Independent Auditor’s Report

Introduction

Background

Canada’s fighter force

3.1 National Defence, which includes the Canadian Armed Forces and the Department of National Defence, protects Canadians and Canada’s sovereignty. National Defence contributes to the defence of North America and to international peace and stability by participating as a member of the North American Aerospace Defense Command (NORAD) and the North Atlantic Treaty Organization (NATO). To meet these commitments, National Defence needs an effective fighter force, which means capable aircraft and personnel. In the spring of 2018, the Royal Canadian Air Force had 76 CF-18 aircraft and more than 1,450 military and civilian personnel contributing to the fighter capability.

3.2 The Royal Canadian Air Force must have a minimum number of fighter aircraft and crew on standby to enforce Canada’s sovereignty and to respond quickly to threats against North America. It must also have aircraft available to respond to emergencies, to deploy on international operations with allies, or to be used for training.

3.3 Canada bought its CF-18s in the early 1980s, and at that time, it expected to replace them after about 20 years of service. Modernization projects extended the CF-18’s retirement date. In 2010, the government announced its intention to buy 65 F-35 fighter aircraft to replace the CF-18s by 2020. Because the government still had not decided to buy a replacement aircraft by 2014, National Defence extended the CF-18’s planned retirement date to 2025. In December 2017, the government announced that it intended to use a competitive process to buy 88 new fighter aircraft to replace the CF-18s by 2032.

Previous audit

3.4 In 2012, the Office of the Auditor General of Canada’s audit report on replacing Canada’s fighter jets was tabled in Parliament. The audit examined Canada’s participation in the Joint Strike Fighter Program and the decision process to acquire F-35 aircraft. The audit concluded that National Defence did not manage the process to replace the CF-18 fleet with due diligence and that Public Works and Government Services Canada (name changed to Public Services and Procurement Canada) did not demonstrate due diligence in its role as the government’s procurement authority.

Focus of the audit

3.5 This audit focused on whether National Defence managed risks related to Canada’s fighter aircraft fleet so that it could meet Canada’s commitments to NORAD and NATO until a replacement fleet is operational.

3.6 This audit is important because the Government of Canada identified a fighter aircraft fleet as a critical capability of the Canadian Armed Forces. To meet this capability, the Royal Canadian Air Force needs enough pilots to fly the aircraft and enough technicians to do maintenance and repairs. It also needs enough fighter aircraft to control Canada’s vast airspace and to contribute to international operations at the same time.

3.7 We did not examine the process that the government launched in 2017 to buy the 88 replacement fighter aircraft. We did not follow up on our recommendation from our 2012 report on replacing Canada’s fighter jets. We also did not examine Canada’s ongoing participation in the Joint Strike Fighter Program.

3.8 More details about the audit objective, scope, approach, and criteria are in About the Audit at the end of this report.

Findings, Recommendations, and Responses

Overall message 3.9 In 2016, the Government of Canada directed National Defence to have enough fighter aircraft available every day to meet the highest NORAD alert level and Canada’s NATO commitment at the same time. This direction would require National Defence to increase the number of fighter aircraft available for operations by 23%. The new operational requirement came at a time when the Royal Canadian Air Force faced a growing shortage of trained and experienced pilots and technicians. Furthermore, the current fleet of CF-18 aircraft are already over 30 years old, the CF-18 will continue to become more vulnerable, and there are no plans to improve its combat capability. 3.10 To have the number of aircraft needed to meet the new operational requirement, the government focused efforts on increasing the number of aircraft. The government’s original plan was to buy 18 new Super Hornet fighter aircraft, even though National Defence’s analysis indicated that this plan would not help the Royal Canadian Air Force meet the new operational requirement and would make the personnel shortage worse. The government is now planning to buy used fighter aircraft from Australia that are the same age and have the same operational limitations as the CF-18s that the Royal Canadian Air Force are currently flying. 3.11 Over and above existing budgets, National Defence expects to spend almost $3 billion on extending the life of the current fleet and to buy, operate, and maintain the interim aircraft, without a plan to deal with its biggest obstacles to meeting the new operational requirement: a shortage of pilots and the declining combat capability of its aircraft. Although National Defence has plans to address some risks, these investment decisions will not be enough to ensure that it can have the number of aircraft available daily to meet the highest NORAD alert level and Canada’s NATO commitment at the same time.

