Posted on July 24, 2019 by Chris Thatcher
A formal request for proposals (RFP) to replace the Royal Canadian Air Force (RCAF) fleet of CF-188 Hornets was released on July 23, launching the final phase of an intense competition for what will be the largest acquisition in recent Air Force history.
The much-anticipated RFP had been expected in May, but was pushed back several months to allow procurement officials to asses changes to a draft version requested by several of the likely bidders.
Valued at up to $19 billion, the future fighter project is seeking proposals for 88 advanced aircraft to replace an RCAF fleet of 76 Hornets that began entering service in the mid-1980s. Four suppliers have been qualified to submit bids: Sweden's Saab Aeronautics with the Gripen E; Airbus Defense and Space, under the United Kingdom and Northern Ireland, with the Eurofighter Typhoon; Boeing with the F/A-18 Super Hornet; and Lockheed Martin with the F-35A Lightning II Joint Strike Fighter. The latter two both have the support of the United States government.
Proposals must be submitted by spring 2020–no date was provided in the government press release–but bidders will have at least two opportunities to confirm critical elements of their submission meet Canada's security and interoperability requirements.
During industry engagements over the past two years, senior officers with the Fighter Capability Office have stressed the importance of Two Eyes (Canada-U.S.) and Five Eyes (Canada, U.S., United Kingdom, Australia and New Zealand) interoperability. The fighter fleet is integral to both Canadian sovereignty and U.S. defence through the NORAD mission. French manufacturer Dassault Aviation withdrew from the competition in November 2018, citing the Two Eyes requirements as a restricting factor to any proposal.
Bidders can provide their security offer for feedback by fall 2019, and then revise. They will also have an opportunity after the full proposals are delivered to address deficiencies “related to mandatory criteria,” Public Services and Procurement Canada (PSPC) said in a statement. “[Bidders] will receive feedback from Canada so that they can address non-compliance. This approach has already been used for other large federal procurements and has proven to be successful in maintaining a high level of competition.”
Though technical capability will account for 60 per cent of the evaluation, economic benefit to Canada will be worth 20 per cent, the highest weighting for economic return on any procurement to date. The final 20 per cent will be attributed to overall program cost.
One reason for the delayed RFP was concern raised by Lockheed Martin over how the government's Industrial and Technological Benefits (ITB) policy would apply. Though 110 Canadian companies have received around US$1.5 billion in contracts for the F-35 program to date, the company is unable to offer the type of industrial offsets required by the ITB policy and believed it would be at a disadvantage. The government was reminded that, as a signatory of the Joint Strike Fighter Production, Sustainment and Follow-on Development Memorandum of Understanding in 2006, it had agreed not to impose “work sharing or other industrial or commercial compensation ... that is not in accordance with the MOU.”
Carla Qualtrough, minister of Public Services and Procurement and Accessibility, told defence executives at a trade show in May that changes had been made to the statement of requirements that would “ensure a level playing field” while “maintaining our government's policy objectives.
“Every bid must still include a plan for ITBs equal to 100 per cent or more of the contract value. That doesn't change,” she said. “This procurement is a generational opportunity for the Canadian aerospace industry that will generate good middle-class jobs across the country. What will change is that it will be up to each supplier to decide whether they will also provide a contractual obligation for their ITBs.”
Bidders will score higher if their ITB plan is backed with a contractual obligation, added Qualtrough.
“This is a complex process. As complex as any the federal government has ever conducted. The field is comprised of very different entities – and dynamics. Conducting a truly open and fair competition among them is indeed a challenge,” she said.
Mitch Davies, a senior assistant deputy minister at Innovation, Science and Economic Development Canada, told CBC on July 23 that the ITB requirement had been structured so that companies could “make a compliant ITB offer that suits their circumstances,” but that Lockheed Martin could still be penalized for failure to meet certain contractual commitments.
The competition is being monitored by an independent fairness monitor.
In public statements, Lockheed Martin said it looks forward to participating in the competition, while other companies said they will review the RFP documents.
The U.S. Air Force has been touring the F-35 in Canada this summer; it performed at the Bagotville Airshow in June and will be at the Ottawa-Gatineau airshow in early September. A spokesperson told Skies the fighter is “the most survivable aircraft and a generational leap ahead of any other fighter in production today. From a cost perspective, we've reduced production cost below $80 million,” which would be on par, if not below, other legacy aircraft. Over 400 aircraft have now been built, accumulating 200,000 flight hours.
When the government re-launched the Future Fighter Capability project in late 2017, it also said the eventual evaluation would include an assessment of a bidder's “impact on Canada's economic interests,” a clause directed at Boeing for its then trade complaint against Montreal-based Bombardier.
With the trade complaint since dismissed by U.S. International Trade Commission, Jim Barnes, Boeing's team lead for the Canada, told Skies in May the clause would not have “an impact on our competitiveness.”
Boeing will likely bid the Block 3 variant of the Super Hornet, “the next evolution” that features advanced networking and data processing capabilities in a distributed targeting processor network with cockpit touch panel displays, and in an airframe that has been enhanced from 6,000 to 10,000 flight hours.
“The baseline Super Hornet attributes, with the capability increases of the Block 3, is an ideally suited aircraft for NORAD and NATO operations,” said Barnes. “At this point in time, we think we have a very compelling offer to put on the table.”
That offer could be bolstered by the continued interest in the aircraft by the U.S. Navy. Boeing has signed a multi-year contract for 110 Block 3 aircraft out to 2026, and is expected to convert as many as 442 Block 2 variants to the Block 3 configuration by 2033.
“It is the perfect time for an international customer to procure the Super Hornet,” he said, noting that the ongoing U.S. Navy program will help maintain acquisition and lifecycle costs.
Airbus Defence & Space has said from start of the competition that it would decide whether to submit a proposal once the final statement of requirements in the RFP was released. The Typhoon serves in a similar role to NORAD duty with the Royal Air Force, and has participated in numerous missions with U.S. aircraft. It is unclear how easily it could be incorporated into NORAD mission systems.
However, Airbus has continued to strengthen its position in Canada, winning the fixed-wing search and rescue aircraft competition in 2016 and partnering with Bombardier on the C Series, now known as the Airbus A220. It now calls Canada it's fifth home country.
“We are proud of our history as a longstanding partner to Canada, serving the country's aerospace priorities for over three decades. We welcome the new opportunities to support the Canadian Armed Forces, to provide skilled aerospace jobs across our country and to help safeguard Canadian sovereignty,” Simon Jacques, president of Airbus Defence and Space Canada, told CBC.
While the Gripen E might be the dark horse in the competition, Patrick Palmer, Saab Canada's executive vice-president, told defence reporters in May the aircraft was designed to be easily upgradeable as technology changes–the avionics software is split so that flight-critical and tactical modules can be upgraded separately “without having to have a full aircraft recertified.”
The jet has also evolved to ensure NATO interoperability and meet “the threats beyond 2025 – the threats we know today, the threats we don't know today ... in any contested airspace environment,” he said.
More important for the NORAD mission, the Gripen was designed from the outset for Arctic operations, requiring minimal ground crew support and featuring the ability to operate from austere airstrips.
PSPC expects to award a contract in 2022. The first aircraft will be delivered starting in 2025.
https://www.skiesmag.com/news/fighter-jet-rfp-released/
