Mark Collins – F-35 and Canadian Election: Liberals Loose With Fighter Costs

Readers of this blog will know I have been no advocate of the F-35. Nonetheless the Liberal Party, in its just-released and ludicrously short (three pages!) defence platform displays utter ignorance of modern Western fighter realities (Canada is not going to buy Russian or Chinese). The party says it will hold an open competition for the RCAF’s new plane and then says it will simply exclude the F-35A from that competition. Huh? Talks about a political competition, not a real one. From the platform, p. 3:


We will not purchase the F-35 stealth fighter-bomber. The primary mission of our fighter aircraft will remain the defence of North America [good point, see ‘F-35 and Canada: Good for “Discretionary” Missions, But…‘]. We will immediately launch an open and transparent competition to replace the CF-18 that will exclude requirements that do not reflect Canada’s interests, such as first-strike stealth capabilities. We will reduce the financial procurement envelope for replacing the CF-18s [that figure is $9 billion]. Instead of budgeting for the acquisition of 65 F-35s, we will plan to purchase an equal or greater number of lower priced, but equally effective, replacement aircraft.

At an 80 cent dollar, the per unit fly away cost of each F-35 is $175 million, and the sustainment costs of each plane will be $270 million – given that repair work must largely be undertaken in the United States. Alternatively, the Super Hornet’s reported fly away price is around $65 million at an 80 cent dollar, and a large amount of the sustainment activity can be undertaken here at home, creating good jobs for Canadians.

The Super Hornet is merely used as an illustration of cost savings and is not indicative of which aircraft would win a truly open and transparent competition…

Now the real numbers. The USAF’s FY 2016 (starts Oct. 1 2015) unit acquisition cost of the F-35A is US $132 million or some Cdn $165 million with an 80 cent dollar–not $175 million. However by US FY 2020, when Canada might well place an order after a real competition if the F-35A won, that cost is projected at some US $100 million or Cdn $125 million at the same exchange rate (who knows though? and who knows if planned production rates will be funded by Congress). A lot less than $175 million.

Then the Super Hornet. In US FY 2013 each cost US $80 million. That would be Cdn $100 million, a whole lot more the $65 million, eh? How many of those might the Liberals buy with a reduced procurement budget? Not the 65 fighters the RCAF says it needs.

As for “plan to purchase an equal or greater number of lower priced, but equally effective, replacement aircraft” other than the Super Hornet (with less than $9 billion!), there are three theoretical possibilities. But the Eurofighter Typhoon and the Dassault Rafale are both considered considerably more expensive than the Super Hornet [scroll down here to para starting “Extrapolating a little…”] while the new Saab Gripen E is probably comparable to the Super Hornet.

There’s another big problem. The Super Hornet and its Growler electronic attack brother may well be out of production after 2017 (though the US Navy is trying hard to keep the line open, more here and here); and the Typhoon line may stop by 2018 (though there is always the chance of foreign orders keeping it going).

So by the time the Liberals got around to buying a cheaper fighter than the F-35A there might be only one relevant aircraft around, the Gripen E. Some competition. Sure looks like the Liberals don’t have a clue about the fighter aircraft market–in fact it looks like they don’t give a damn about realities. Cloud cuckoo land. As with the Conservatives it’s just all politics all the time–see here and here (though NDP leader Thomas Mulcair sounds very reasonable by comparison!). Some basis for a serious country’s defence policies.

Relevant:

The RCAF’s New Fighter and Long-Term Sustainability: What About the US Navy?

How Many F-35Cs for US Navy Department (and services overall)?

US Navy: Slow F-35C Arrival=Super Hornet Life Extension

F-35 “Challenges” Round-Up, Esp. US Air Force and Marines

Here’s the website of the National Fighter Procurement Secretariat.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

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30 thoughts on “Mark Collins – F-35 and Canadian Election: Liberals Loose With Fighter Costs”

  1. With F-35, Canada may find itself with another aircraft which, like Cyclone, promised much but ended up delivered with “interim capabilities”. Super Hornet, Typhoon, Gripen and Rafale are at least known quantities which should enter service relatively quickly. But all three major parties are going to want to claim jobs via “Canadianisation” even if it delays the objective of replacing CF-18 and inflates unit cost.