Managing the fighter force

National Defence could not meet the new requirement for Canada’s fighter force

What we found

3.12 We found that Canada’s fighter force could not meet the government’s new operational requirement, which is to have enough aircraft ready each day to meet the highest NORAD alert level and Canada’s NATO commitment at the same time. The fighter force could not meet the requirement because National Defence was already experiencing a shortage in personnel, and the CF-18 was old and increasingly hard to maintain. We also found that the government’s proposed solution of buying interim aircraft will not help solve either the personnel shortage or the aging fleet.

3.13 Our analysis supporting this finding presents what we examined and discusses the following topics:

Why this finding matters

3.14 This finding matters because National Defence needs enough trained and experienced personnel who can prepare and fly the number of fighter aircraft needed to meet the government’s operational requirement and who can prepare for the transition to the replacement fleet.

Recommendation

3.15 Our recommendation in this area of examination appears at paragraph 3.33.

Analysis to support this finding

3.16 What we examined. We examined whether National Defence analyzed and identified options to manage risks to meeting the defence commitments to NORAD and NATO at the same time.

3.17 New operational requirement. Canada has been a member of NORAD and NATO for many years. Before 2016, National Defence operated on the basis that its first priority was to meet its commitment to NORAD. The number of aircraft needed to meet the commitment to NORAD depended on NORAD’s alert level. When the NORAD alert level was low, there was operational flexibility to train personnel or deploy aircraft to NATO if needed.

3.18 As a result of this approach, between March 2014 and November 2016, the average daily number of aircraft that technicians prepared for operations varied. The number of aircraft prepared depended on several factors, including operational and training requirements, the availability of spare parts, and the weather.

3.19 In 2016, the Government of Canada directed National Defence to have enough aircraft available every day to meet the highest NORAD alert level and Canada’s NATO commitment at the same time. Although there was no timeline for meeting this new operational requirement, it was a significant change, as it came at a time when the Royal Canadian Air Force was already facing low personnel levels, was managing an aging fleet, and had not yet identified a replacement fleet. The change reduced operational flexibility and would require National Defence to increase the number of available aircraft by 23%.

3.20 Personnel. Even before the new operational requirement, the fighter force did not have enough experienced technicians and pilots. As of April 2018, according to National Defence, 22% of technician positions in CF-18 squadrons were vacant (8%) or were filled by technicians not yet fully qualified to do maintenance (14%). We found that between December 2016 and April 2018, CF-18 technicians were able to prepare on average about 83% of the aircraft needed to meet the new requirement.

3.21 National Defence analysis in 2016 indicated that it would be possible to increase the number of available aircraft over several years by investing in training more technicians and using contractors for some work traditionally done by technicians. In 2017, National Defence approved a $628 million plan to increase the number of available aircraft. At the time of our audit, the plan was in the early stages of implementation, and it was too soon to assess whether it would work.

3.22 Since 2014, departures of experienced CF-18 technicians have reduced the overall expertise of the fighter force, which has negatively affected fleet maintenance. Because of these departures, from 2014 until 2018, the average maintenance hours needed for every hour that a CF-18 flew increased from 21 to 24. In addition, as the fleet ages, it will become more difficult and take longer for technicians to maintain the CF-18s.

3.23 Unless there are more experienced technicians to perform maintenance, the number of flying hours available for each CF-18 pilot will decrease. To maintain and develop new skills to sustain the fighter force’s capability, CF-18 pilots are expected to fly 140 hours per year. We found that in the 2017–18 fiscal year, 28% of pilots flew fewer than the minimum 140 hours. According to National Defence, one reason for these fewer hours was the shortage of technicians to maintain the aircraft.

3.24 Furthermore, National Defence identified that it had only 64% of the trained CF-18 pilots it needed to meet the government’s new requirement, so it would need to considerably increase the number of trained pilots. National Defence is unlikely to be able to do so because pilots have been leaving the fighter force faster than new ones could be trained. According to National Defence, between April 2016 and March 2018, the Royal Canadian Air Force lost 40 trained fighter pilots and produced only 30 new ones. Since then, an additional 17 fighter pilots left or stated their intention to leave.

3.25 National Defence had an annual plan to recruit people for various occupations, including the occupation of pilot. However, there was no plan to specifically address the serious problem of the lack of CF-18 pilots. If CF-18 pilots continue to leave at the current rate, there will not be enough experienced pilots to train the next generation of fighter pilots, and National Defence will not have enough pilots to be able to meet the government’s requirement to meet the highest NORAD alert level and the commitment to NATO at the same time.

3.26 In our opinion, the shortage of trained technicians and pilots, along with the difficulties in maintaining an aging fleet, will prevent National Defence from meeting the government’s new requirement. Even if the plan to increase the number of technicians is successful, we found that there was no plan to increase the number of CF-18 pilots. Consequently, given the shortage of pilots and the limits of the training system, National Defence will not be able to meet the new operational requirement for many years.

