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Murray Brewster · CBC News A little joke used to make its way around the Harper Conservative government every time National Defence presented Andrew Scheer's former boss with the bills for new equipment — about how Stephen Harper would emit an audible 'gulp' of alarm when they crossed his desk. Scheer, in the first of a series of election-framing speeches for the Conservatives, pledged yesterday to wrap his arms around Canada's allies, take the politics out of defence procurement, buy new submarines, join the U.S. ballistic missile defence program and expand the current military mission in Ukraine in an undefined way. What was absent from the Conservative leader's speech — a greatest-hits medley of road-tested Conservative policy favourites, blended with jabs at the Trudeau government's record — was an answer to the first question his supporters usually ask on these occasions: How are you going to pay for it? Deficit hawk or defence hawk? The Liberals have set the federal government on course to increase defence spending by 70 per cent by 2027. The cost of what Scheer is proposing — submarines and missile defence — would have to be shoehorned into that framework somehow. Either that, or he'd have to radically redesign the current defence spending program. Scheer's speech was greeted with raised eyebrows by more than one defence sector observer. "When he starts talking about deficits, you can kiss all that goodbye," said Stephen Saideman, a professor of international affairs at Carleton University. "In other speeches, he talked about being a deficit hawk. That would have real implications for the defence stuff." The Harper government increased defence spending during the Afghan war and made a series of promises to revitalize the military, but ended up cutting its budget and postponing projects in order to eliminate the deficit. 'Harper all over again' Saideman said Scheer's speech did not offer an ironclad guarantee that he'd avoid doing the same thing, and was even inaccurate in its characterization of the Liberals' record on defence spending. A full half to two-thirds of the defence and foreign policy vision Scheer laid out, he said, was "Harper all over again" — but with some surprising differences. His embrace of allies was much warmer than it was with the previous Conservative crowd, which tended to look upon NATO with a jaundiced eye. "I will reinvigorate Canada's role in the alliances we share with our democratic allies. This includes existing alliances like NORAD, NATO, the Commonwealth, La Francophonie and the Five Eyes, but it will also include overtures to India and Japan," Scheer said. He also pledged a Conservative government would do more in Eastern Europe. "This will include expanding upon the current missions to support Ukraine and providing Ukraine's military with the equipment they need to defend their borders," said the Conservative leader. Scheer didn't say in his speech what he wants Canada to do in Eastern Europe that it isn't doing now — short of putting combat troops on the front line of Ukraine's breakaway eastern districts, or selling offensive weapons to Kiev. Scheer did promise to take the lead on a potential United Nations peacekeeping mission, a proposal that has been out there in the international community for months and has largely gone nowhere. Other ideas that often go nowhere filled out the rest of Scheer's speech — like the promise of a fix for the Canadian military's complex, cumbersome system for buying equipment. Politicians are to blame, Scheer said. "Military procurement in Canada is hyper-politicized, to our detriment," he said. "By playing politics with these matters, governments have diminished the important responsibility to adequately and expediently equip the Armed Forces." To accept that argument, one must set aside his party's favourite rallying cry during the politically blistering F-35 debate of half a dozen years ago: If you don't support the plane, you don't support the troops. Politics-free procurement? Michael Byers, a University of British Columbia defence policy expert, said removing politics from procurement decisions would be a fantastic step forward, one that could save taxpayers boatloads of money by doing away with pet projects and regional interests. "It's an admirable goal, but he would be the first prime minister ever to take the politics out of defence procurement," he said. "So, I'm skeptical about whether he would actually do so ... I take that statement with a very large grain of salt." The absence of a clear fiscal pledge also troubles Byers, who noted that replacing Canada's Victoria-class submarines with either German or Swedish-built boats would be expensive. So would participation in ballistic missile defence, which has various levels of participation from research and development all the way up to anti-missile radar and batteries. It is, he said, all about the dollars. "I think that when we talk about defence spending and defence budgets, we have to talk about real money going out the door in terms of signed contracts," said Byers. "And neither the Conservatives nor the Liberals have been able to deliver much in the way of signed contracts for the last 20 years." https://www.cbc.ca/news/politics/scheer-rolls-out-an-ambitious-defence-agenda-but-critics-ask-where-s-the-money-1.5127028

