THE BIG LIE
On April 3, 2012, after nearly six years of the Harper government misleading Parliament and the public, the much-vaunted F-35 program crash-landed at centre stage in Canadian politics. The engine-trouble had begun nearly a year earlier, just before the general election that gave Stephen Harper his majority government.1 The Liberals had tried to make the record-breaking acquisition a major election issue, but the smooth-talking prime minister allayed all fears about the government’s choice of fighter jet. The strong, stable government had everything under control. Canadians agreed.
Opposition leader Michael Ignatieff ’s concerns centred on how much it would cost to acquire Lockheed Martin’s high-tech aircraft, known as the Joint Strike Fighter (JSF) Lightning II, or F-35, to replace Canada’s aging fleet of F-18s. The government set the price at $15 billion for sixty-five of the experimental aircraft. That figure included the acquisition and supporting infrastructure of the jets, or so the government claimed. The Opposition wasn’t buying it.
After decimating the Liberals and driving Michael Ignatieff from the field of Canadian politics in May 2011, the Conservatives defended their costing by releasing next to nothing about the aircraft procurement to the political opposition, and merely repeating the talking points to support their disputed figure. Ironically, their accounting for the F-35 acquisition began to crumble when a man the Harper government had hired, Kevin Page, challenged the government’s costing. Page was appointed as the parliamentary budget officer under the Accountability Act in 2008. He was to be an independent watchdog, paid for by citizens to provide non-partisan analysis of the nation’s finances and government spending.
Page claimed that the real price tag of the program was $29 billion, nearly double the figure cited by the prime minister and the minister of defence. He also accused the Department of National Defence (DND) of keeping two sets of books for the F-35 program: one for departmental and cabinet use, the other for public and parliamentary consumption. The DND’s defence was that there was only one set of books—with two columns.
The extent to which the Harper government badmouthed Page as an incompetent busybody was malicious and disingenuous. The denunciations had nothing to do with the elite civil servant’s competence. The reason Page had been appointed by the Conservatives as the inaugural head of the Parliamentary Budget Office (PBO) in the first place was his sterling record in the public service—including a stint with two prime ministers, Paul Martin and Stephen Harper, “as the sort of chief economist for the Privy Council.”2
During the transition between the Martin and Harper governments—a process smoothly facilitated by seasoned professionals such as Derek Burney and Ian Brodie—Page worked from a third-floor office in the Langevin Block under the then clerk of the Privy Council, Alex Himelfarb. Page attended some cabinet meetings as a key official involved in getting the prime minister and finance minister to sign off on the budget. On a personal level, the Harpers had sent Page and his family a condolence note in 2006, after they lost a child in a tragic accident.
Page was impressed with the way Stephen Harper conducted cabinet, telling me, “PM Harper ran the meetings efficiently. He was a fan of Chrétien that way and followed his cabinet style. The difference between the two governments was that while Chrétien had a lot of experience around his cabinet table—including many people who had been on the planning and priorities committee and had run departments—Harper did not have a lot of experience to draw on. When they appointed me, they saw me as a fiscal conservative. What am I really? A nerdy guy who doesn’t like wasting money.”
And what is Stephen Harper? A nerdy guy who doesn’t like being questioned, much less contradicted. It seemed as if Harper’s favourable impressions of Page, including the ones that underpinned his appointment to the PBO, were now water under the bridge. The government was not only defending a hugely expensive and controversial acquisition, but its credibility was squarely on the line.
If the PBO chief had it right, voters had been purposely misled during the 2011 election about the biggest planned expenditure of the Harper government—the fleet of F-35s. And that would mean that Michael Ignatieff, the Cassandra-like Liberal leader of the day, had been right when he claimed the government was lowballing the numbers for the acquisition. Not surprisingly, the Harper government turned on Page like a junkyard dog.
Finance minister Jim Flaherty accused the PBO chief of incompetence. According to Page, Flaherty had “taken PBO criticisms personally” and stopped inviting the parliamentary budget officer to Finance meetings. The prime minister and the Department of National Defence rejected Page’s numbers, insisting that Canada would get the F-35 for $70 million to $75 million apiece. Furthermore, defence minister MacKay said the annual service bill for the new fighter jets would be approximately the same as for the F-18s. Both statements were pure fantasy. The price of the F-35 was at least $20 million more per plane than the government’s number, and maintenance costs were 42 percent higher than claimed.
Behind the government’s categorical denials of the PBO’s much higher cost estimates, and the vicious personal attacks on Page, a whiff of nervousness hovered in the air. Stubbornly maintaining that the F-35 was “the only option available,” the prime minister failed to provide any evidence for that statement other than the usual variety—his own pronouncement. Perhaps that’s why he told a Toronto news conference in the run-up to the 2011 election, “I’m not going to get into a lengthy debate on numbers.”
The controversy over numbers and facts surrounding the F-35 simmered for nearly a year until the spring of 2012. Despite the government’s constant cheerleading for the project, the issue wouldn’t go away. This was partly because of ominous news about the F-35 coming out of the United States, and partly because the government was persisting in the very behaviour that had triggered a contempt-of-Parliament finding against the previous Harper minority. The issue then had been the government’s refusal to give financial information about the cost of government initiatives to Parliament, including the F-35 project—a practice it was still pursuing, according to Kevin Page. But whether you believed the government’s numbers or the PBO’s, buying the stealth jet would be the single most expensive acquisition in Canadian military history—in other words, a major test of the government’s claim to be sound financial managers.
