Ottawa's F-35 price-tag could skyrocket if Washington scraps purchase

OTTAWA — The Globe and Mail

The Lockheed Martin Joint Strike Fighter is unveiled during a ceremony in Fort Worth, Texas,in this July 7, 2006 file photo. (LM OTERO/LM OTERO/AP)

The Harper government has a lot riding on the outcome of high-stakes congressional budget talks now that the future of the F-35 Joint Strike Fighter program hangs on whether Democrats and Republicans can reach a bipartisan deficit deal by next Wednesday.

U.S. Defence Secretary Leon Panetta is warning Congress that the fighter program could be among the casualties if Washington is forced to implement across-the-board cuts to reduce its deficit.

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A “super committee” has until Nov. 23 to find $1.2-trillion in savings over the next 10 years, and Mr. Panetta is increasing the pressure with just a few days to go.

Should the committee – officially called the Joint Select Committee on Deficit Reduction (JSCDR) – fail to reach a deal, across-the-board cuts described as “sequestration” would apply almost immediately.

Mr. Panetta writes in detailed letters to two senators dated Nov. 14 that the U.S. Department of Defence “would face huge cuts” if there is no deal.

“Decisions related to major programs could include: Terminate Joint Strike Fighter,” the letter states.

Congressional leaders gave little indication on Tuesday as to whether a deal is within reach, but Canada’s minister in charge of procurement welcomed Mr. Panetta’s action.

“Our government and our closest military allies understand the importance of this program to the protection of our sovereignty,” associate defence minister Julian Fantino said on Tuesday under repeated questioning from the NDP and the Liberals in the House of Commons. The opposition argued the Defence Secretary’s comments prove its time for Canada to scrap its own involvement in the F-35 program.

“The wheels have fallen off the wagon,” New Democratic MP David Christopherson said. “When are they going to finally admit that they’ve got this wrong and get out and do a public tender?”

A U.S. decision to scale back or withdraw from the Joint Strike Fighter program would have major political and financial implications for Canada. National Defence plans to spend $9-billion to acquire 65 F-35 fighter jets between 2016 and 2022. The department says it expects to get a deal on the price by buying when they are in heavy production. Mr. Panetta’s letter suggests that might not be possible.

Ottawa estimates its jets will cost between $70-million and $80-million each, even while acknowledging the current unit cost is well over $100-million (U.S.).

Canadian defence experts said on Tuesday they do not expect the Americans will pull out of the program entirely, but even scaling back their involvement to save money would lead to higher costs for Canada.

University of Ottawa professor Philippe Lagassé, an expert on Canadian foreign and defence policy, said he’s aware of serious concerns within National Defence that the cost of the F-35s could crowd out “Canada First” procurement plans.

“There may be other elements within the government, not necessarily the Conservative party itself, that are secretly hoping this will at least create some pause for the government,” he said. “There’s definite second thoughts about the overall costs and the affordability of the current procurement program.”

Adam Chapnick, a defence studies professor at the Royal Military College of Canada, said a U.S. decision not to go ahead with the F-35 purchase would have a significant impact on Canada.

“The cost would increase dramatically,” he said. “If the United States wasn’t going to use the F-35, then it wouldn’t make as much sense for us to, because part of our goal is to be inter-operable with the United States. So if there’s nothing to be interoperable with, there’s much less incentive to go ahead.”

Denis Stairs of Dalhousie University’s Centre for Foreign Policy Studies said it appears premature for anyone to conclude that the United States is backing away from the F-35.

“It’s Washington politics as usual,” he said.