2016 a seven-member federal cabinet committee is drawing up final options to replace Canada’s aging fighter jets. The cabinet committee is working to refine the choices that will eventually be put in front of the full cabinet, where there would be a debate before the government made a final call. Critics, including Conservatives, accused the Liberals of rigging the process to purchase a fleet of Boeing Super Hornets at the expense of the F-35.

Justin Trudeau, who led his Liberal Party to a commanding victory in 19 October 2015 parliamentary elections, campaigned on a platform that stated "We will not buy the F-35 stealth fighter-bomber. We will immediately launch an open and transparent competition to replace the CF-18 fighter aircraft. The primary mission of our fighter aircraft should remain the defence of North America, not stealth first-strike capability. We will reduce the procurement budget for replacing the CF-18s, and will instead purchase one of the many, lower-priced options that better match Canada’s defence needs."

The St. Louis Post-Dispatch reported on 20 October 2015 that "Pentagon data show the last batch of F-35 A-model jets cost $108 million each, although that price is slated to drop to $85 million by 2018. Boeing's F/A-18E/F currently costs $60 million per aircraft, according to the US Navy".

In February 2016 Defence Minister Harjit Sajjan told an audience of experts and industry representatives that the government would not exclude the F-35 from the competition for a new aircraft. The Government planned an open and transparent process that would focus on obtaining the right aircraft for Canada. Ensuing media coverage framed the statement as a backtrack of the Liberals’ campaign promise, but excluding the F-35 was never an option to begin with. Prejudging the outcome of the competition by explicitly excluding the F-35 would violate Canadian law. The government can write requirements that put emphasis on control over Canada and its borders and defense of North America, in which case requirements other than stealth become much more valuable features.

In October 2014 Canada announced plans to conduct yet another modernization of its CF-18 fighter jets, an effort that would further delay purchases of the F-35 joint strike fighter. The upgrade will allow the Boeing-made CF-18s to fly until 2025.

Canada required a fighter aircraft to contribute to the safety and security of Canadians and protect the sovereignty of one of the largest expanses of airspace in the world. Canada will replace its CF-18 with the best plane, at the best value for taxpayer dollar, to protect Canadian sovereignty up to the 2050s. The multi-role CF-18 entered service in 1982 with an original Estimated Life Expectancy (ELE) of 2003. Aggressive fatigue management and structural repair programmes have extended the current ELE to the 2017-2020 timeframe. Concurrently, a comprehensive CF-18 modernization program has ensured the aircraft will remain survivable and operationally relevant in both the Counter-Air and Counter-Surface roles throughout this extended lifetime.

No other platform within the Canadian Armed Forces (CAF) inventory was capable of fulfilling all CF-18 mandated roles. With the retirement of the CF-18, the CAF will lose its capability to contribute to aerospace/land/maritime effects in the domestic, continental and international domains unless a suitable capability replacement is introduced into service. Canada has an operational requirement to replace the existing fleet of CF-18s with a fighter aircraft capable of delivering aerospace capabilities in support of CAF operations.

The government must decide whether to proceed with the F-35 purchase or conduct a competition involving other fighter aircraft as well. But the decision won't come until well after the federal election in October 2015.

In July 2010, the Government of Canada announced its decision to buy 65 F-35 Lightning II jets to replace Canada’s CF-18 fleet. The announcement was the culmination of nearly 13 years of Canada’s participation in the United States-led Joint Strike Fighter Program. Buying and maintaining the F-35, or any other fighter jet, will require a significant long-term financial commitment. It will have far-reaching economic and operational impacts on Canadians and the Canadian Forces. Decisions taken to date as well as those yet to come will have impacts for the next 40 years.

National Defence considers 65 aircraft the minimum number needed to meet its training and operational requirements. Based on past experience, National Defence expects to lose aircraft in the course of normal usage. Based on National Defence’s assumed attrition rate, in order to maintain the fleet of 65 aircraft, Canada may need to purchase up to 14 additional aircraft over the next 36 years. National Defence did inform the government of the need to consider the requirement for attrition aircraft at a later date.

In early 2010, National Defence restarted the process to obtain a government decision to buy the F-35. Following the government’s 2010 announcement, National Defence informed the US Joint Strike Fighter Program Office of its plan to reduce the purchase to 65 aircraft. National Defence’s public response to Parliamentary Budget Officer’s report in March 2011 reported total capital costs for 65 F-35s of CN$6.0 billion, with additional capital acquisition costs [weapons, training, etc] of another CN$3.0 billion. A further CN$3.0 billion was projected for contracted sustainment for 20-year operating costs. The Auditor General of Canada’s 2012 Spring Report - Replacing Canada’s Fighter Jets, reported that National Defence’s estimates used for decision making in June 2010 had included a further CN$860 million for Contingency, for CN$4,830 million for Operating costs, and CN$4,740 millionfor National Defence personnel. This placed the total budgetary commitment at CN$25,120 million rather than the previously reported CN$14,700 million.

