May 31, 2019 | Local, Aerospace
The Canadian Press, Lee Berthiaume
OTTAWA — The federal procurement minister is defending the government's plan to loosen procurement rules for the F-35 stealth fighter in the face of questions and concerns from companies that make competing jets.
Speaking at the annual Cansec arms-trade show Thursday, Public Procurement Minister Carla Qualtrough insisted the move is needed for a robust competition to replace Canada's aging CF-18s. That competition is expected to result in a $19-billion deal for a new fleet of fighters.
“The innovations and modifications we are adopting will enable participation from all eligible suppliers while applying the same rules to everyone on a level playing field,” Qualtrough said during a breakfast speech.
“This is a complex process. As complex as any the federal government has ever conducted.”
The government's plan involves lifting a long-standing requirement that companies legally commit to putting some of their contract money back into Canadian industry if they win a defence competition.
The proposal followed U.S. complaints that the requirement violated an agreement Canada signed in 2006 to become one of nine partner countries in the development of the F-35, which is being built by Lockheed Martin.
While partner countries can buy F-35s at a discount, they must also contribute money to the planes' development — in Canada's case, more than $500 million to date.
Partners are also forbidden from requiring economic benefits as a condition for buying the plane. Companies in each partner country instead compete for contracts associated with the aircraft, with Canadian industry having won $1.5 billion so far.
But representatives from Boeing and Saab, which make the Super Hornet and Gripen fighter jets, respectively, said Wednesday the previous policy worked well in ensuring defence contracts benefit Canada economically.
And they warned abandoning the requirement that bidders commit to reinvesting in Canada could hurt the country's aerospace industry, which would in turn make it more difficult for the military to support its new jets.
Industry sources say representatives for the Eurofighter Typhoon, the fourth aircraft expected in the competition aside from the F-35, Super Hornet and Gripen, have expressed similar sentiments.
Qualtrough, offering the government's most extensive defence of the plan to date, insisted that despite letting bidders choose not to make contractual obligations to re-invest, the government is committed to ensuring the largest economic benefits possible.
Under the new process, bidders can still guarantee that they will re-invest back into Canada if their jet wins the competition and get full points — which is the likely approach for Boeing, Saab and Eurofighter.
Those like Lockheed Martin that can't make such a commitment will be penalized and asked to establish “industrial targets,” lay out plans for achieving those targets and sign a non-binding agreement promising to make all efforts to achieve them.
“No one should misunderstand this: our government remains committed as strongly as ever to the (industrial benefit) policy in this competition,” Qualtrough said during her speech.
“We're getting the fighter jet for the RCAF's needs, at the right price, and with the right economic benefits for Canadians.”
The government has said it plans to launch the long-overdue formal competition to select Canada's next fighter jet in July, nearly four years after the Liberals were elected in 2015 on a promise to hold an immediate competition.
Companies are expected to submit their bids next winter, with a formal contract signed in 2022. The first plane won't arrive until at least 2025.
–Follow @leeberthiaume on Twitter
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Colin Butler Even an expert in armoured fighting vehicles thinks it's a strange place to find what the Canadian Army calls "the backbone" of its combat vehicle fleet. "I'm surprised that vehicles of this importance and significance are being stored in a conventional steel breaker's yard," said Jon Hawkes, the Land Management Editor for military information publisher Jane's Information Group. "Typically they'd be in a military facility of some kind, even if it's sort of, you know, popped out in the back out of the way in the contractors own facility." "For them to be in this breaker's yard is not where I would expect them to be." "Them," in this case are the LAV III, the workhorse of the Canadian Army. You've likely seen them on television, either helping Canadians stricken by some natural disaster, such as the 2013 floods in Alberta, last year's floods in Quebec, or, maybe overseas, carrying our troops into hot zones in such places as Afghanistan and more recently Mali. What are these LAV IIIs doing in a junk yard? So what on Earth are they doing in the back lot of a junk yard? "I think it's interesting," John Hawke said. "You could read that two ways." "On one hand, these things are being quasi-dumped in a corner somewhere to be dealt with later and perhaps that's not caring for them in the best possible way. Although as I say, they're very hardy vehicles. I wouldn't necessarily fear for their status." "Alternatively you could say that someone somewhere is actually being quite smart in finding a very cost-effective solution for storing them for a period of time. I'd imagine it's not hugely expensive to put them wherever this is." Secretive contractors Except, no one working with these LAVs is willing to talk. CBC News first attempted to visit the site in person, but was told to leave the property by staff at the scrap yard. When contacted by phone, Matt Zubick, a member of the family that owns John Zubick's Limited said "I can't talk about that" before he hung up. Steph Bryson, a spokeswoman for General Dynamics Land Systems Canada, declined to comment, referring the question to the Department of National Defence. So why all the secrecy? No secret at all "I find that a bit amusing," said Daniel Le Bouthillier, the head of media relations for the Department of National Defence. "From our perspective, the work is hardly a secret." It turns out the work inside John Zubick's Limited has been happening for the better part of a decade. After Canadian troops deployed in Afghanistan, they quickly realized the army's fleet of LAV IIIs, which they've had since 1997, needed a few tweaks to give soldiers better protection against the Taliban insurgency. Those tweaks involved better armour, blast absorbing seats and other upgrades. However, the LAV IIIs were never designed to handle the extra weight, according to Le Bouthillier. "This additional weight meant more wear and tear and affected the vehicles' what they call 'full mobility potential.' So these upgrades that are happening now address all those issues." The upgrades are being done by London, Ont.-based military manufacturer General Dynamics Land Systems Canada as part of a $1.8 billion refitting and refurbishment program with the Canadian Armed Forces called LAVIIIUP, a deal that was first struck in 2010. The program will see all 550 Canadian-made LAV IIIs, getting new armour and new hulls in order to extend the life of the vehicles until the year 2035. "As part of that process, LAV III hulls, which were not designed to support the weight of upgrades are being sent to a scrap yard, taken apart and melted and this is done because these are considered controlled goods," Le Bouthillier said. "So what you're seeing in that scrap yard are parts that are not being harvested for the upgrades," he said. "These are not drive-in, drive-out full capability vehicles. These are just parts of them. They might look like full vehicles because they're so big. Especially when you look at them from above." The first batch of upgraded LAV IIIs were delivered to the military in 2012, with the delivery of the final batch expected next December. https://www.cbc.ca/news/canada/london/london-ontario-lav-1.4734920