ON THAT SCORE, April proved to be the cruellest month— at least April 2012. On April 3, Canada’s auditor general (AG) released his report into the F-35 program. Michael Ferguson, new to the job, took over his post on November 28, 2011, under circumstances that didn’t have the high-altitude controversy of the F-35 but were nonetheless bumpy enough.
Although the Harper government had advertised the AG’s position as bilingual, it chose Ferguson, a unilingual anglophone from New Brunswick, where he had served as deputy minister of finance. The selection of a unilingual candidate prompted Michel Dorais, an official in the Auditor General’s Office, to resign as a matter of principle: his position was that the auditor general had to be able to speak both official languages or the working atmosphere in this important institution would be damaged. Treasury Board president Tony Clement responded in the House of Commons by tabling a previous political donation by Dorais to the Liberal Party—the usual government tactic of returning all things to politics. That contretemps quickly receded in the blowback from Ferguson’s findings. In either language, his scathing report was a heat-seeking missile into the government’s undocumented claim that the F-35 was the right aircraft at the right price.
The new auditor general revealed that the Harper government’s costing for the F-35 was astronomically and deliberately out of whack. The cost of acquiring and maintaining sixty-five F-35s over twenty years was not the $15 billion the government claimed, but $25 billion—and even that number might be low. The proof cited by the AG for his astonishing finding came in the form of incontrovertible evidence: the DND’s own internal estimates.
The AG also pointed out that the DND’s secret costing had been done in 2010. The revelation of the timing was explosive. It was in 2010 that the DND had made the internal decision to select the F-35. The $10-billion discrepancy between the AG’s number and the government’s was bad enough—a difference of 40 percent. But there was now another elephant in the room that could not be blanketed by speaking points. Why had senior officials in the DND told Parliamentary Budget Officer Kevin Page in 2011, nearly a year after they had set the real cost of the F-35 fleet at $25 billion, that the bill to taxpayers was only $14.7 billion? An officer of Parliament had ordered the DND to produce public information of the highest importance and the department had failed to do so.
There was worse news in Ferguson’s report. The AG said that the Harper cabinet would have known that the government’s public number had been off by $10 billion. In addition to the mismanagement represented by that order of miscalculation, there was the issue of garden-variety dishonesty. This revelation also meant that while Harper ministers and DND bureaucrats were castigating Kevin Page for getting the costs wrong for the F-35, they were perfectly aware that his numbers were far more accurate than their own. A good public servant had been trashed for getting it right by the very people who, as it turned out, had covered up the true costs.
Speaking to reporters in a scrum after an appearance at the public accounts committee on April 5, Ferguson said, “I can’t speak to individuals who knew, but it was information that was prepared within National Defence, and it’s certainly my understanding that that would have been information that, yes, that the government would have had . . .”
If the F-35 debacle didn’t reflect well on the government’s ability to manage huge sums of money, it did afford an excellent glimpse into the heart of its modus operandi: the notion that the incumbent gets to mint his own facts, the penchant for secrecy at the public’s expense, the reflexive blame-shifting. Looked at over the six years the project was in the Harper government’s hands, the F-35 is a story of hoodwinking the public, misleading Parliament, and risking billions of taxpayers’ dollars—all that without the federal government having the foggiest idea of what Canadians were getting for their money. As a saga of institutional manipulation and political mendacity, it is unparalleled in modern Canadian politics.
One of the oddities of the F-35 debacle is that the Conservatives inherited the whole mess from a previous Liberal government. It was an orphan they didn’t have to take in. As avowed reformers eager to change the way Ottawa did business, the Harper government should have seen the inherently flawed F-35 program as a golden opportunity to show both fiscal prudence and a commitment to getting value for the potentially massive public expenditure involved. It showed neither. And not because, as a participant in the nine-member consortium developing the aircraft, Canada was under any obligation to buy the F-35. It wasn’t. Instead, when Gordon O’Connor became minister of defence in 2006, he stayed with, and his successors perpetuated, a procurement process that was a stunning example of “worst practices” public policy.
The F-35 was chosen by the Department of National Defence without a competitive bidding process, an approach that federal procurement experts such as Alan Williams point out adds at least 20 percent to the fly-away price. In fact, the June 1, 2010, letter sent by DND assistant deputy minister Dan Ross to Public Works to justify sole-sourcing the mammoth contract was just 150 words long! The DND tried to justify its approach with the claim that it had done its own review in which the F-35 bested the competition: Boeing’s F-18 Super Hornet; the Swedish-built Saab Gripen; the Dassault Rafale from France; and the Eurofighter Typhoon, built by a consortium led by Britain.
In fact, the Harper government and the DND ceded due diligence to third parties, and very strange ones at that—the US Air Force, the principal client for the jet, and Lockheed Martin, its manufacturer. Even more inexplicably, the official in the DND whose job it was to issue the Statement of Requirements (SOR) for this massive acquisition ignored the established process, which is to first produce a formal statement of the military’s requirements, and then have the civilian side choose the best equipment at the best price. “That was the responsibility of Assistant Deputy Minister-Materiel Dan Ross. But Ross did exactly what bureaucrats are not supposed to do. He committed to the F-35 and recommended to then defence minister Gordon O’Connor that this was the choice,” Alan Williams, former DND procurement chief, told me.
Ross, who retired as the DND’s procurement boss in January 2013, admitted that Canada’s procurement system was “broken,” partly as a result of split ministerial responsibilities for military acquisitions, and partly because of a lack of audits and reviews, and a too-distant working relationship with the auditor general. Above all, Ross told the Hill Times newspaper, procurement has to be somebody’s full-time job: “Right now . . . you have requests for lunch, juice, and sandwiches sitting on Minister MacKay’s desk [along] with Fixed Wing Search and Rescue budgets.”
