Canadian government quietly signs $2 billion defence contract with General Dynamics

On the same subject

• 

  April 27, 2021 | Local, Naval

  McCoy: New warship will serve Canada well '€” at a fair price

  The Royal Canadian Navy needs new, modern vessels to remain relevant as the Halifax Class of ships approaches end of life. Let's stop wasting time and move'€¦

• 

  October 18, 2019 | Local, Aerospace, Naval, Land, C4ISR, Security

  Conservatives promise to 'protect' defence spending from deficit battle

  Defence takes a fifth of the federal budget and has often been a target for deficit cutters Murray Brewster The Conservatives have pledged to "protect" the budget of the Department of National Defence even as they work to eliminate the federal deficit. In their election platform, the Tories said they would find $5 billion in savings by cutting operational expenses, but were not clear on precisely what that meant, other than to say it would not affect services to Canadians. The Liberals, through their two-year-old defence policy, committed to increase defence spending by 70 per cent to $32 billion annually by 2024-25 — a program that would unfold at precisely the same time a potential Conservative government intends to cut expenditures.​​ The Liberals have also set in motion plans to buy two of the military's biggest-ticket items — new fighter jets and navy frigates. Conservative leader Andrew Scheer said Wednesday his party would stick with those purchases, but would be more efficient. "We are committed to the funding allocated to the Department of National Defence," he said during a campaign stop in in southwestern Ontario. "We will not do what the Liberals did, which is waste hundreds of millions of dollars stopping and starting the procurement process." The Conservatives have pledged to depoliticize the process of buying military equipment and have complained about the Liberal government's delivery timelines and decisions, including the plan to purchase used Australian F-18s to supplement the existing fighter jet force until a decision is made on brand-new warplanes. Says money wasted "They have wasted so much money when it comes to procurement," Scheer said, adding that Conservatives would "protect the budgets of National Defence [and] we're going to ensure that the money that's allocated to National Defence is spent wisely." At least two experts wonder how the Conservatives can live up to that pledge in light of the fact the Defence Department is the single biggest discretionary expense on the federal balance sheet and the last two times Conservatives — or Liberals — tried to balance the budget, military spending took major hits. Under the government of former prime minister Stephen Harper, the defence budget was cut by $2.1 billion annually and the department racked up sizeable chunks of lapsed spending, money that was appropriated by Parliament, but not spent. The reduction took place after the Afghan war and the department faced concurrent spending cuts through the Conservative strategy review and deficit reduction action plan. Both Liberal and Conservative governments in the 1990s cut defence spending and postponed buying new equipment, most notably new maritime helicopters, which only came into service in the last few years Defence spending an obvious target "Balancing a federal budget without looking at defence spending is extraordinarily difficult, to impossible," said Dave Perry, an analyst and expert in defence spending at the Canadian Global Affairs Institute. "Defence spending accounts for one-fifth of the federal budget." And even if the Conservatives did look for savings, a change to the accounting structure at Defence leaves little room for them to recoup much money by cancelling or postponing equipment purchases. Reducing the size of the military or the civil service was something previous governments did, but Perry said those kinds of cuts "take two years or more" to make their way through the system. Kevin Page, the former parliamentary budget officer and CEO of the Institute of Fiscal Studies and Democracy, said much of what all of the parties are proposing — and their ability to deliver — is contingent on the kind of Parliament that is elected on Monday. CANADA VOTES How much will the defence file matter to voters? PBO pushes up cost estimate for Canada's frigate build by $8 billion In a minority government scenario, the Conservatives might find themselves struggling to deliver savings outside of the Defence Department, he suggested. Would need majority "If elected, I would assume the Conservatives would need a majority government to push through the savings on direct program spending – infrastructure, wage bills, other operations, corporate and development assistance," Page said. The Liberal record on defence spending is up for debate. An internal DND slide presentation, obtained by CBC News, lays out projections for the department going to up to the 2036-37 fiscal year. Faced with extraordinary pressure from the Trump administration to meet NATO's goal of earmarking two per cent of gross domestic product for military spending, the Liberal government committed to a 70 per cent increase by 2024-25. The Feb. 25, 2019 slide presentation shows that spending will peak in 2026-27 and begin to fall again in the preceding decade. Used Australian fighter jets could cost $1.1B: Parliamentary budget officer The document also shows that, for two years running, the Liberals have not spent as much as they planned on new equipment. While $12.7 billion was set aside in their plan between 2017-19 for new military gear, the Trudeau government only asked Parliament for permission to spend $8.34 billion — leaving $4.4 billion still in the treasury. The slide presentation said part of the reason is that some existing projects came in under budget, but in one-third of the instances the spending delay was because the Defence Department — or the federal government in general — could not get the projects organized. https://www.cbc.ca/news/politics/conservatives-defence-spending-1.5323618

• 

  November 19, 2019 | Local, Aerospace

  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. https://ottawacitizen.com/news/national/defence-watch/boeing-pitches-guarantee-of-billions-of-dollars-of-work-for-canadian-firms-if-its-super-hornet-is-picked-by-canada