The Royal Canadian Navy to receive a sixth Arctic and Offshore Patrol Ship

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  August 12, 2020 | Local, Aerospace

  How selecting the Lockheed Martin F-35 could impact Canada’s economy

  Posted on August 12, 2020 by Chris Thatcher The Lockheed Martin F-35A Lightning II has long been considered the favourite to replace the Royal Canadian Air Force (RCAF) CF-188 Hornet. But in a competition now being contested in a weakened economy in which the government faces a ballooning deficit and an uncertain job market, how well each fighter jet scores on acquisition and sustainment costs and economic benefits to Canada – worth 40 per cent of the evaluation – could be almost as important as how well the aircraft meets the Air Force's capability requirements. The Joint Striker Fighter (JSF) has become the most expensive weapons program ever for the U.S. Department of Defense and could cost more than US$1 trillion over its 60-year lifespan, according to the New York Times. The Department of National Defence in 2013 estimated the full cost of procuring and operating the F-35A at US$45 billion over 30 years. Others have pegged the number far higher. Furthermore, under the rules of the JSF partnership agreement, to which Canada is a signatory, Lockheed Martin cannot offer traditional industrial and technological benefits (ITBs) to Canadian industry. If company officials are feeling at a disadvantage, they aren't admitting it. “We understand the rules, we understand the way the competition is structured and the requirements,” said Steve Callaghan, Lockheed Martin's vice-president of F-35 development and a former U.S. Navy F-18 squadron commander and Fighter Weapons School instructor. In an online briefing to media on Aug. 6, Callaghan shared the results of an economic impact assessment that suggested selection of the F-35 could impact GDP by almost $17 billion and generate more than 150,000 jobs over the life of the program. Lockheed Martin submitted its 7,000-page bid on July 31 to replace the RCAF's 94 legacy Hornets with 88 F-35A fighters. The proposal is one of three the federal government received at the deadline for a contract valued at up to $19 billion. Boeing's F/A-18E/F Super Hornet and Saab's Gripen E are also in the running. The government may begin negotiations with one or more of the compliant bidders once the initial evaluation is completed, likely by next spring. The final decision is expected in 2022 and first deliveries by 2025. As the RCAF and Public Services and procurement Canada now begin to evaluate the proposals, Lockheed Martin was keen to remind Canadians the F-35A is the only fifth-generation fighter in the competition. “It truly is a generation ahead of any other fighter in production and can be procured for about the same or less than the far less capable fourth-generation aircraft,” said Callaghan. Though the Joint Strike Fighter program was originally launched with the intent of developing a more cost-effective family of aircraft with a shared design and common systems, and high production volume to reduce procurement and sustainment costs, the ambitious program has struggled with high development costs and the final price tag. However, between the second Low Initial Production Rate (LRIP) in 2008 and LRIP 10 in 2016, the cost of an F-35A decreased by about 60 per cent. As Lockheed Martin ramps up to a production rate of about 141 aircraft per year for LRIP 14, its reached a per unit cost of about US$78 million. The aim now is to bring the cost per flight hour down under US$25,000 by 2025. “We are putting that same level of focus, that same level of rigour and innovation to reduce sustainment costs,” said Callaghan. “With ... every flight hour, the enterprise gets smarter, more mature, more effective, more on track to meet several critical performance and affordability targets.” Equally important to a government that will be eying more well-paying jobs in the aerospace sector for decades to come, Callaghan highlighted Canada's involvement in the JSF program. The federal government was the first nation to sign on to the U.S. partnership and to date “more than 110 Canadian companies have contributed to the development and the production of the F-35,” he said, resulting in about US$2 billion in contracts. According to the economic impact study, conducted by Offset Market Exchange (OMX), a Toronto-based firm that helps OEMs develop their Canadian supply chains and provides analytics to ensure compliance with ITB obligations, the full impact of the program between production (2007 and 2046) and sustainment (2026 and 2058) could result in $16.9 billion to Canada's GDP. Though contracts are awarded on a “best value” basis among all participating countries, Canadian companies have proven their ability to compete and deliver quality, he added. And suppliers would be building parts not just for 88 aircraft, but likely for over 3,000. With the F-35 manufactured in the U.S. and many sustainment hubs already selected, several Canadian companies have been raised concerns about access to high-value in-service support work. Though Callaghan wouldn't commit to specifics, he noted that more than 2,500 F-35s could be operating in North America past 2060, resulting in “a large number” of potential sustainment opportunities. “I think Canadian industry is in a very good position to capture quite a few of those contracts,” he said. If Canada opts for another aircraft, the current contracts would be honoured “to their conclusion,” but would then be placed up for best value bids to JSF nations, he added. Though Lockheed Martin is still ramping up production and addressing software issues, the F-35 is a rapidly maturing program. Over 550 aircraft have been delivered and the entire fleet has accumulated over 300,000 flight hours. Eight services, including five outside of the U.S., have declared initial operating capability and the Royal Australian Air Force is expected to do so before the end of 2020. F-35s have been part of operations and joint and international exercises. Both Norway and Italy have conducted NATO Iceland air policing with their fleets. “These are indications of the maturity of the program,” said Callaghan. “We are a mature program that is really hitting stride.” https://www.skiesmag.com/news/f-35-impact-canadas-economy/