    According to the head of USAF Air Combat Command F-35 is intended for BVR engagements with F-22 handling close in work. This may mean that Canada may have difficulty participating in a useful manner in missions where confirmation of identity is mandated by the rules of engagement.
    http://www.airforcetimes.com/story/military/2015/09/20/general-usaf-considers-measures-f-35-survive-complete-mission/72403642/

    F-35A also means a refuelling change, albeit that there would be some upside in terms of native CC-177 refuelling capability with the addition of boom tanking. I guess it depends on how much life is left in CC-150 and whether a dual probe/boom capability is required even with acquisition of CF-35A.

  2. And to keep those costs coming down foreign sales need to go up–from June:

    ‘Lockheed, Pentagon Revive F-35 ‘Block Buy’ Proposal

    Export customers for the Lockheed Martin F-35 Joint Strike Fighter are being pushed to commit to a multiyear buy, as soon as next year. But some are far from ready to do so, and the proposal represents a departure from U.S. procurement policy.

    Lockheed Martin (Static Display C-2) and the Pentagon are resuscitating the eight-year-old proposal for a multiyear, multinational “block buy” of F-35 Joint Strike Fighters, as part of a campaign to secure enough export orders to support planned production-rate increases late in this decade. Lockheed Martin documents show that international orders are expected to account for more than 40% of the total over the next five years, but so far only 30 exports are under contract…’
    http://aviationweek.com/paris-air-show-2015/lockheed-pentagon-revive-f-35-block-buy-proposal

    Mark Collins

  3. You don’t honestly believe that Canada is going to get the F-35 for the same price the US military does do you? You also left out the fact that every F-35 built so far and into the foreseeable future will need modifications as the testing proceeds which adds additional costs and down time. The F-35 would also require massive changes to runways, depots, tankers etc. You also have to get permission from the US every time you want to fly the F-35. That is unacceptable.

    The truth is as the PBO has pointed out that no one knows what Canada would pay for any of this until we hold a competition. But cost will greatly depend on how much politics gets involved as you have correctly pointed out with the ship building project. You could have the Rafale built in Canada for example but it would cost a whole lot more than having them built in France. Having said that all the F-35 jobs have been given away already so there will be no offsets if we buy the F-35.

  4. Someone with serious military aviation expertise adds:

    “Operating cost comparisons are really, really difficult, but this suggests that in LCC [life-cycle cost], if Gripen is 100, the Typhoon and Rafale are 200 and the F-35 is 300. (Those are extremely rough numbers.)

    Note that the Norwegians are beginning to panic about operational costs and that one of the options in their current defense white paper process is a cut to that 56-aircraft buy.”

    Mark Collins

  5. Well, with every aircraft mentioned except the F-35 you can actually perform missions. Excluding the F-35 is not a bad decision because there is no finished product to evaluate in a proper fly-before-you buy. Add to that the F-35 is one of the few programs in history to have illegal low-rate-initial-production or ‘LRIP’.
    In order for a program in the U.S. DOD to go into LRIP it has to have DOD procurement milestone-C approved. This signifies that the design and production methods have been audited and agreed upon to be stable. Yet well over 100 of these aircraft have been made and more are on the production line. With no milestone-C. The woes that plague the F-35 program development are the idea that this kinds of milestones in procurement can be ignored. DOD procurement milestone-C is…part of DOD procurement law, agreed upon by the U.S. Congress. To date, the U.S. taxpayer has spent over $110B (sunk cost) on development and procurement of these F-35 mistake jets (Source: CRS up to FY2013 and adding up to the U.S. FY2015 budget). For no, credible combat capability. The aircraft is likely to get shot down in combat. It is overall, less effective than the existing fighter aircraft. It costs (to-date) over $50,000 per flight hour (source;USAF). So any competition Canada engages in, I would respectfully recommend that it only includes proven designs. The unit cost of the F-35 might actually mean something if we were looking at a complete, combat ready, finished product based on robust evaluations. As it is, with all of the illegal efforts going on to move this aircraft down the production line, we have a problem that is more suited to lawyers. “Don’t come to me with a problem unless you have a solution.” Ok. First step: assemble a U.S. Department of Justice task force to investigate all this so it doesn’t happen again. We can’t just write-off over $110B with a smile. I would say that all this could build a U.S. RICO Statute case. Including fraud by trick or device. “The F-35 is a fifth-generation fighter”. That which is presented without evidence, can be dismissed without evidence.

