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By Alan Williams

Defence Watch

Guest Writer

The Canadian JSF Industry Group (CJIP) recently put out a letter advocating that Canada purchase the F-35 without any competition. This should come as no surprise to anyone as the companies in the CJIP are currently performing work in this program. It is certainly in its best interest that Canada remains within the program. The real question is, is it in Canada’s best interest to do so?

Sadly, in making its case, the CJIP has exposed itself as being nothing more than cheerleaders for the government, parroting the government’s point of view. Even worse, it presents arguments that indicate that it knows little, if anything about the structure of the program or about defence procurement.

The group claims, “Although competition makes for good sound bites, the reality is it has serious economic consequences.” The exact opposite is true. From an economic standpoint, the economic benefits to Canada will be at least 2-3 times as great through a competition than through sole sourcing.

When I signed the 2002 Memorandum of Understanding (MOU) committing Canada to phase 2 of the program, it was to allow Canadian industry the opportunity to compete for contracts in the program. The rules were clear. If you didn’t join, your industries could not bid. We invested $100 million from DND’s budget and $50 million from Industry Canada’s budget. By the time I retired Canada’s industries had garnered about $400 million in contracts.

Apparently today that figure is up to $600 million. As long as Canada remains a partner in the program, it is entitled to bid and hopefully win contracts. The CJIP’s claim that “any delay in the purchase of the new fighter will have real consequences for Canadian industry” is just not true.

Moreover, under the JSF program, there are no guarantees for industry. A company had to provide “best value” in order to win. This principle is to be applauded from a cost containment perspective. As such, Canada is not guaranteed a specific amount of industrial benefit. Current projections are that Canada might win $9-12 billion in contracts.

However, under a competition, any winning bidder is obligated to provide industrial benefits to Canada equal to or greater than the contract it signs with the government. In this case, a contract to acquire and maintain the new jet fighters will likely be at least $25 billion. These $25 billion in benefits are guaranteed to Canada, whereas the $9-12 billion derived from the JSF program is only a projected “hoped-for” figure. From an economic standpoint, while a competition may not be in the best interests of the CJIP, there is no doubt that a competition is in the best interests of Canada.

However, the more important question, is how do we ensure that we select the best aircraft that meets Canada’s needs?

The CJIG suggests that is best for Canada because “The F-35 has won every competitive process it has been in:- US & 8 MOU Partner Nations – ‘Battle of the X-Planes’ (2001); Japan (2012); Israel (2012); Netherlands (2013); & Korea(2014).” As my colleague Bill Sweetman has pointed out, “none of the partner nations conducted a competition. The U.S. selected Lockheed Martin over Boeing’s X-32, not its current competitors, based on a proposal that could not be executed on time, budget or within the design weight. Israel was sole-source and the F-35 lost the formal phase of the Korean contest, a decision reversed after a political spat.”

Perhaps, more importantly, as a sovereign independent country, surely Canada should be selecting an aircraft to meet Canada’s needs irrespective of what other countries may have concluded.

Paul Manson, who held positions as chief of the defense staff and boss of Lockheed

Martin’s Canada operation, recently asserted in a Globe and Mail op-ed that the F-35 would win any competition because of its “acknowledged superiority in operational performance.”

General (Retired) Manson may have a tremendous skill set, but I doubt being clairvoyant is one of them. Pardon me if I am unwilling to see the government spend $50 billion dollars of Canadian taxpayers’ money based on his assurances. All aircrafts in the marketplace today have their strengths and weaknesses. The critical question is which jet best meets Canada’s needs at a reasonable price. The only way to know for certain is to publicize Canada’s statement of requirements (SOR) and conduct an, open, fair and transparent competition.

By the way, the CJIG is also wrong in asserting, “‘a competition will take 3 years to run. I doubt that any members of the CJIG have run a competition. I have. Given the current state of the SOR, a competition can be concluded within 18 months and probably sooner. If the members of the CJIG were truly concerned about expediting the procurement process, they would have voiced opposition to the government squandering over two years since the publication of the Auditor General’s report in April 2012. The government’s 7-point plan, while possessing a catchy title, is nothing more than a delaying tactic.

The CJIG got it completely backward. Selecting a new jet aircraft without a competition is bad management, bad policy and bad for business.

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(Alan Williams served as Assistant Deputy Minister (Materiel) for the Department of National Defence. In April 2005 Williams retired from the Public Service. He is now President of The Williams Group, )