DANIEL LEBLANC The American government is once again urging Canada to acquire U.S.-built fighter jets to replace its fleet of CF-18s, one day after it emerged the Pentagon recently threatened to pull the F-35 out of the $26-billion competition for new aircraft. The contradictory messages from the U.S. government showcase how the Americans are trying to prevent a tendering process that would favour European manufacturers at the expense of either the Lockheed Martin F-35 or the Boeing Super Hornet. The Canadian government is weeks away from launching a competition for 88 new fighter jets, with the two American firms set to enter into a competition against the Swedish Gripen and the Eurofighter Typhoon, which is built by a consortium that includes Airbus. In a statement on Tuesday, the American government called on Canada to make sure its fighter jets can operate alongside U.S. military aircraft around the world. The “crucial” point, according to the American government, is Canada's participation in the North American Aerospace Defence Command (NORAD) that controls the Canadian and American airspace. Only U.S.-built fighter jets currently operate in NORAD and European aircraft would face technological hurdles in gaining the ability to fully integrate into the bi-national military alliance. “We continue to believe in the importance of NATO and NORAD interoperability as a crucial component of Canada's acquisition of defence assets,” said Joseph Crook, a spokesman for the U.S. embassy in Ottawa. Mr. Crook added the American government remains “hopeful that U.S. firms are able to participate in open and transparent competition processes that can support Canada's NATO and NORAD obligations, especially when it comes to co-operative engagement capabilities.” On Monday, the Macdonald-Laurier Institute published letters from American officials who warned their Canadian counterparts last year that the F-35 might be pulled from the competition unless Canada's requirements for industrial benefits were modified. The American government is concerned about Canada's Industrial and Technological Benefits (ITB) policy, which requires the winner of the contract to invest the equivalent of the acquisition cost in Canada. Built by Lockheed Martin, the F-35 is a stealth aircraft developed by an international consortium of allied militaries under a program that specifically rejects the application of traditional industrial benefits. Canada has been a member of the program since 2006. In an interview after a cabinet meeting on Tuesday, Defence Minister Harjit Sajjan said he has sought to reassure the Americans by pointing out that the Canadian government will focus mostly on technical capabilities in deciding which aircraft to purchase. “First of all, the capabilities of the aircraft is the number one priority. Making sure we meet the needs of the Canadian Armed Forces – the Air Force in this particular case – is the number one priority. We will always make sure that will happen,” Mr. Sajjan said. He added that obtaining benefits for the Canadian economy is also important, while suggesting the matter will have less importance in the final weighting of the bids. “This obviously factors into the equation, but the capability requirements for the Canadian Armed Forces is always the number one priority,” he said. In a speech laying out his foreign-affairs policy on Tuesday, Conservative Leader Andrew Scheer said he will seek to modernize the NORAD alliance if his party forms the next government, including through the purchase of fighter jets that can defend North America alongside the U.S. fleet. “I will act to select a new fighter jet through an open competition and make sure the new jets are interoperable with our American allies,” Mr. Scheer said. Vice-Admiral Mathias Winter of the U.S. Navy said in a letter last December that Canada has received US$1.3-billion in economic benefits from its participation in the F-35 program to this point. “The F-35 supplier team will submit an F-35 offer only if (1) the ITB requirement is waived entirely and (2) there is no future ITB obligation arising from selecting the F-35,” Vice-Adm. Winter said in his letter. https://www.theglobeandmail.com/politics/article-us-government-urges-canada-to-acquire-american-fighter-jets-in-2/

Matt Gurney One can only imagine the astonishment in Ottawa when a letter arrived from Washington, reminding the Canadian government that military procurement projects are about procuring military equipment, not creating Canadian jobs. I like to imagine flabbergasted bureaucrats reading the letter over and over, before finally putting it down, rubbing their temples and musing aloud, “Don't the Americans realize how things are done here?” They do, it seems. And they don't like it. On Monday, the Macdonald-Laurier Institute published a new report, “Catastrophe: Assessing the Damage from Canada's Fighter Replacement Fiasco.” The title tells you most of what you need to know about the tone of the report. Author Richard Shimooka recaps the long and embarrassing history of Canada's inability to properly replace our rapidly aging and slowly attritting fleet of almost-40-year-old CF-18 jets. The report mostly covers a story that's been oft-told, including here in the National Post. But it did break some news: apparently, Washington's frustration with Canada is boiling over, and it's not keeping quiet about it anymore. Shimooka recaps the long and embarrassing history of Canada's inability to properly replace our rapidly aging ... CF-18 jets Shimooka's report reveals the existence of two letters previously unknown to the public, sent last year by American officials to Canadian counterparts. The specifics of the complaints involve fairly legalistic and technical aspects of Canada's membership in the international consortium that helped finance the development of the F-35 stealth fighter. Suffice it to say that Canada, as a participating nation, gets access to a rock-bottom price for the fighter (meaning the same cost paid by the U.S. military) and Canadian firms have been part of the production of the planes from the very beginning. That's the deal. It's a pretty good one. But Canada wants a different deal. Specifically, it wants the same kind of deal it always insists on when buying military equipment from abroad. We want any foreign company we're purchasing equipment from to invest heavily in Canada, so that even a contract signed with a foreign supplier can be shown to have helped Canadian jobs, and the middle class, and those working hard to join it. Even this is only a