The Liberal government under Justin Trudeau has been unfairly maligned for mishandling the replacement of Canada’s 40-year-old legacy Hornets. Instead, the CF-18 replacement has been craftily managed to get the best possible deal for Canada in virtually every aspect. In the 6+ years since Justin Trudeau halted the sole source procurement of the F-35, the price of the jet has dropped from approximately $110M per aircraft to below $78M, more than 30%. The Trudeau government properly aligned the priorities of simultaneous support for NORAD and NATO and increased the fleet requirement from 65 jets originally identified by the Chretien government to 88 jets, an increase of 26% fleet size.
If Canada had pulled the trigger early in 2015 when Prime Minister Stephen Harper had the chance, Canada would have received less capable F-35s, with older Block 3i software, lots of glitches, flying maneuvering restrictions and growing pains yet to be solved. Now, when Canada commits to F-35, the RCAF will receive Block 4 jets with amazing connectivity, mature sensor fusion, enhanced electronic warfare, a new cradle-to-grave maintenance system, a working drag chute, interoperability with other NATO nations who have already fielded F-35s and learned all the important lessons of how to utilize the jets, and the list goes on.
Canada continues to reap the benefits of industrial participation; $616M invested into the F-35 program and $2.7B in contracts let so far, more than 4 times the return on investment direct to Canadian companies. Even better, that amount, paid before any formal F-35 procurement is signed does not count in Lockheed Martin or F-35’s favor and they will have to make up the full amount for the industrial benefit credits in the competition structure. So that ‘early’ money comes on top of the F-35 business that would flow after a contract is signed.
The timing could not be better for Justin Trudeau to have milked the most out of the F-35 partnership and now commit to buying the biggest single lot of airplanes of any partner nation (Australia and UK bought in tiered buys).
More (88 instead of 65), cheaper ($78M instead of $110M), better (Block 4 instead of Block 3), and best ROI (better than 4 to 1) sounds like an incredibly well executed plan even more so with the US ‘Build Back Better’ trend to see Canada get a better deal and squeeze everything from those pesky, insular Yankees.
Of course, none of this is true.
The Liberal government has mismanaged this procurement every step of the way. I have always warned Americans about the EH-101 fiasco where Jean Chretien promised during the election campaign that if elected, he would cancel the program. The day after being elected, the new Prime Minister cancelled the contract. The RCAF had completed a full procurement assessment and signed the contract to purchase the EH-101 Merlin for Search and Rescue as well as shipboard Maritime missions. With the contract cancelled, Canada paid more than $500M in penalties and was left without a new helicopter. Chretien used the line that Canada shouldn’t buy Cadillacs when all it really needed was Chevrolets. 20+ years later, the RCAF was still limping along with the tired Sea Kings and finally procured Sikorsky Cyclone helicopters with mountains of growing pains along the way.
How did the Minster of National Defence get to 88 jets if the RCAF had all along been forced to limit the number of fighters needed to 65? Two staff officers, with very credible backgrounds, reworked the numbers of jets needed to fly NORAD, plus NATO missions, plus spares, plus airplanes in modification status, and all the extras. This was not done by a formal trade study or operational assessment as is always the case; two guys in headquarters came up with those numbers that allowed DND to change their posture which was then going to allow the Liberals to argue that they needed more jets right way and to buy Super Hornets (and get out of the F-35 deal).
What if Stephen Harper had pulled the trigger on the F-35 in 2015 when he had the chance? There was a plan to pull 4 F-35s from the line of USAF airplanes and dedicate them to Canada to start the effort. I would have enjoyed flying those first jets and Canada would have saved billions buying used Australian legacy Hornets, modifying them to RCAF standards, only to be retired sometime soon after. One of the great ironies is that Steven Fuhr, who had flown CF-18s for a brief period in the RCAF and was later elected to Parliament, led the charge to sole source Boeing Super Hornets to fill the capability gap that the Liberal government invented. Fuhr had family ties to Boeing and was deep in bed with the company. He used his fighter pilot background within the new government to push for Super Hornets without understanding the technologies involved, or the costs. The ‘end around’ almost worked as they tried to pull the trigger for 18 Super Hornets in the summer of 2016. Most think that the deal failed because of the Bombardier / Boeing trade dispute related to the C-Series airliner launch. What really killed the deal was the $6B price tag for 18 jets, astronomical by any standards and unpalatable. After all, the original procurement of 65 F-35s was capped at $9B so paying $6B for 18 Super Hornets was not going to work. Fuhr failed his new government compatriots and Canada was launched into the swamp with this long, painful procurement fiasco.
Does Capability matter? Usually in Canada we think no, but Survivability matters. F-35 has repeatedly shown exchange ratios better than 20:1. Older generation fighters, like Saab’s Gripen E, at the best of times, might see exchange ratios of 2:1 (they best the bad guys…for every 2 Russians taken out, 1 Gripen is lost). Does Canada want to trade the lives of RCAF fighter pilots 2:1 or do we want those men and women to come home every time from combat with a fighter that can best the enemy by more than 20 to 1? Even the Liberals can do that math. BTW, the Gripen has never seen combat in any model since first employed in the early 1990’s. That’s a long time to fly peacetime missions, primarily in Sweden and then come to Canada to take on F-35 which has already been deployed in combat in the Middle East.
The question for the Liberals is how they will tell a story that allows them to back away from their promise not to buy the F-35. The other element to watch is how Lockheed Martin will help soften the ground over the winter to educate Canadians what F-35 really means for Canada. Are the Liberals astute enough to tell the jobs story and how the contractor kept the F-35 contracts and companies whole throughout the pandemic, and how the increasing number of non-F-35-partner nations buying F-35s means even more work for those Canadian firms that make parts for every F-35 that flies? The ‘Industrial Logic’ that Lockheed Martin (LM) has applied to communications in Canada for the last decade plus has not worked well…but thanks to Boeing being excluded, there isn’t really a serious competitor left and LM now must neutralize any Saab-Quebec liaison that might give hope to that long-shot team. This is a perfect time for LM to step up the talk about jobs, jobs, jobs and future economic opportunities. But it is also hard for the Texans to get beyond their fatigue with Canada and to give a 3rd period press instead of trying to cruise to a win. Canadians remember Team Canada doing that with Team USA during the Canada Cup hockey series…which did not work out well, did it? We almost did the same thing at the Vancouver Olympics but were saved by Sydney Crosby’s OT goal. Let’s try not to blow this one…LM needs to give the Liberals a hand telling a great economic story, bury the option of buying Gripen and get this over with.
And where are we now with F-35 still alive and the Swedish-built Saab Gripen posed against it? The new Gripen E model is still in testing and not fielded which means it has lots of bugs and software problems to be ironed out before it is ready for operational use. In the Finland competition, where F-35 beat out Gripen as the new Finnish Air Force fighter, the Gripen costed out at $101M vice the F-35 at under $80M, not even close.
Remember Justin Trudeau standing up in Parliament in June 2016 saying about the Conservative party… “They clung to an aircraft that does not work and is far from working.”
How could the Liberal government now choose an airplane that is not ready for operational use, has many growing pains yet to be discovered and costs more than the F-35.
So, the Liberals can still snatch victory here…