Whatever the cause, something had gone terribly wrong with the jet-fighter program. The Statement of Requirements for the F-35 was issued four years after the decision had been made by the DND to acquire it without competitive bidding—an absurd reversal of how sound procurement unfolds. When the equipment is chosen before the SOR is issued, you may be sure that when it is issued, only one aircraft will qualify—the one already chosen. It is not a rational process, but an exercise in “wiring” the specifications to get what you want.
Think of it as brochure fever, followed by a few whoppers to get the bank loan.
At one level, the military simply wanted the F-35 the way a teenager might eschew a Malibu and lust after a Corvette: DND bureaucrats enabled the acquisitive instincts of the generals by making unsubstantiated recommendations to the political side, all the while ignoring the well-known and agreed-upon rules. As one general told me, “The chief of the defence staff should be at the bottom of the Ottawa River over this. I know for a fact the prime minister is furious over this.”
But it was not, as some have argued, entirely a case of the government being asleep at the switch. Far from it. Successive ministers in the Harper government lent the full weight of their uncritical support to a project headed in the direction of the disastrous F-22 Raptor, a US fighter jet so over-budget that the production line was shut down by former secretary of defense Robert Gates after the assembly of just 187 aircraft.
The F-22 bill to American taxpayers was $65 billion. For that, they got a stealth “hangar queen” or “maintenance hog” that never saw combat in Iraq or Afghanistan, a disastrous fate for a piece of equipment that came in at 400 percent over budget. One of the reasons stealth aircraft like the F-35 need more maintenance is that aero-systems that feature low observable (LO) or radar absorbing materials (RAM) rely on plastic as an important element of construction. Metal or even ceramics can’t be employed because they reflect electromagnetic waves, which show up on radar. That was the main reason the US Navy never bought the F-22: stealth materials require enormous maintenance and do not hold up well in adverse weather or at Mach speeds—conditions otherwise known as combat.
Nevertheless, the busiest promoter for Canada’s acquisition of the F-35 “stealth” fighter was Peter MacKay. During his five years as minister of defence, MacKay earned his keep by posing with the F-35, including one shot in the cockpit of a plywood mockup of the fighter jet that was trucked to Ottawa all the way from Lockheed Martin headquarters in Fort Worth, Texas. Though the wooden aircraft was shipped free of charge by the manufacturer, the photo shoot of MacKay at the plastic controls cost Canadian taxpayers $47,000. MacKay’s claims about the stealth fighter, taken straight from the company’s talking points, ran the gamut from the confusing to the contradictory, from the absurd to the downright deceitful. The F-35 was not, as MaKay claimed, the only stealth fighter in the world. Canada’s new chief of the defence staff, General Tom Lawson, told the Commons defence committee, “There are countries around the world flying [other aircraft with stealth capabilities] to great success these days.”
THE HARPER GOVERNMENT announced its intention to buy the F-35 on July 16, 2010. In the 2011 election, Harper spoke of the “contract” to make the unprecedented purchase, complained it shouldn’t be an election issue, and implied that political opponents who criticized the F-35 were unpatriotic deadbeats. Tellingly, he insisted the price he was quoting for the so-called “fifth generation fighter” was accurate, despite directly contrary evidence from the United States. “A lot of the development costs you’re reading [about] in the United States, the contract we’ve signed, shelters us from any increase in those kinds of costs. We’re very confident of our estimates and we have built in some latitude, some contingency in any case. So we are very confident we are within those measures,” the prime minister told the Waterloo Record on April 9, 2011.
While both the prime minister and his defence minister were cheerleading for Lockheed Martin, it was becoming evident from more forthright sources that no one could make any solid claims about the F-35. The simple reason for this lack of certitude was that the F-35 went into production before it was ever flight-tested. It was an experimental aircraft. The manufacturer never built a combat-ready prototype that could engage in a fly-off against competitors so that the best plane could be determined based on merit. In the case of the F-35, it was “buy before you fly.”
This perverse procurement model had long since set off alarm bells with American government officials and even with the US military, who were learning that there was a terrible price to be paid for the practice of “concurrency”—of producing and testing the F-35 in parallel rather than in sequence. The evidence from the Congressional Budget Office (CBO) and the US Senate armed services committee revealed that the F-35 program was in deep trouble at every level—from poor production quality on the aircraft’s electronic warfare capability to obscene cost overruns and hugely expensive delays. Even the pilots’ headrests were too big, limiting aft vision in combat with potentially fatal results.
The Government Accountability Office (GAO), the agency charged with catching government waste in the United States, pointed out that the program was veering off course because the Pentagon had committed to final production before testing and development were complete. Frank Kendall, the Pentagon’s chief weapons buyer, offered a scathing assessment of how the US military acquired the F-35. On April 24, 2012, he told ABC.com, “Putting the F-35 in production years before the first test flight was acquisition malpractice. OK? It should not have been done. OK? But we did it.”
This was the heart of the matter. The same month that Canada’s auditor general revealed that the Harper government had grossly understated the cost of the F-35, the GAO was reporting in the United States that the Pentagon was buying its weapons systems backwards—squandering billions in taxpayers’ dollars on sophisticated equipment by “spending first and asking questions later.” It was a practice the Congressional Budget Office had been warning about since 1988 in a study called “The Effects of Concurrency,” which looked at fourteen major weapons system programs acquired by the Pentagon. Each of them featured a parallel process of production and testing. All of the programs experienced cost increases ranging from 33 to 527 percent, and schedule delays of up to 139 percent.