  6. We get quoted by Paul Wells at Maclean’s!

    ‘Jet plane politics: Is this the moment the Liberals take flight?

    There aren’t a lot of people familiar with procurement who were impressed with Trudeau’s claim that he can get more jets for a lower cost by declaring the F-35 ineligible from the outset. “Sure looks like the Liberals don’t have a clue about the fighter-aircraft market. In fact, it looks like they don’t give a damn about realities,” foreign affairs blogger Mark Collins wrote. “Cloud cuckoo land.”..’
    http://www.macleans.ca/politics/ottawa/jet-plane-politics-is-this-the-moment-the-liberals-take-flight/

    Mark Collins

      1. More on Norwegian plans:

        ‘Norway’s F-35 Commitment Reportedly Still Firm

        Leaked details of a Norwegian defense planning document intended to guide government spending in 2016 appear to support continued procurement of the planned full complement of Lockheed Martin F-35s, the first of which was formally rolled out at the manufacturer’s facility here on Sept. 21.

        The Royal Norway Air Force is currently slated to take 52 F-35s to replace its aging F-16s, but has so far received government authorization for only the first 22 aircraft. The question ofwhether Norway will slow down or even cut acquisition of part of the remaining 30 is expected to be debated by the country’s parliament in early 2016. However, leaked details of recommendations that will form part of a defense spending White Paper on the issue indicate the F-35 remains fully supported.

        Details published by the Norwegian defense and security website “Never Again” show senior defense officials recommend staying with current plans to make the F-35 fully operational by 2025, and for the aircraft to be “fully integrated” with the Kongsberg Defense Systems-developed Joint Strike Missile (JSM) anti-ship weapon. However, according to the website, the recommendations which will be submitted to the Norwegian defense ministry on Oct. 1, include the cautionary warning that the “phasing in of new combat aircraft will involve a planned reduced operational capability in the transition phase.”..’
        http://aviationweek.com/defense/norways-f-35-commitment-reportedly-still-firm

        Mark Collins

  7. AvWeek story:

    ‘Canadian Liberals Would Scrap F-35 Buy

    Canada is one of the five largest potential and current F-35 export customers. JSF program office director Lt. Gen. Chris Bogdan told the ComDef conference in Washington Sept. 9 that “you will not see a bomb-burst on my watch” — that is, program partners going their separate ways — so a Canadian competition would be a public blow to the effort. Conversely, it would be a major opportunity for rivals: “Everybody who isn’t Lockheed Martin is a bit thrilled today,” a Dassault representative says…

    One Canadian financial analyst, speaking on condition that he not be identified, says Canada’s aerospace supply sector continues to favor a JSF buy. “They are very bullish on additional opportunities for business across the program,” he says. He also is doubtful the government would be easily able to exclude the F-35 from a competition.

    Boeing’s F/A-18E/F Super Hornet is identified as a possible substitute for the JSF in the Liberals’ paper. However, Dassault has been mounting a low-key Rafale campaign, and along with Boeing has provided some information to the fighter secretariat. Eurofighter has done the same, but Saab has not; its policy is to not engage with nations that are F-35 partners. But the Liberals’ plan would open the market to the JAS 39E Gripen. Eurofighter would also be likely to compete.

    “When the Canadians decide they are buying an aircraft, and hopefully it will be the F-35, we will put a plan in place for them,” says Lorraine Martin, Lockheed’s F-35 executive vice president and general manager.