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  December 10, 2019 | Local, Aerospace, Naval, Land, C4ISR, Security

  Canada is rich - and cheap

  EUGENE LANG Eugene Lang is an adjunct professor at the School of Policy Studies, Queen's University, and a fellow at the Canadian Global Affairs Institute. “It's Canada, they have money,” Donald Trump said at last week's NATO summit. Most of what the U.S. President says is either exaggerated or false, but occasionally he sums up in a sentence what everyone knows to be true. After admonishing Prime Minister Justin Trudeau at the summit for Canada's failure to meet, or strive toward, the North Atlantic Treaty Organization's defence-spending target of 2 per cent of Gross Domestic Product (GDP), Mr. Trump pointed out an inconvenient truth. The President was saying Canada is rich and cheap. But just how rich is Canada? Among the Group of Seven -- a group of the richest countries in the world -- Canada enjoys the third-highest per-capita income and, since 2016, has led the G7 in economic growth. Canada also has the lowest net-debt-to-GDP ratio among those same seven countries, and the second-lowest national-government-deficit-to-GDP ratio. Which means, in essence, that Canada is the third-richest country in the G7 and the best in class with government finances. Successive governments in Ottawa have spent 20 years boasting about this strong national balance sheet to Canadians at every turn, and telling anyone abroad who would listen. This is why Mr. Trump knows that Canada does indeed have money. We are rich, at least compared with most other countries. But are we cheap? Canada spends about 1.3 per cent of GDP on national defence, tying us for fourth with Italy within the G7. Yet, Ottawa has never fully accepted the validity of the defence-spending-to-GDP measure. Both the Harper government – which signed the Wales Declaration, enshrining the 2-per-cent NATO target – and the Trudeau government have claimed input measures such as the GDP ratio don't tell the full story, and that output indicators are more meaningful. The defence output measure that is best understood is the extent to which a country's military is engaged in operations internationally. On that score, Canada looks terrible. We have fewer troops deployed abroad today on NATO, United Nations and other multilateral missions than in decades. To be sure, having influence internationally and carrying your fair share of global responsibility entails much more than the size or engagement of your military. Official Development Assistance (ODA), or foreign aid, is another important measure in this connection. Canada also ranks fourth among G7 countries in ODA as a percentage of gross national income (GNI). However, Ottawa is spending only 0.28 per cent, up slightly from 0.26 per cent last year, the lowest level this century. Fifty years ago, a World Bank Commission report, titled Partners in Development, recommended developed countries spend 0.7 per cent of GNI on aid. That Commission was chaired by Lester Pearson, former prime minister of Canada, recipient of the Nobel Peace Prize and a Canadian icon. Over the years, various Canadian governments have paid homage to Mr. Pearson's vision. Yet in the five decades since his report was published, Canada has rarely reached half of the Pearson target in any given year. Whether Ottawa likes or doesn't like input or output measures, or GDP or GNI ratios, doesn't really matter in the world of international politics. For better or worse, these are the indicators that are used to compare and assess the degree to which countries are living up to their obligations and responsibilities internationally. Imperfect as they are, these are measures of burden sharing. They are the statistics countries look at when considering whether Canada or any other country is pulling its weight globally. And on these measures, Canada looks middling at best, and bad at worst, by both international comparative standards. At the same time, we are among the world leaders in economic growth among developed countries, and we have held the gold medal in public finances for years. Rich and cheap, as it were. That was the essence of Mr. Trump's criticism of Canada this week at the NATO Summit. And foreign governments the world over know it to be true. https://www.theglobeandmail.com/opinion/article-canada-is-rich-and-cheap/