In other words, the US F-35 program followed a procurement process that the Congressional Budget Office had deemed to be a bad idea twenty-five years ago. Although the aircraft went into production in 2003, the first “test flight” didn’t take place until three years later. As long as things went without a hitch—i.e., when flight simulators and computer models correctly predicted how the aircraft would perform—savings on testing costs were realized. But when difficulties arose, it meant the public was stuck not only with expensive upgrades to fix the immediate problem, but also with a huge bill for retrofitting all the planes built to that point. From that perspective, the F-35 was a manufacturer’s dream and a buyer’s nightmare.
“The F-35 saga shows an essential part of a broken military procurement process in the United States,” Winslow Wheeler told me. Wheeler spent thirty years as a national security advisor on Capitol Hill, and is the director of the Straus Military Reform Project at the Centre for Defense Information in Washington. “The heart of the broken process is ‘setting the hook,’” Wheeler noted. “The manufacturer over-estimates the performance and underestimates the cost and offers ‘fantasies’ about the scheduling. The F-35 is classic. The key to ‘setting the hook’ is making sure that production starts before you begin testing. Contractors like Lockheed Martin say testing can’t take place first because it would waste a lot of money. Once a lot of public money is spent, the argument used is that you can’t waste all that money that has already been invested. At that point, you have entered the ‘buy-in’ stage.”
In the movies, they called it “the sting.” More than one high-ranking US military officer has felt it during the painful course of procuring the F-35. Air Force Lieutenant General Christopher Bogden put it like this in American Spectator magazine in May 2013: “What I see Lockheed Martin and Pratt & Whitney doing today is behaving like they are getting ready to sell me the very last F-35 and the very last engine and are trying to squeeze every nickel out of that last F-35 and that last engine.”
There was another big problem with the F-35. If a camel is a horse designed by a committee, the Joint Strike Fighter is an aircraft designed by clueless politicians, Star Wars–struck Pentagon planners, and opportunistic contractors. From the late 1980s, when its design first emerged from the Pentagon’s Defense Advanced Research Projects Agency, the F-35 was burdened with contradictory demands. It was supposed to be both a short takeoff and vertical-landing aircraft, and a supersonic fighter jet. “This required an airframe that—simultaneously—wanted to be short, even stumpy, and single-engine, and also sleek, long, and with lots of excess power, usually with twin engines,” Winslow Wheeler wrote.
Politicians added more humps to the “flying camel” during the Clinton administration, including the demand that the F-35 be multi-service. Consequently, it had to meet the differing needs of the Air Force, the Marine Corps, and the Navy. In reality, three planes in one were being developed simultaneously—with an astonishing twenty-four million lines of computer code in the electronics of each F-35.
The president’s officials also imposed the new requirement that the high-tech aircraft be multi-purpose—both an air-to-air fighter and a bomber. That meant that the F-35’s already compromised design would be further burdened by adding weight to the airframe to manage heavy bomb loads. Something had to give, and that something was the agility embodied in the F-16, a singlepurpose pure fighter jet. The F-35 ended up with the worst of all worlds—not as agile a fighter as the F-16, not as capable a bomber as the F-15E, and nowhere near as effective at low altitudes (in close air support for ground forces) as the A-10.
And then there was the part of the sales pitch the generals couldn’t resist. Clinton administration officials imposed the “stealth” requirement, which meant additional tweaks of the aerodynamics of the already guppy-like F-35, and what experts have called “maintenance-intensive skin coatings” required to reduce radar reflections. But as many experts have pointed out, “stealth” doesn’t mean invisibility, but merely limited detection ranges against some radar types at certain angles.
Even then, there are no guarantees. This is what retired general Lewis MacKenzie, the commander of NATO forces in the Bosnian War, told me about the sexiest selling point in the F-35 brochure: “In the Bosnian War, the Serbs shot down a ‘stealth’ F-117 bomber. Posters went up around Belgrade, ‘Sorry Bill, we didn’t know it was invisible.’ They were using old Soviet radar and missiles. The F-35 is really not relevant as an initial-strike fighter because initial strikes these days are not done by fighters, but by Cruise missiles.”
More than a decade into the project, what was supposed to have been a low-cost solution to the US forces’ need for a newgeneration fighter jet has became a procurement nightmare, gobbling up 38 percent of the Pentagon’s budget. In 2001, the Pentagon planned to buy 2,866 F-35s at $79 million per plane for a grand total of $226.5 billion. By 2010, the plan was altered. The buy was reduced to 2,456 jets at $298.8 billion—a 14 percent reduction in the number of F-35s against a 32 percent price increase.
By 2012, the cost of the fleet ballooned to $395.7 billion and climbing. Since development began in 2001, unit costs per aircraft have doubled—from $81 million to $161 million. The full life-cycle cost of operating and supporting a reduced US fleet of 2,457 F-35s is now estimated to be $1.5 trillion—a sum, as reported in Foreign Policy magazine, greater than the annual gross domestic product of Spain.
Even more daunting for potential buyers, the new jet is years behind schedule. The first batch of F-35s was slated for combat use in 2010, but since less than 20 percent of the flight testing on the aircraft has been completed, and just 4 percent of the mission systems verified, the US military now says the deployment date is “to be determined.” It could be as far off as 2019 or 2020. Added to an escalating price, the production delay is almost certain to lead to reduced or cancelled orders. And that means just one thing: a much higher sticker price for buyers who proceed with the acquisition.