    The F-35 JPO says, “Canada continues to remain a partner in the F-35 program and we continue to provide Canada with the information they need to make an informed decision that is the best interests of the nation.”’
    http://aviationweek.com/defense/canadian-liberals-would-scrap-f-35-buy

    Mark Collins

    1. From a senior Pentagon official (but would LockMart play fair?)

      ‘Kendall: Canadian Suppliers Will Continue To Support F-35

      Amid renewed questions about Canada’s commitment to the F-35 fighter jet, the Pentagon’s top acquisition official said the Canadian supply base will remain an essential part of the program, even if the nation does not buy the aircraft.

      “I believe those suppliers are part of the team, I don’t see any reason why they would not continue to be part of the team whether Canada [buys jets] or not,” Frank Kendall, the Pentagon’s undersecretary of defense for acquisition, told reporters here during a ceremony to celebrate the roll out of Norway’s first F-35. “We make our decisions on participation based on best value and if Canadian firms are still best value then they will be part of the program.”..

      Kendall said Tuesday [Sept. 22] he is hopeful Canada will decide to move forward with the planned buy…’
      http://www.defensenews.com/story/defense/policy-budget/industry/2015/09/22/kendall-canadian-suppliers-continue-support-f-35/72636328/

      Mark Collins

  8. Dear me, things are both more complicated and more simple than you state.

    There are significant options open to Canada, if we only could take one. Trust me, from watching the military industrial complex for decades now, if Canada chose to buy the Super Hornet or the Typhoon, those production lines would most certainly stay open. If not to get the gravy of supplying all of the spare parts and support etc. the new fighters would need. And why knock the Gripen? Saab has produced several generations of combat worth fighters and does so with an eye to low costs (lowest per hour of operation cost of any major combat aircraft) and cold weather durability.

    And bear in mind what we will really need them for. If past experience, say going back to the Korean War, is any indication, it will be to degrade (bomb) some greatly lesser enemy. Kuwait, the Balkans, Libya, Iraq. We ain’t talking about taking the Russians or Chinese on here, and if we were the UASF probably wouldn’t let us play anyways (much like the fantastic, on paper, Saudi Air Force and the Gulf War.)

    And now we are going to spend $500 million to extend the service life of our CF-18s. Say what? I have an idea. Just like the Italians, why don’t we lease a squadron of F-16 Falcons from the US and use them for any medium to short range high altitude bombing missions we have over seas? Leasing is a good option, the Aussies did it with the F-4 Phantom while they waited on Mirages and Hornets. Tranches of perfectly serviceable Fighting Falcons are wrapped in plastic in the aridity of the Bone Yard.

    Heck, if we want to go cheap, I bet you we could buy some completely acceptable MiG-29s at rock bottom prices. They deliver the mail, we can even use them to bomb Putin. Think about the made in Canada irony of that!

  9. Well props to Trudeau for getting the military on the radar in this election. At least people are talking about it, but what the news outlets seem to be missing in the Liberal F-35 announcement is how the different parties would use the CF-18 replacement.

    The conservatives have basically out sourced our foreign policy to the US. So the replacement will continue to be a bomb truck over uncontested territory in the Middle East.

    For the NDP they don’t want to do any thing out side of Canada so they need primarily an interceptor and a anti-ship platform. (Even the Russians aren’t going to come over the Arctic on foot)

    The Liberals would pull back from the US empire building projects and do more peace keeping. So a lighter more easily deployed aircraft like the Grippen could be very interesting in their world even though they have called out by name the super duper hornet.

    A few notes on comments above.
    Kuwait is buying 28 Typhoons so that line will stay open long enough for us to make up our minds.

    The US GAO does NOT expect prices to drop for the F-35 with a ramp up of production.

    Saab wasn’t interested in pushing the older version of the Gripen but are very interested in us looking at the new one. Gripen is part Boeing so support here would be easy.

    Either the NDP or Liberals would love to announce the Rafale would be assembled in Quebec likely by Bombardier. Lets pray if either of them get in that they don’t put their finger on the scale like The Conservatives have done with the F-35.

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