Saturday, December 8, 2012

KPMG report on F-35 costs expected next week

An awful lot of fuss is being made over the soon to be released KPMG report commissioned by the Harper government on the projected life cycle cost of the F-35 program. Apparently, the National Post has seen sections of the report and has a piece by John Ivison in today’s paper giving some of the details.

One of the main takeaways for me is that, according to Ivison:

The report validates much of the costing done by National Defence. The acquisition costs are identical at $8.9-billion. DND calculates sustainment costs will be $7.3-billion, while KPMG says $15.2-billion. On operating costs, DND estimates $9-billion, whereas the accountancy firm calculates $19.9-billion.”

The biggest difference in cost estimates is in the length of time over which the costs are estimated: Department of National Defence used a 20-year period; KPMG used a 42-year lifespan. So—surprise!—the new study shows an enormously higher total cost—nearly $46-billion, in fact.

This is indeed a staggering amount for taxpayers to fund, but, in isolation, it is almost meaningless. In the absence of an alternative to which it can be compared, how can anyone make a valid value judgement? Is there really an option to not buy a replacement for our aging fleet of CF18s? I don’t believe there is.

Not that the Harper government should not be in for a full share of criticism over this file. From the beginning, this procurement issue has been handled in an unnecessarily ham-handed manner. And I’d say Defence Minister Peter MacKay could, justifiably, be shuffled out of his important portfolio over bungling his attempt to manage the process.

It seems pretty clear to me that our government has already made a “moral” commitment to the Americans that we’ll purchase F-35s, making it all the harder to pull out of the program. Moreover, DND, according to Ivison, “remains a staunch advocate of the F-35.” Consequently, the government will need all its persuasive powers to convince taxpayers that this hugely expense fighter is the “right” one for us.

The Conservative government is apparently asking other manufacturers for estimates and information on availability and capabilities of other planes. I’m happy to hear this. With this information in hand, we’ll all be able to better judge whether to side with the government or with the opposition on this issue.

Our politicians too often treat these things as political footballs and Canada loses out as a result. Ivison reminds us of the financial and military disaster former Liberal Leader Jean Chrétien made of the Mulroney government’s plan to replace the Canadian Forces’ aging fleet of Sea King maritime helicopters.

Jean Chrétien cancelled the AgustaWestland EH101 helicopters purchase made by Brian Mulroney’s Conservatives, paid a $500-million termination fee and rigged the subsequent contest to prevent AgustaWestland from winning.”

That was back in the early 1990s, but the Sea King fiasco was still playing out in late November of this year when DND reported that one of those old Sea King helicopters was forced to make an emergency landing in a vacant lot in Halifax after experiencing mechanical problems.

So let’s hope the Harper government can get back on track with the CF18s’ replacement and make a decision that’s right for Canada and to heck with the politics.


  1. I find it interesting that in spite of factual information provided by the Minister, the DND and all players, that they still claim the opposite. Lets take the lefties talking points to ludicrous lengths, and demand the costing be investigated over a 100 year life span.

  2. Still cheaper than what the CBC will cost us over the same time period.

  3. Things can be reviewed at this post at the Canadian Defence & Foreign Affairs Institute’s “3Ds Blog”, note last link:

    F-35: The Canadian Conservative Government’s Lost Crusade


  4. Perhaps the cost of the CBC over 42 years should be tabled too.!
    That should put this issue into perspective for the Dippers/Libs.