April 3, 2012 11:39 pm

Canada steps in over fighter jet order

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The Canadian government on Tuesday stripped the defence department of control of the F-35 fighter jet procurement project after an official watchdog found the ministry had understated the cost of the aircraft in reports to parliament.

Canada intends to buy about 65 F-35s – a fifth-generation Joint Strike Fighter – to replace its ageing fleet of fighter jets but the project has not run smoothly for the Conservative government. It selected the aircraft in 2010 without holding a formal competition, provoking intense criticism from opposition parties.

Michael Ferguson, Canada’s auditor-general, said his agency’s report on the selection of the F-35 had identified “a number of significant problems with the decision making process” and that “National Defence did not exercise the diligence that would be expected in managing a C$25bn commitment”.

The US F-35 programme, led by Lockheed Martin, has struggled with technical and production problems, leading some international partners to reconsider their orders.

The report made several pointed criticisms, concluding that “problems relating to development of the F-35 were not fully communicated to decision makers, and risks presented to decision makers did not reflect the problems the JSF programme was experiencing at the time”.

The report went on to note that “full life-cycle costs were understated in the estimates provided to support the government’s 2010 decision to buy the F-35. Some costs were not fully provided to parliamentarians.”

The report provoked testy exchanges in parliament, where Thomas Mulcair, leader of the New Democratic party, said it had exposed a “litany of poor public administration, bad decision making and lack of accountability by Conservative ministers”.

Stephen Harper, Canadian prime minister, rejected the criticism and said the government had not yet bought the aircraft and would implement the auditor-general’s recommendations on increased supervision of the procurement.

The auditor-general’s report raised concerns that, partly in response to industry pressure, the defence department had steered ministers towards selecting the F-35 without a competition by, among other things, exaggerating the commercial benefits Canada would derive from such a move.

While estimates varied widely, “in the majority of cases, only the most optimistic scenario was put forward [in briefing materials for decision makers] rather than a range of potential benefits that reflected the inherent uncertainties in the projections”, the report found.

In a statement, the government said it would address the concerns, including commissioning more independent reviews and setting up a F-35 secretariat to lead the project.

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