Academic journal article Air & Space Power Journal

The Joint Strike Fighter / F-35 Program: A Canadian Technology Policy Perspective

Academic journal article Air & Space Power Journal

The Joint Strike Fighter / F-35 Program: A Canadian Technology Policy Perspective

Article excerpt

The Canadian F-35 procurement represents the largest peace-time acquisition of new aircraft for Canadian forces since the Korean War. Securing industrial benefits from military procurement is essential for advanced industrialized nations, and it has long been Canadian industrial policy to do so. For the CF-18 program, "offset" contracts were negotiated, valued at 2.7 billion Canadian dollars (CAD) or 110 percent of the worth of the initial contract.

According to the US Department of Defense (DOD), Canadian participation in the Joint Strike Fighter (JSF) program offered the promise of leveraging an investment of US $150 million into $8-10 billion of incremental revenues for Canadian industry over the life of the program. However, procurement of the F-35 was a "no bid" sole-source contract that precluded any possibility of bargaining both for price and industrial benefits under the offset model.

Issues that resulted in the DOD structuring of the JSF program to preclude traditional offsets include recognition of the nonmarket nature of defense procurement in the context of acquisition reform and the changing nature of defense systems. Partners like the United Kingdom, Israel, and Norway adapted to this new "no offset" model in securing industrial benefits. As of 2012, Canada has considerable incremental opportunities to develop similar programs that will enhance industrial and regional benefits from the JSF program as long as the offset model is not considered the norm for twenty-first-century programs. We try to address the issue in terms of how a country that lived comfortably under the US North Atlantic Treaty Organization (NATO) umbrella since World War II with limited obligations can rebuild a drastically downsized defense capability after the end of the Cold War. Canadians have only a limited sense of awareness of the need for military capabilities for the Arctic and a very limited understanding of the importance of military power.

Program History

Canada's procurement of the JSF (F-35 Lighting II) is a controversial program in Canada, a country notable for controversial defense procurement programs. The acquisition began with Canada as a participant in the development. Beginning in 1997, Canada invested US $10 million to participate in the concept demonstration phase, which resulted in the selection of Lockheed Martin as the winner in 2001. This was followed by an investment of US $100 million plus an additional US $50 million in federally funded Canadian technology programs. Canada signed on to the JSF Production, Sustainment, and Follow-on Development Memorandum of Understanding (MOU) with an additional investment of US $551 million tobe spent between 2007 and 2051. In 2008 Canada announced its intention to acquire the JSF to replace the CF-18, with the government of Canada exercising its option under the MOU and committing roughly CAD 9 billion to acquire a fleet of 65 aircraft, weapons, support, spares, and operating costs in accordance with the Canada First Defense Strategy.

As of this writing, several embarrassing controversies have occurred, including an auditor general's 2012 Spring Report that raised concerns about the no-bid/sole-source contract and many other issues, such as escalating costs. In light of these findings, the government of Stephen Harper established a Seven Point Plan that included creation of the National Fighter Procurement Secretariat, tasked with "ensuring] that the Royal Canadian Air Force acquires the fighter aircraft it needs to complete the missions asked of it by the Government, and that Parliament and the Canadian public have confidence in the open and transparent acquisition process that will be used to replace the CF-18 fleet.''1 As a part of this process, the secretariat issued new "terms of reference" in December 2012 for the evaluation of alternative aircraft to the F-35 and commissioned independent reviews of costs for the program.2 Behind these concerns are the apparent lack of industrial benefits from what amounts to one of the largest Canadian defense procurements in decades as well as the decision makers' and general public's lack of understanding and perceived need for the increase in defense capability offered by the JSF. …

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