Production has slowed to such a crawl that the US Department of Defense (DOD) has for three straight years reduced near-term orders, deferring aircraft and costs to future years. Since 2002, total orders through 2017 by the DOD have been reduced by threequarters, from 1,591 aircraft to just 365.
After a dozen years of development at a cost of $64 billion to US taxpayers, the F-35 project hasn’t produced an aircraft that can be mass-manufactured. So how can any country’s military even operate training squadrons with F-35s? Since the aircraft is still an “experiment,” the answer is that they can’t. In fact, the operational limitations are laughable. The F-35 is prohibited from flying at night or in instrument weather conditions, including clouds. Test pilots have complained that the plane’s radar often doesn’t work. And on days when the temperature dips below 15 degrees Celsius, the fifth-generation aircraft is a little like an old British sports car—hard to start. That is bad news for the F-35s Peter MacKay has said will be stationed in Cold Lake, Alberta. Final flight testing for the F-35 is now slated to be completed in 2017, which means that everyone who flies the aircraft before that date is effectively a test pilot.
While the Harper government stuck with the sales pitch, the Americans weren’t the only ones getting nervous about the cost or performance of the warplane that is supposed to give them tactical superiority in the air for the next half century. JSF partners Britain, Italy, the Netherlands, and Turkey were all so “dismayed” about the performance and cost of the F-35, they delayed or downsized their own orders for the troubled aircraft. Israel, which has actually signed a Letter of Order and Acceptance for the purchase of nineteen F-35s, with fifty-five others to come later, was worried enough to send a high-level defence delegation to Washington for a first-hand look at the JSF project. The Israelis were not impressed with the Americans’ refusal to share computer codes, or with the state of the project. One of the members of the Israeli team subsequently told the World Tribune, “We knew there were problems with the airplane, but things are much worse than we had been told.”
There was also the issue of obsolescence. The US military is already talking about a sixth-generation fighter jet. Others3 who watch the defence industry are beginning to question the wisdom of investing vast amounts of money in fighter jets piloted by humans, when the future of air warfare may well belong to cheap drones that can outfly any manned aircraft because their design doesn’t have to take into account the level of G-force a human pilot can withstand. As one pro-drone F-35 skeptic put it in response to an online defence of the F-35, “Building F-35s today is as stupid as fielding horse cavalry was at the beginning of World War I.”
GIVEN ALL THE evidence to the contrary, most of it coming from the very country that was actually building the aircraft, Stephen Harper’s insistence that the costs of the F-35 were fixed was peculiar to say the least. But his government’s uncritical assumption that it was the right aircraft—in fact, the “only” one—for the RCAF was, if anything, even stranger. Associate Minister of Defence Julian Fantino rhapsodized that the acquisition of the F-35 was a “holy” undertaking, and Peter MacKay warned that if the purchase was cancelled, Canadian pilots would “die” and national sovereignty would be at risk.
The government preferred to talk about anything but what the country actually needed from a new fighter. For Canada, where the main roles for fighter aircraft are airspace defence and sovereignty, the F-35 is a poor fit. As the aircraft now stands, it can’t communicate by satellite while on reconnaissance missions in the High Arctic—a flaw Lockheed Martin promises to fix by 2019. There is trouble with the weapons systems, trouble with the cockpit, and trouble with the special helmet test pilots say gives them blurred or double vision. As a single-engine jet, the F-35 is less than ideal for long-range reconnaissance flights over remote areas. In the jargon of the industry to describe an aircraft’s range, Canada requires a “long-legged” jet fighter—one that can patrol over great distances. The F-35 is “remarkably short-legged,” according to expert Winslow Wheeler. “Its short range is an oddity because the F-35 has an enormous ‘fuel fraction’ rating, able to carry 18,000 pounds of fuel. But to make room for the external tanks, all of the aircraft’s weapons systems have to be stored inside. Viewed from the nose, the plane looks rather pregnant. Worse, the huge external tanks are a permanent weight and performance drag,” said Wheeler. Retired Colonel Paul Maillet, former manager of Canada’s fleet of twinengine CF-18s, also puzzled over the choice of the F-35: “How do you get a single-engine, low-range, low payload, low maneuverability aircraft that is being optimized for close air support to operate efficiently in the North?”
Although they didn’t much like conversations about the cost of the F-35, there was one number the Harper government loved to talk about—the much-ballyhooed windfall of contracts to the Canadian aerospace industry for JSF-related work. As reported by Murray Brewster of the Canadian Press, the government marketing machine had initially pegged the industrial benefits of the F-35 to Canada at US$12 billion. It was a Pollyanna figure that high-balled the potential benefits, just as the government had low-balled the F-35’s true costs.
There was one fact that the government’s rose-coloured glasses couldn’t change. No one knows how much business Canada’s $25-billion-a-year aerospace industry will receive. It is true that as a member of the JSF consortium, Canadian industry can bid on work. But as the auditor general reported, there is no guarantee of contracts for the F-35 because Lockheed Martin puts all work out to competitive bid. Even if a Canadian company wins a contract— as seventy of them have at a value of just under $500 million—it would have to have that contract constantly renewed over the fifty years the F-35 is slated to operate in order to realize the maximum economic benefit.