3.27 Interim aircraft. In November 2016, the government announced that it would begin discussions with the Boeing Company and the United States government to explore buying 18 new Super Hornet fighter aircraft. This was done to solve what it identified as the problem in meeting the new operational requirement: the gap between the average number of CF-18s available daily and the number needed to meet the highest NORAD alert level and the commitment to NATO at the same time. This new requirement was put in place at a time when the CF-18 fleet would not be able to meet it for many years because of personnel shortages.

3.28 National Defence’s analysis showed that buying the Super Hornet alone would not allow the Department to meet the new operational requirement. The Department stated that the Super Hornet would initially decrease, not increase, the daily number of aircraft available because technicians and pilots would have to be pulled away from the CF-18s to train on the new aircraft.

3.29 National Defence analysis further stated that once the Super Hornet fleet was operational, the Department would still not be able to prepare the aircraft needed daily to meet the new requirement because of the shortage of trained personnel to maintain the CF-18 fleet. The Department stated that it needed more qualified technicians and pilots, not more fighter aircraft.

3.30 After a trade dispute in 2017, the Government of Canada decided not to buy the Super Hornet. During this period, the Australian government offered to sell surplus F/A-18 aircraft to Canada. National Defence began to assess the possibility of buying and modifying the Australian aircraft to meet Canada’s needs. In December 2017, the government announced its intention to buy 18 Australian F/A-18s and spare parts. National Defence determined that the Australian F/A-18s, which are similar in age and design to the CF-18s, could be modified to be nearly identical to Canada’s fleet. The total estimated cost was CanadianCAN $471 million to buy and modify these aircraft and an additional CAN$558 million to operate them until 2032.

3.31 According to National Defence, the Australian purchase would give it more aircraft and spare parts to help manage the CF-18 fleet. However, the purchase will not fix the fundamental weaknesses with the fleet: the aircraft’s declining combat capability and the shortage of personnel. The Australian F/A-18s will need modifications and upgrades to allow them to fly until 2032. These modifications will bring the F/A-18s to the same level as the CF-18s but will not improve the CF-18’s combat capability. In addition, National Defence still does not have enough technicians to maintain and pilots to fly the aircraft.

3.32 In our opinion, purchasing interim aircraft does not bring National Defence closer to consistently meeting the new operational requirement introduced in 2016. Without more technicians and pilots, the effect on fighter force operations will be small.

3.33 Recommendation. National Defence should develop and implement recruitment and retention strategies for fighter force technicians and pilots that are designed to meet operational requirements and prepare for the transition to the replacement fleet.

The Department’s response. Agreed. National Defence will implement plans to increase the number of technicians and pilots in the fighter force. Initial steps have already been taken, such as the Fighter Capability Maintenance Renewal initiative (which will add over 200 technicians to front-line squadrons) and new recruitment efforts and retention strategy and initiatives to be completed by fall 2019. In addition, Strong, Secure, Engaged, Canada’s new defence policy, includes an initiative to increase the fighter force by an additional 200 positions.

National Defence had no plan to upgrade the combat capability of the CF-18 even though it is expected to fly until 2032

What we found

3.34 We found that the CF-18 had not been significantly upgraded for combat since 2008, in part because National Defence expected a replacement fleet to be in place by 2020. National Defence did not have a plan to upgrade the combat capability of the CF-18 even though it will now have to fly until 2032. Without these upgrades, according to the Department, the CF-18 will become more vulnerable as advanced combat aircraft and air defence systems continue to be developed and used by other nations.

3.35 Our analysis supporting this finding presents what we examined and discusses the following topics:

Why this finding matters

3.36 This finding matters because having a combat-capable fighter force is important to Canadian national security and to National Defence’s ability to meet Canada’s commitments to NORAD and NATO. To be effective, a fighter aircraft must be able to operate with allies, be a credible deterrent, and be able to engage and defeat potential adversaries.

Recommendation

3.37 Our recommendation in this area of examination appears at paragraph 3.50.

Analysis to support this finding

3.38 What we examined. We examined whether National Defence managed the CF-18 fleet to meet Canada’s defence commitments to NORAD and NATO. We examined whether National Defence managed risks to

combat capability, and

extending the life of the CF-18 fleet.

3.39 Combat capability. The CF-18 is Canada’s only fighter aircraft used in military operations at home and abroad. A fighter aircraft must be able to identify, track, and defeat threats and survive in combat situations. As threats evolve—particularly with new technology—investments must be made for the fighter aircraft to maintain its combat capability.

