Boeing pitches guarantee of billions of dollars of work for Canadian firms if its Super Hornet is picked by Canada

DAVID PUGLIESE, OTTAWA CITIZEN

U.S. aerospace giant Boeing is pitching its guarantee of billions of dollars of work for Canadian companies as well as keeping aircraft maintenance in country as it tries to convince the Liberal government to select a new version of the Super Hornet fighter jet.

Boeing is hoping that new technology on the Super Hornet and its commitment to place as much as $30 billion of work with Canadian firms will result in it winning the competition to build 88 jets.

The move comes as the NDP and aerospace unions are becoming more vocal about the need for Canada's fighter jet replacement project to pay major dividends for the economy.

NDP leader Jagmeet Singh said last week he would be pushing that issue when Parliament returns and he hopes to have a discussion with the Liberal's new defence minister about how Canadian jobs can be created and sustained by the program.

Boeing had been non-committal to the Canadian program as it reviewed the bidding requirements throughout the summer. But that changed last week when Boeing confirmed it was in the race.

“We wouldn't be having this conversation if we didn't think we had a very realistic chance of winning,” Boeing executive Jim Barnes said in an interview with this newspaper.

Lockheed Martin's F-35 stealth fighter is considered the top contender in the project that will see the purchase of new jets at a cost of between $15 billion and $19 billion. Saab of Sweden is also in the competition, offering the Gripen fighter jet.

The issue of guaranteed economic benefits for Canada could be a problem for the Liberal government, which under pressure from the U.S., changed the procurement rules to allow the F-35 to be considered. Because of the way the U.S.-led F-35 program is structured, Lockheed Martin cannot provide guarantees of any work for Canadian firms, a stance that in the past would have disqualified a company from bidding on a major defence acquisition.

In early September, the union representing machinists in the aerospace industry warned that the changes made for Lockheed Martin would come at the expense of other firms offering guaranteed work for Canada's aerospace sector. In addition, the union is worried that if Canada were to purchase the F-35 then most of the key maintenance would be done in the U.S., putting in jeopardy 600 jobs at L-3 in Mirabel, Que. L-3 conducts maintenance on the Royal Canadian Air Force's current CF-18 fighter fleet.

Barnes said Boeing was surprised about the change in the Canadian competition that lifted the need for guarantees on providing domestic firms with work equal to, or more than, the cost of the project. Boeing has L-3 on its fighter jet team as well as Peraton Canada Corp., CAE Inc., GE Canada and Raytheon Canada.

Barnes said over the years the Canadian government has built up a capability to maintain its fighter jets at home by using those companies. “So we are leveraging that investment by the government of Canada,” he added.

Boeing officials say they are confident in guaranteeing billions of dollars of work for Canadians as the company has an extensive presence in both military and commercial aerospace around the world as well as its own facilities in Canada.

Lockheed Martin has countered that while there are no guarantees of work on the F-35 program, Canadian firms have picked up more than $1.3 billion in contracts on the project over the last 12 years. The amount of those contracts could significantly increase as more F-35s are delivered to the U.S. and Canada's allies, Lockheed Martin officials have noted.

Boeing is offering what is known as the Block 111 Super Hornet, an advanced version of the existing aircraft.

Earlier this year the U.S. Navy confirmed it is purchasing 78 of the aircraft which are equipped with a new computer, sensors and data links to boost the amount of information that can be received or transmitted. The aircraft also has satellite communications, which is important for Arctic operations, Boeing noted. Some stealth aspects have also been added and Boeing says it has been able to increase the life of the aircraft from 6,000 flight hours to 10,000 flight hours.

It is also pitching the new Super Hornet as less costly to maintain. The aircraft costs about $18,000 U.S. an hour to operate compared to the F-35 which costs $44,000 U.S.

The Pentagon and Lockheed Martin are working on reducing that F-35 cost.

Bids for the Canadian program must be submitted by the spring of 2020, and the winner is expected to be determined by early 2022. The first aircraft would be delivered by 2025.

Technical merit will make up the bulk of the assessment at 60 per cent. Cost and economic benefits companies can provide to Canada will each be worth 20 per cent.

A trade dispute between Canada and Boeing over duties on Canadian-made civilian passenger jets prompted the Liberals to include in the fighter jet competition a clause that would consider any economic harm a company has done to Canada.

Barnes said that clause is in the bidding documents. Boeing, however, does not see that as a problem for the company as it ultimately lost the trade dispute.

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