So where did Ottawa come up with the $12-billion figure for economic benefits? From the same place they got their plywood F-35: Lockheed Martin. In the wake of the auditor general’s skeptical report, Industry Canada lopped off US$2 billion from the value of the government’s contract estimate that had come straight out of a Lockheed Martin database. Perhaps they had taken to heart Michael Ferguson’s observation that “only the most optimistic projections” on economic benefits were given by the Harper government.
That is the opposite, for example, of what happens when the finance minister produces a budget. The FM makes his financial “targets” realistic by basing them on an average of forecasts by economists, not on the rosiest projections. Overestimating the economic benefits of the F-35 may be good salesmanship, but it is bad practice, especially at a time when the US military is facing deep budget cuts in a period of austerity. Prudent planners always consider the “what if ” question. If the US government seriously cut back its own order of F-35s, there would be no “sweet spot” where Canada could make its purchase when the price for the stealth fighter would be at its lowest during so-called “maximum production.” Even worse, Congress could cancel the F-35 program as simply unaffordable, the same way another Lockheed Martin product, the F-22, had been shuttered over rising costs and insoluble problems.
But changing warplanes in mid-jetstream is fraught with complications for the Harper government. Canadian industry and the military are deeply embedded in the F-35 program. It is worth noting that two of the Canadian companies that won F-35 contracts also have direct ties to the prime minister. It was announced at the Paris Air Show on June 17, 2013, that Magellan Aerospace signed a potentially billion-dollar deal to produce over a thousand tail assemblies for the Conventional Take-Off and Landing variant of the F-35. Magellan is owned by N. Murray Edwards, the chair of Canadian Natural Resources.4
Edwards was one of the key figures outside of cabinet who had the prime minister’s ear in December 2012, when Stephen Harper was formulating Canada’s new policy on foreign takeovers. It was the Calgary billionaire who warned the prime minister that the $15-billion Nexen takeover by China’s state-controlled CNOCC Ltd., a controversial deal that the Harper government approved, would be “the first of many” if Ottawa didn’t move to put conditions on state-owned entities buying into the Canadian resource sector. As reported by Shawn McCarthy in The Globe and Mail, the prime minister’s ultimate policy decision on foreign investment “closely mirrored” the tycoon’s views.
And then there was Nigel Wright. Before becoming Stephen Harper’s chief of staff on January 1, 2011, Wright had been a high-powered executive with Onex Corporation, dealing specifically with the aerospace industry. Wright was the face of Onex in Wichita, Kansas, when the company purchased Boeing’s commercial aircraft division in 2005. Renamed Spirit Aerosystems, the company is now run by Larry Lawson, former program manager of the F-35 at Lockheed Martin, and chief executive of the company’s aeronautics division.
Wright had also worked with investment bankers Goldman Sachs in the purchase of Raytheon aircraft for $3.3 billion in 2006. The company was renamed Hawker Beechcraft Corporation, and has partnered with Lockheed Martin on projects for the F-35. After a few corporate transformations, including a bankruptcy and a failed attempt to sell itself to the Chinese, the company reemerged as Beechcraft Corporation. Its senior vice-president of military programs is Jim Grant, who spent the last seventeen years at Lockheed Martin as vice-president of new business.
Nigel Wright’s answer to the built-in conflict of interest of having worked for Canada’s largest private equity company with a finger in many pots, including the F-35, was to erect a selfimposed “ethical wall.” This wall would theoretically prevent him from participating in any discussions touching the procurement of the F-35 by the Harper government, an important assurance since the PM’s chief of staff was merely on leave from Onex Corporation and intended to return to the private sector. The then industry minister, Tony Clement, came up with an even better defence against allegations about Wright regarding the F-35. “That’s baloney,” Clement told The Globe and Mail. “He’s never been involved and he’s not involved in this. There’s nothing to influence. We’ve already made the decision.”
Giving out contracts to foreign companies whose governments were potential buyers has become a key part of the sales pitch for the F-35. Lockheed Martin held out the allure of becoming part of the supply chain as a way of cushioning the disappointing performance of the JSF, its runaway costs, and chronic scheduling delays. Former DND procurement chief Alan Williams believes that the main reason Stephen Harper supports the F-35 is not the requirement of the military for a stealth fighter but the possible bonanza of contracts for Canadian industry.
There was money to be made by sticking with the program, as Norway learned. In return for placing an order for just two F-35As, the same variant of the aircraft Canada decided on, Norway got a letter from US secretary of defense Leon Panetta, agreeing to integrate Norway’s so-called “Joint Strike Missile” into the JSF design. It was a deal that could be worth as much as US$4 billion to Oslo.
But what was an effective marketing tool for the F-35 did not necessarily mean good things for the overall program. With the aircraft being manufactured by Lockheed Martin, the engines being produced by Pratt & Whitney, and some weapons systems coming from foreign countries in order to get those countries to invest, critics fear that it could leave the development process more unstable than ever. And Lockheed Martin is worried about consortium partners getting cold feet. Although industrial partners in the joint effort, such as Canada, paid $100 million for the right to bid on F-35 work, the reality is that only countries who fly the jet can reasonably expect to cash in on contracts. “If in fact the Canadian government were to decide not to select the F-35, we will certainly honor the contracts that we have here with the Canadian industry,” Lockheed Martin’s executive vice-president, Orlando Carvalho, told reporters in Montreal. “But our approach in the future would be to try to do business with the industries that are in countries that are buying the plane.”
