Only competition will reveal the best CF-18 replacement

In an op-ed published in The Hill Times Oct. 5 entitled Why sole-sourcing the F-35 is best, Richard Shimooka of the Conference of Defence Associations Institute attempted to present evidence to support that claim. My opinions differ from his. His first argument is to refer to the internal analysis conducted within the Department of National Defence (DND). According to Mr. Shimooka, between 2006 and 2010 DND “undertook a painstaking evaluation process to identify the Royal Canadian Air Force’s (RCAF) requirements” and discovered that “the F-35 offered the lowest cost and best industrial opportunities.” There are three fundamental flaws with this argument. First, in 2006, prior to the RCAF developing its requirements, the assistant deputy minister of materiel recommended the F-35 to the minister. This recommendation was based on an internal RCAF assessment at a time when the F-35 was in its embryonic stage of development, was well behind schedule and with its price spiralling upward. Obviously, the fix was in for the F-35. Surprise, surprise, when four years later, the RCAF determined that only the F-35 could meet its requirements. None of us are that gullible! Second, with respect to “the lowest cost,” without undertaking an open, fair, and transparent competition, there is no way of knowing for certain what any jet will cost. A supplier that desperately wants to win a contract will make significant price concessions to win the contract. Isn’t that one of the main reasons we run competitions? To drive the price down! Third, with respect to industrial benefits, best estimates are that Canadian industry might garner up to $10-$12-billion in contracts through the F-35 program. After all, no industrial benefits are guaranteed in this program. However, in a competition, any successful bidder would be required to guarantee industrial opportunities equal to or greater than the value of the contract. In this case, benefits at least twice as great as under the Joint Strike Fighter program. Furthermore, the Department of Innovation, Science and Economic Development is in the position of demanding high quality, leading-edge industrial and technical benefits. Mr. Shimooka’s second argument is that the Conservative government’s “broader defects in its governing approach,” its “muzzling experts” within government, its failure to grasp the program’s “nuances and risks” drove the public to seek out other voices of authority like the Parliamentary Budget Officer (PBO) and the Office of the Auditor General (AG). Mr. Shimooka then goes on to claim that both of these offices produced flawed reports that further eroded the public’s confidence in the government’s sole-source decision. Truth is, neither the AG nor the PBO would likely have been asked to delve into the costs of the F-35 program had it not been for the government’s misleading cost pronouncements. Anyone involved with defence procurement had to know that the government’s initial claim that it would cost $9-billion to acquire 65 jets and $7-billion to support them was ludicrous. The long-term support costs are typically two to three times as great as the initial acquisition cost. In this case, the government was claiming the support costs were less than the acquisition costs! From an initial government estimate of $16-billion, current estimates are that the program will cost Canadians over $40-billion. Mr. Shimooka’s next justification is to claim that for the previous government, “running a competition would be a legal liability since it was a vastly better choice in all major categories, a competition would be tantamount to a political sham and be grounds for a lawsuit by other manufacturers.” However, during the mandate of the Conservative government, the F-35A was not even certified operational (it was only declared operational in Aug. 2016). Furthermore, not only would running a competition not be a legal liability, it is mandatory to do so. Under section 506.12 (b) of the Agreement on Internal Trade, a sole-source option can be pursued if there is “an absence of competition.” In this case, there are certainly alternatives to the F-35, even if Mr. Shimooka is dismissive of their capability. If the F-35 did not exist, would we say that no other aircraft exists to meet our needs? Would we therefore not purchase any fighter aircraft replacement? Of course not! There can be no doubt that there are a number of alternatives to the F-35. These include Boeing’s Super Hornet, Dassault’s Rafale, Saab’s Gripen and EADS/BAE’s Eurofighter Typhoon. These are used by many of our allies and each, to a greater or lesser extent, can meet Canada’s fighter replacement needs. Which one can best meet Canada’s needs, taking into consideration price and industrial and technical benefits, can only be determined through a competition. Of course, if you have predetermined which aircraft you want, then you wire or fix the requirements to suit your needs. That is what occurred. Mr. Shimooka’s final justification to support the sole-sourcing of the F-35 is to suggest that without the F-35, Canada would be deploying a military force that is “ill-equipped to meet the potential threat.” In fact, it is precisely because we want a jet that can meet potential threats that we must run an open, fair, and transparent competition. We need an objective determination, not a subjective one. The irony, of course, is that the F-35A may yet be the best aircraft to meet Canada’s needs. The only way of knowing for certain is through an open, fair, and transparent competition, a competition based upon the government’s public articulation of the role it sees for our military and the role it sees for Canada’s fighter replacement. Mr. Shimooka must be clairvoyant when he asserts, “a competition would not substantially change the result or cost to Canada.” What is clear is that acquiring aircraft through a sole-source contract is not only illegal, but bad business. Costs are typically higher and industrial benefits are lower. Most importantly, only through a competition can we be certain that we have purchased the best plane to meet the needs of our men and women in the military. Alan Williams is a former assistant deputy minister of materiel at DND. He is now president of The Williams Group providing expertise in the areas of policy, programs and procurement. He has authored two books, Reinventing Canadian Defence Procurement: A View From the Inside, and Canada, Democracy, and the F-35. He can be reached at williamsgroup691@gmail.com.