Canada balks at buying pricey F-35s from U.S.
Tuesday , August 19, 2014 - 12:12 PM
O Canada, land of “peace, order and good government.” Land of compromise and polite politics. Land of turmoil over whether to buy the F-35.
As in the United States, the fighter plane has become a rancorous political issue. What once looked like a sure buy of 65 planes has been bogged down by infighting and un-Canadian vitriol, and the purchase is on hold while Canadian officials consider whether to buy another plane.
The F-35 Lightning II is a U.S. plane, made by a U.S. company for the U.S. military. But if the cost for U.S. taxpayers is going to come down to levels that make the plane affordable in the long term, the Pentagon is depending on foreign governments to buy the F-35 as well.
From the beginning of the program, Defense Department officials signed up eight international partners, including Canada. Since then, they’ve crossed the globe looking for additional foreign government customers with some success. Japan and Israel have agreed to buy some of the planes, while South Korea appears likely to make the F-35 its next fighter jet as well.
But as Canada shows, not everyone is sold on what has become the most expensive weapons system in U.S. history. In addition to being a symbol of power, might and mind-bending technology, the next-generation Joint Strike Fighter (JSF) has, to some, come to represent waste and unwieldiness — in the United States and abroad.
Many thought that by now Canada would have decided whether to buy the planes — a move that would help drive down costs in the nearly $400 billion program — or instead force the plane’s manufacturer, Lockheed Martin, to compete for its business. But it’s now unclear when that will happen.
Some fear that if nations such as Canada balk, there could be questions about the long-term affordability of the program. Meanwhile, Boeing, one of Lockheed Martin’s fiercest competitors, has pounced on what it sees as an opportunity in Canada and other countries to tout its F/A-18 Super Hornet as a proven, affordable alternative.
Facing budget constraints, Italy and the Netherlands have already curtailed the number of F-35s they said they plan to buy. Denmark is holding a competition that would pit the F-35 against other fighters. Meanwhile, the production line at Lockheed Martin’s Fort Worth, Texas, plant has been limited to a little over 30 the past two years, as tightened U.S. budgets and technical problems have forced the Pentagon to significantly slow its procurement as well.
“The program is stuck in low production rates and high costs,” said Richard Aboulafia, an aerospace industry for the Teal Group. “The production rates are low because costs are high and costs are high because production is low.”
Currently, the plane’s so-called “flyaway cost,” which doesn’t include research and development, among other things, is approximately $110 million apiece for the Air Force’s model, the company says. But Lockheed and Pentagon officials say it could be lowered to less than $80 million by the end of the decade. Lockheed and some of its subcontractors are investing $170 million to reduce the price.
Still, the Government Accountability Office recently said that affordability “remains a significant concern” and that “the program is likely to be challenged” to meet cost reduction goals.
While ramping up production would bring the per-plane cost down, it would be unwise to build too many too soon because not all of the necessary testing has been done on the aircraft, said Todd Harrison, director of defense budget studies at the Center for Strategic and Budgetary Assessments.
Additional testing will inevitably reveal problems that need to be fixed, which then cost money to repair, he said. For years, critics of the program, including Sen. John McCain, R-Ariz., have said that the United States should never have committed to buying the plane while it was still being developed, saying it violated one of the basic rules of airplane acquisition: “fly before you buy.”
“It gets to the fundamental tension within the JSF — you want to buy more of them because the quicker we buy them, the cost will come down,” Harrison said. “But the faster we buy them, that just increases the concurrency in the program. We’re buying planes that haven’t completed testing and are going to require modifications.”
The slowed production rate could have another consequence he said.
“One of the concerns has been as we’ve reduced the production rate, people have floated the idea of cutting back on the number of planes the U.S. is going to buy. Then you spook the allies.”
But with the relatively large numbers of aircraft the United States plans to buy, he said, “the fate of the program is up to us, not them.” Though the Pentagon initially planned to buy 2,852 planes, it has for years remained consistent with its commitment to buy 2,443. Britain, which plans to buy 138 planes, the most of any other nation, also said its confidence in the program remains strong even though the F-35 was grounded after a recent engine fire and missed its international debut at a pair of air shows in England last month.
And at a recent “rollout” event in Fort Worth, Australian and U.S. officials celebrated the anticipated delivery of its first two planes. During the ceremony, Air Marshal Geoff Brown, chief of the Royal Australian Air Force, called the F-35 a “revolution” and said it will cause a “step change in the way we prepare for and conduct operations into the future.”
Lockheed Martin officials are confident that more countries will sign on in the years to come as the need to replace their fighter fleets becomes more urgent. The F-35 is designed to supplant several different legacy aircraft, from the F-16 to the F/A 18 and the A-10.
“This is the airplane that’s going to replace all those airplanes and create a capability for the next 50-plus years,” said Steve O’Bryan, Lockheed Martin’s vice president of international strategy and business development.
Replacement of the F-16 alone creates a huge market for the F-35, he said. More than 4,500 F-16s have been built, and nearly 30 countries use the aircraft.
And while not all of those F-16s will be replaced, “the potential is significant,” he said.
Potential customers are one thing. Signed contracts are another.
It initially appeared as if Canada was definitely going to buy. Defense officials praised the F-35’s speed and stealth. At a news conference announcing the purchase to buy 65 F-35s in 2010, then-Defense Minister Peter MacKay called it “the best that we can provide our men and women in uniform.”
But two years later, the government put the acquisition on hold after an auditor general’s report suggested the government misled Parliament, saying that key costs over the course of the fleet’s life were much higher than previously stated.
Liberals attacked the conservative government. John McKay, a member of Parliament, called it “deceit and incompetence at the highest levels.” Another member, Ralph Goodale, wrote that the “F-35 fiasco exposes dishonesty and incompetence.”
As a result, the Harper administration, while denying it misled Parliament, put the purchase on hold and appointed a National Fighter Procurement Secretariat to ensure the Canadian military acquires the right plane.
But Goodale thinks that the government will put off any decision until after the upcoming elections. “This is a hot potato for them,” he said. “Their process up to now has been terribly flawed, and they have very little public support for how they’ve gone about this.”
The cost has been a big issue, and there was also “concern here in some circles that the F-35 was the anointed choice without having gone through the formality of a competitive process,” said Martin Shadwick, a Canadian defense analyst and a professor at York University.
Still, he said, “My personal anticipation is that we’ll still buy.”
But Boeing is doing everything it can to change minds.
“We certainly believe the Super Hornet is very well-suited for the unique environment and geographical challenges faced by the Royal Canadian Air Force,” said Howard Berry, Boeing’s F/A-18 international business development team leader. “We continue our battle rhythm. We continue to engage our political colleagues on both sides of the aisle.”
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