Though an albatross for the Harper government, the troubled F-35 program has been blood in the water for Canada’s opposition parties, who for years have been unable to penetrate “Teflon Steve’s” political coating. Harper’s choreographed brushoff of Parliamentary Budget Officer Kevin Page, and his rhetorical acceptance of the auditor general’s damning report, merely sharpened their attack. Two senior parliamentary watchdogs—the auditor general and the parliamentary budget officer—had made clear that the government had not just bungled the F-35 program, it had put out deceitful numbers to cover it up. Both the NDP and the Liberals accused the Harper government of misleading Canadians about the true cost of acquiring the F-35.
Short of admitting gross incompetence, defence minister Peter MacKay had no option but to confirm the government’s connivance in fudging the numbers on the F-35. As reported by Lee Berthiaume of Postmedia, MacKay eventually admitted that the Harper cabinet had signed off on the $25-billion cost of the F-35 but had kept the information secret. On April 30, 2012, he told the Senate defence committtee, “It ultimately goes to cabinet.” There were instant demands for the prime minister and his defence minister to resign for misleading Parliament, and a myriad of questions that the government had no stomach to answer. The biggest question was whether the Conservatives had committed political fraud by misleading Canadian voters in the 2011 election about the cost of the F-35.
One politician had no doubt about the answer. After Thomas Mulcair gave a speech in Ottawa to the Economic Club, the leader of the Opposition had this to say: “We have clear and convincing evidence that the government intentionally provided false information to Parliament and that’s serious. This is a basic question of respect for our institutions.”
Nor were the Liberals mollified by Stephen Harper’s obvious reversal on his previous statements touching the F-35. After listening to him evading the crucial issue of when he became aware of the true costs of the F-35, and then watching him cover his pivot during Question Period by promising more “supervision” of furtive bureaucrats in the DND, interim Liberal leader Bob Rae remembered how Harper had treated critics of the F-35 in the 2011 election: “The numbers did not add up. The numbers were not real numbers. We knew it, we said it. What was Mr. Harper’s answer then? He called us liars. He said we were unpatriotic. . . . He cannot now pretend that he was just the piano player in the brothel who didn’t have a clue as to what was really going on upstairs.”5
With his credibility in tatters, defence minister Peter MacKay took no questions on the day the auditor general’s report was released. Effectively cutting loose a department that was now humiliated, he confined his remarks to a lame promise: the government would “move forward” with a proper acquisition process to replace the aging CF-18s. MacKay’s parliamentary secretary (now immigration minister), Chris Alexander, came up with the stinker of the day in the aftermath of the AG’s report. He blamed the media for misleading the public on the F-35, claiming that the government had yet to spend a nickel on a replacement for the F-35.
It was an embarrassing moment for the ambitious Alexander. He was pleading innocent to a charge that had never been made, in order to sidestep the real offence: barefaced and repeated duplicity from the government of Canada. Both the prime minister and his minister of defence had talked about a signed “contract” to acquire the F-35 and a total commitment to the project. It was the government, not the media, that had put out the false cost of doing that, as the auditor general reported. Alexander’s bloviating aside, the point wasn’t that Canada’s cheque for the F-35s hadn’t been cashed; it was that the government had committed to writing it, and had lied about the amount. The only saving grace between Canadians and a duplicitous mega-procurement was the work of parliamentary watchdogs Page and Ferguson.
A revealing fact was buried in Chris Alexander’s attempt to pretend the Harper government had not already chosen the F-35. He referred to the government’s seven-point plan as having an “options analysis” component—clearly stating that more than one aircraft was being considered to replace Canada’s F-18s. His statement clashed with the parliamentary record. The year before, the DND had reported to Parliament that the F-35 program had entered the “definition” phase, which comes after the “options analysis” phase. So how could Alexander now claim that the choice hadn’t been made?
History had simply been rewritten. Two weeks after Auditor General Michael Ferguson released his report, DND officials retroactively amended the department’s report to Parliament from the previous year. Where it had once reported the status of the F-35 program as in the “definition” phase, it changed that designation to the “options analysis” phase. Either the DND was assisting the Harper government or someone in the DND had apparently checked the wrong box on a purchase worth $25 billion.
In addition to the political consequences for the government of being outed by the auditor general, there was also a constitutional implication. Under the Westminster model of parliamentary democracy, which Canada ostensibly follows, the practice has been that if waste, corruption, or gross mismanagement in a government department becomes public, the minister himself is responsible—whether or not he was aware of the particulars of the case.
Under the doctrine of ministerial responsibility, Peter MacKay should have resigned as the Opposition demanded. Instead, Stephen Harper followed what would become a pattern for his leadership. The minister was left in place, bureaucrats were blamed, and the prime minister refused to answer any questions about his knowledge of the program.
Claiming to embrace the recommendations of the auditor general, Stephen Harper was left with only one course of action: to smother further debate about the disgraced program before it began to resonate with voters and the party base. The Conservatives moved swiftly to shut down hearings by the public accounts committee into the auditor general’s findings.6 They did this before the committee had heard from ministers and defence department officials who disputed the auditor general’s findings—though, paradoxically, they accepted his recommendations. Gerry Byrne, a Liberal MP on the committee, excoriated committee chair NDP MP David Christopherson for letting the government members move the motion: “This is outrageous. We can’t shut this committee down. To shut this committee down is a scandal. It means the government is desperate to hide something.”
Suddenly, government communications officers began in earnest to spin a whole new narrative for the F-35. The government now insisted that the decision to buy the F-35 had not been made—a breathless reversal given that the prime minister himself was on record multiple times extolling the purchase and arguing that the F-35 was the “only” fighter that met Canada’s requirements. The government’s position had been best articulated in November 2011 by former associate minister of defence Julian Fantino on CTV’s Power Play: “Yes, there’s a plan A, there’s a plan B, there’s a plan C, and there’s a plan Z; and they’re all F-35s.”