3.40 Apart from integrating some new weapons during Canada’s involvement in Libya in 2011, National Defence has not significantly upgraded the CF-18 for combat since 2008. It has not done so, in part because it expected that a replacement fleet would be in place by 2020.

3.41 We found that National Defence has not kept the CF-18’s capability up to date with most modern combat aircraft and air defence systems. For example, some modern fighter aircraft are harder to detect on radars than the CF-18 and can identify targets at greater ranges.

3.42 According to National Defence, the CF-18 will be disadvantaged against many potential adversaries, and its combat capability will further erode through the 2020s and into the 2030s. Threats to the CF-18 would have to be reduced or destroyed by allies before the CF-18 could operate in certain environments, which would limit Canada’s contribution to NORAD and NATO operations.

3.43 Extending the life of the CF-18. National Defence has information about the CF-18’s engineering, technology, and functions. National Defence has systems that monitor individual aircraft and their components to identify when parts need to be replaced and when inspections and major structural overhauls need to be done.

3.44 In 2014, National Defence assessed whether the CF-18 fleet could fly beyond 2020. It concluded that extending the aircraft’s retirement date to 2025 had a low risk to cost and technical factors, and a moderate risk to operations. The analysis also showed that a further extension to 2030, while technically feasible, would be risky and costly. On the basis of this analysis, and because there was no government decision about a new fleet, National Defence extended the CF-18’s retirement date to 2025.

3.45 National Defence identified upgrades so that the CF-18 could continue to fly until the new 2025 retirement date. However, the Department removed upgrades to combat capability from the project because of cost concerns, a lack of implementation partners, and its expectation that a replacement fighter aircraft would be in place by 2025.

3.46 Under the government’s current procurement timeline, National Defence will have to extend the CF-18’s retirement date again, to 2032. This extension is required to complete the transition to the replacement fighter fleet. In 2032, the CF-18 will be about 50 years old and will have fallen an additional 15 years behind combat technology if no upgrades are made.

3.47 To extend the CF-18’s retirement date to 2032, National Defence expected that the aircraft’s current fatigue threshold will need to be increased. This increase will require National Defence to periodically monitor fatigue on CF-18s on the basis of usage, to replace obsolete components, and to conduct more hours of maintenance for each aircraft.

3.48 In 2017, National Defence estimated that the total cost of extending the flying life of the 76 CF-18s until 2032 will be $1.2 billion. This amount includes the cost for spare parts and upgrades to the structure and avionics and electrical systems, but not any combat capability upgrades.

3.49 Without combat upgrades, the CF-18 will be less effective against adversaries in domestic and international operations. In our opinion, flying the CF-18 until 2032 without a plan to upgrade combat capability will result in less important roles for the fighter force and will pose a risk to Canada’s ability to contribute to NORAD and NATO operations.

3.50 Recommendation. National Defence should analyze what upgrades are required for the CF-18 to be operationally relevant until 2032 and should seek approval for those that are appropriate and achievable.

The Department’s response. Agreed. National Defence is currently seeking approval on a number of upgrades to meet regulatory and interoperability requirements to continue flying the CF-18 until 2032. In addition, the Royal Canadian Air Force is conducting analysis to assess necessary combat upgrades that could be implemented to address the growing challenges presented by evolving threats. This analysis, anticipated to be completed by spring 2019, will take into consideration plans to transition to a future fighter capability in the mid-2020s.

Conclusion

3.51 We concluded that National Defence has not done enough to manage risks related to Canada’s fighter aircraft fleet so that it can meet commitments to NORAD and NATO until a replacement fleet is in place.

3.52 National Defence has not done enough, in part because of factors outside of its control. Uncertainty around when a replacement fighter fleet would be in place and increased operational requirements established by the government in 2016 put National Defence in a position that will make it difficult to manage risks until a replacement fighter fleet is in place.

3.53 Although National Defence has plans to address some risks, such as the shortage of technicians, these investment decisions will not be enough to ensure that National Defence can have the number of aircraft available daily to meet the highest NORAD alert level and Canada’s NATO commitment at the same time. National Defence expects to spend almost $3 billion, over and above existing budgets, without a plan to deal with its biggest obstacles to meeting the new operational requirement: a shortage of pilots and the declining combat capability of its aircraft.

Subsequent Event

3.54 We state in paragraph 3.25 of this report that there was no plan to specifically address the serious problem of the lack of CF-18 pilots. After the period of our audit, National Defence informed us that in September 2018, it approved a plan to address the declining levels of experience among pilots in the fighter force. However, this plan does not address the need to increase the overall number of CF-18 pilots.