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  March 5, 2019 | Local, Aerospace

  Budget Officer’s analysis of used Australian F-18 deal to be released Thursday

  DAVID PUGLIESE, OTTAWA CITIZEN The Parliamentary Budget Officer will release his report Thursday on the federal government's purchase of used Australian F-18 fighter jets for the Canadian Forces. Yves Giroux's report will be a fiscal analysis of the government's acquisition of the 25 aircraft. Eighteen of the Australian F-18 aircraft will eventually be flying for the Canadian Forces, while another seven will be used for testing and spare parts. The Royal Canadian Air Force are using the jets as interim fighters to boost the capability of the current fleet of CF-18s until a new generation aircraft can be bought. The Royal Canadian Air Force recently received its first two used Australian fighter jets at 4 Wing Cold Lake in Alberta. The first two aircraft were F/A-18A models, which means they are single seat aircraft. The aircraft were flown to Cold Lake, Alberta, from Nellis, Nevada, where they were participating in Exercise RED FLAG. The aircraft will be employed at 3 Wing Bagotville and 4 Wing Cold Lake, according to the RCAF. Deliveries of the Australian jets will continue at regular intervals for the next three years, and aircraft will be integrated into the CF-18 fleet as modifications are completed, according to the RCAF. The final aircraft are expected to arrive by the end of 2021. A second group of planes are expected to arrive later this year. Canada is paying Australia $90 million for the aircraft. The federal government originally estimated the purchase of the Australian jets would cost around $500 million, but the Department of National Defence's procurement chief, Pat Finn, said that price reflected every aspect of the associated deal, not just the cost of purchasing the jets. Canada is also acquiring extra spare parts, the Australian jets will have to be outfitted with specific Canadian equipment and software and testing will be needed. The $500-million project estimate also included $50 million in contingency funds to cover any problems and another $35 million for the salaries of all civilian and military personnel involved over the life of the project. An additional $30 million will be spent on new infrastructure over the years needed to accommodate the aircraft. Those costs add up to $360 million, Finn said. But DND also plans to upgrade its existing fleet of CF-18s with new communications gear and equipment required to meet regulations to operate in civilian airspace, improvements which the Australian jets will also eventually receive at a cost of around $110 million, an amount that brought the original estimate to nearly $500 million. The Liberal government had planned to buy 18 new Super Hornet fighter jets from U.S. aerospace giant Boeing to augment the Royal Canadian Air Force's CF-18s until new aircraft can be purchased in the coming years. But in 2017 Boeing complained to the U.S. Commerce Department that Canadian subsidies for Quebec-based Bombardier allowed it to sell its C-series civilian passenger aircraft in the U.S. at cut-rate prices. As a result, the administration of U.S. President Donald Trump enacted a tariff of almost 300 per cent against the Bombardier aircraft sold in the U.S. In retaliation, Canada cancelled the deal to buy the 18 Super Hornets, which would have cost more than US$5 billion. Instead of buying the new Super Hornets, the Liberals decided to acquire the used Australian jets. https://ottawacitizen.com/news/national/defence-watch/budget-officers-analysis-of-used-australian-f-18-deal-to-be-released-thursday