Suddenly, there was no commitment, and there was no signed contract, despite Peter MacKay having said in the House of Commons on December 13, 2010, “Mr. Speaker, let us look at the actual contract. What the Canadian government has committed to is a $9-billion contract for the acquisition of sixty-five fifth-generation aircraft. This includes not just the aircraft, but also includes the on-board systems, supporting infrastructure, initial spares, training simulators, contingency funds. This is a terrific investment for the Canadian Forces.”
As if that weren’t enough, this is what Julian Fantino added for good measure in Fort Worth, Texas, in the early days of the Harper majority on November 8, 2011: “We will purchase the F-35. We’re on record. We’re part of the crusade. We’re not backing down.”
The Harper government was apparently going to hit the “reset” button and begin the process all over again in the proper way— slinking away in political bedroom slippers from any responsibility for the brewing procurement fiasco and the cover-up. Canadians would finally find out the real costs of putting the maple leaf on Lockheed Martin’s fifth-generation fighter, and program funds would be frozen until they did—or such was the latest messaging from the political wizards in the Land of Oz.
Besides the historical revisionism on the F-35 program, the government’s damage control had a second feature. The prime minister, his minister of defence, and senior bureaucrats at the DND moved heaven and earth to turn the F-35 affair into a difference of opinion on accounting methods, an honest disagreement between the government and the auditor general over interpreting the rules—the same defence the Conservatives resorted to when they were caught cheating on election expenses in the “in-and-out” scandal.
It was the lowest point in the F-35’s ongoing saga of deceit. The obligation to supply the “full life-cycle cost estimates” was not an optional requirement. It was and is a central plank of Treasury Board guidelines. It is also a well-known and accepted principle of cost-estimating inside the DND. Neither the military nor the Harper government abided by the rules of the Treasury Board, or of the Department of National Defence itself, which had agreed in writing with a previous auditor general that full life-cycle costs would and should be factored into the department’s procurement process. After all, that’s how it worked in every other NATO country. As former auditor general Sheila Fraser, the federal bureaucrat most trusted by Canadians during her tenure, told me, “The truth is, this mess was self-inflicted. All the policy and systems were there. They just weren’t respected. It’s a bit like the sponsorship scandal.”
Despite the well-established rules, neither the government nor Peter MacKay’s department initially included “operational costs” in their public estimates. When they finally did, they shortened the base number of years in service for the aircraft to reduce, at least optically, the actual costs. In the United States, the F-35 was supposed to take care of the military’s needs for fifty-five years. The Harper government worked out its operational cost numbers for the JSF acquisition based on twenty years of service.
Hopelessly entangled in a web of contradiction and conniving, the government shunted the F-35 issue into a fog of shifting bureaucratic responsibilities, independent outside audits, expert panels, seven-point plans, and token questionnaires to other companies in the fighter-jet business. Soon, some in the media were talking about the F-35 being cancelled and about competition for Canada’s new jet heating up. Meanwhile, as the belated audits ordered by Stephen Harper came in, the government’s numberfudging became a national embarrassment.
According to accounting firm KPMG, the cost of the F-35 was $45.8 billion over forty-two years—not even in the same postal zone as the government’s $15-billion figure. As for the PM’s original claim that the aircraft would cost Canada $70 million to $75 million apiece, the accounting firm Raymond Chabot Grant Thornton reported in August 2013 that the number was closer to $95 million. But according to a DND internal report obtained by the Hill Times, the worst-case scenario was that the cost for the F-35 fleet could top $70 billion. It was clear why the PM had said that he didn’t want to get into a long debate on the numbers for the F-35 during the 2011 election: he was out to lunch—and dinner—on the facts.
But there was one thing the government’s ever-whirring public relations machine—a tool calibrated for optics rather than accuracy—couldn’t hide: despite a freeze on F-35 program spending, the DND would still not be going to a competitive bidding process to replace the aging F-18s—the only course correction that could turn a procurement travesty into a rational process. Doomed Liberal leader Michael Ignatieff ’s comment during the 2011 election was true: the program was a sham, the government’s numbers were false, and the whole thing should have been cancelled in favour of the established process for making such huge acquisitions.
For self-styled masters of financial management and champions of transparency, the Harper government received a bleak report card. The government had decided to make the most expensive military acquisition in Canadian history without a competitive bidding process, had misled an officer of Parliament, and had concealed the true cost of the F-35 program from Canadians during an election. On top of that, a federal minister, Peter MacKay, walked away from his ministerial responsibility with barely a blink, enjoying the full support of a complicit prime minister. Now that the facts were at last in plain sight, the F-35 fiasco was not so much about the Harper government anymore, but about the people of Canada. Were they watching? Had they noticed? Did they care? The Harper government wasn’t sure. It is unlikely a decision about the F-35s will be made before the 2015 election.
“It is about whether ministers speak for their departments, or can disown them when it suits them,” columnist Andrew Coyne wrote in the National Post. “And it is about whether we, as citizens, are prepared to pay attention, and hold people in power to account when they lie to us.”
While the country may have been dazzled into indifference or confusion over the true costs of the F-35, one group of Canadians stood up firmly against the government’s attempt to invent the facts. Canada’s scientists publicly opposed Stephen Harper’s attempt to muzzle them and to dismiss independent information that might form an obstacle to the government’s agenda.