The estimated life expectancy of the F-35 is about 8,000 flying hours, or about 36 years based on predicted usage. National Defence plans to operate the fleet for at least that long, and based on experience with other aircraft, it is plausible that the total life expectancy might be 12,000 hours, equating to about six decades. With personnel, operating, and maintenance costs running at about CN$8 billion per decade, that would work out to between CN$32 billion to CN$48 billion owndership cost, versus CN$8 billion purchase price.

While the Auditor General’s Report noted that the extra CN$10 billion or so was "more broadly associated with fighter jet capability (such as personnel)" and would be incurred for any fighter, not just the F-35, the result was national sticker shock among those not conversant with such matters. In response to the Auditor General’s Report, the Government of Canada released a comprehensive Seven-Point Action Plan to fulfill and exceed the Auditor General’s recommendations. The Government of Canada immediately established a new National Fighter Procurement Secretariat (NFPS) within the Department of Public Works and Government Services Canada.

In December 2012 Canada pulled out of the deal to buy 65 F-35s over fears that the aircraft could be too expensive to run, saying it would now evaluate all available options for acquiring new fighters. The Independent Review Panel assembled to provide oversight of analysis carried out for the government’s next fighter jet purchase asked that when evaluating future options the military also consider the impact of extending the life of the CF-18s

The market analysis aimed to seek and obtain capability and pricing information directly from industry in support of the evaluation of all available fighter aircraft. Anchored in the principles of openness, due diligence and third party oversight, the purpose of the market analysis was to provide companies with a full and fair opportunity to present information on their fighter aircraft to support the Government of Canada in making its decision on a replacement aircraft for Canada's fleet of CF-18's.

With the information provided by companies, the Royal Canadian Air Force will assess each fighter aircraft against each of the missions outlined in the Canada First Defence Strategy. The market analysis will also take into consideration information available to the government, as well as knowledge and experience gained by the Royal Canadian Air Force during coalition operations and exercises with allies.

DND therefore moved from a long-held practice of costing over 20 years to costing over the aircraft's entire program of 42 years. Using a new costing framework developed by independent auditor KPMG, the cost estimate to purchase 65 F-35 aircraft remains the same. The cost estimate to fly the aircraft over 20 years remains very close to the original estimate. It goes without saying that the dollar figure for 42 years will be proportionally higher than the previous 20-year figure. As well, the annual average cost of the F-35 program is estimated to be $1 billion per year. This includes the cost that will be incurred regardless of what aircraft is ultimately chosen. Therefore, the additional estimate is completely attributable to the increase in the time frame ordered by the Auditor General from 20 years to 42 years.

As a partner on the F-35 Lightning II program Canadian industry was contributing to the production of the F-35 and, in turn, the F-35 contributed to the Canadian aerospace industry by developing indigenous capabilities and bringing new manufacturing and engineering technologies to the country.

Canada's participation in the Joint Strike Fighter (JSF) Program began in 1997, allowing the nation to be a part of the selection of the fighter aircraft that will recapitalize three U.S. fighter fleets as well as numerous allied countries. Even prior to Canada’s decision to become a program partner in 2002, Canadian industry was actively involved in the JSF project. Domestic industry continues to benefit from the development of the F-35 through the localized establishment of advanced manufacturing technologies.

Canadian industry had [optimistcally] an estimated $10 billion in opportunities to participate in the F-35 program in the coming decades. The program had identified nearly 200 projects with more than $450 million already contracted – more than double Canada’s projected investment in the F-35 program. Lockheed Martin and the F-35 continued to bring manufacturing and production opportunities to Canada, ensuring the domestic technology industry remains globally competitive for decades to come.

As the F-35 transitions into full-rate production, opportunities for Canadian industry would evolve and endure throughout the life cycle of the program. Canadian industry had the opportunity to produce and sustain components and systems to a fleet that is expected [optimistically] to grow to more than 3,000 aircraft.

Canada dropped the provisions of its Industrial & Technological Benefits (ITB) Policy requiring foreign weapons manufacturers to invest an amount of money equal to that of arms contracts they receive back into the Canadian economy following a US complaint, a source in the Canadian government told Reuters on 09 May 2019. "The US government told us they were unable to offer contractual guarantees of economic benefits," the source said. "A bidder that is not willing and able to sign a contract and guarantee them (the benefits) can still bid and still be competitive but they will get less points in the economic benefits category," the source added. The change of heart came after the Pentagon office in charge of the F-35 program informed Ottawa in 2018 year that Lockheed would not take part in the bidding process for Canada's next-gen fighter procurement process unless Canada changed the ITB rules, which were said to contradict industrial benefit rules of the consortium of countries developing the plane. The concession comes amid the Canadian Air Force's apparent desire to see Lockheed Martin remain in the running for the C$15 billion to C$19 billion ($11.1-$14.1 billion US) contract for the purchase of 88 new fighter jets. Under Ottawa's criteria, the planes' performance characteristics make up 60 per cent of the points on a 100-point scale, with price tag and proposed commitments to invest in the Canadian economy making up 20 percent apiece.