second-best option, a procurement Plan B. Canadian politicians would much rather have stuff built in Canada by Canadians, no matter how much that ends up costing us in terms of cost overruns and delays. But when that's simply not possible, we'll settle for industrial offsets from foreign companies. You'll note that in the above paragraph on military procurement, there was very little emphasis on actually successfully procuring equipment for the Armed Forces. Ottawa is much too sophisticated for that kind of concern. The real action is in the jobs, the industrial benefits, the gigantic novelty cheques, the ribbon cuttings, the question period talking points and the partisan mailers crowing about all the money flowing to Canadian firms. That's what military procurement is really for, at least in the eyes of Canadian officials. That's why our national shipbuilding strategy was to first build out a shipbuilding industry and then build some ships, almost as an afterthought, when we could have bought them faster and almost certainly cheaper from an ally. The Americans, it seems, have had enough, and are threatening to pull the F-35 from consideration in Canada's upcoming program to select our next fighter. To their mind, Canada has already been offered an objectively good deal: access to one of the world's most advanced fighter jets at the same cost the U.S. military pays, and billions in industrial benefits. It's true that the F-35 program has been troubled, but most of those problems are now behind it. These jets are entering service in large numbers in the U.S. military and in allied forces, as well. The F-35 isn't perfect but it's available, now, and Canada has already paid the cost of entry to the club. Angling for a better deal than everyone else is getting, is a slap in the face to the Americans and all the other allied nations who are part of the process. Angling for a better deal than everyone else is getting, is a slap in the face to the Americans Now a cynic will say that it's just good business. There's nothing wrong with Canada trying to get the best deal for itself. In general, I have an open mind to this kind of argument. But Canada isn't a business. It's a country that has signed alliances and agreements with our democratic peers, theoretically in good faith. We have our own interests, to be sure, but we also have obligations. Canada's membership in the F-35 consortium does not obligate us to buy F-35s. We'd retain the industrial benefits even if we select another fighter. But certainly it obligates us to at least honour the agreement we've already made? The Liberals have never been keen on the F-35. Before the past election, they actually pledged to never purchase them, before realizing that that was an impossible pledge to keep if we actually intended to hold a fair and open competition to select the next plane. The prime minister himself once dismissively described the F-35 as a plane that didn't work, even as the United States was putting its first squadron into active service. Part of me wonders if the Liberals are deliberately structuring our selection process to make it impossible for the U.S. to sell us F-35s. That would certainly solve that particular problem for the Liberals. Alas, the more realistic answer is probably, as ever, the simplest one. The Canadian government is probably baffled that the Americans would object to us behaving as we always do. Military procurement in Canada isn't about procurement, or the military, or honouring our commitments to our friends. It's about political booty that can be flung around the country come election time. That's just the way we do things here. Why would that ever change? https://nationalpost.com/opinion/matt-gurney-is-it-any-wonder-the-u-s-is-steamed-at-us-over-our-fighter-jet-fiasco

David Pugliese, Ottawa Citizen The defence and aerospace industry is abuzz about the letters the U.S. government sent to Canada over the upcoming competition to acquire a new fleet of fighter jets to replace the RCAF's CF-18s. In short, the Trump administration has given an ultimatum to Prime Minister Justin Trudeau and his government. If Canada insists that industrial and technological benefits must come from the outlay of $19 billion for a new fighter jet fleet then Lockheed Martin's F-35 stealth jet is out of the race. Full stop. The U.S. argument is that because Canada is a partner in the F-35 program it cannot ask Lockheed Martin to meet specific industrial benefits for a Canadian competition if the F-35 is selected. Under the F-35 agreement, partner nations are prohibited from imposing requirements for industrial benefits as the work is determined on the best value basis. In other words, Canadian firms compete and if they are good enough they get work on the F-35 program. Over the last 12 years, Canadian firms have earned $1.3 billion U.S. for their work on building F-35 parts. The U.S. had boldly stated it cannot offer the F-35 for the Canadian competition if there are requirements to meet for set industrial benefits. But that ultimatum could seriously backfire on the Trump administration. Trudeau and the Liberal government has never been keen on the F-35 (Trudeau campaigned against purchasing the jet). There have also been a number of negative headlines over the last year outlining the increasing maintenance costs for the F-35s, not a good selling point for the jet. The U.S. ultimatum may have just given Trudeau a way out of his F-35 dilemma, particularly if the prime minister can say that it was it was the Americans themselves who decided not to enter the F-35 in the Canadian competition. Trudeau will also be able to point to the other firms ready and keen to chase the $19 billion contract. Airbus, a major player in Canada's aerospace industry, says it is open to producing its Eurofighter Typhoon in Canada with the corresponding jobs that will create. Boeing, which has a significant presence in Canada, will offer the Super Hornet. Saab has also hinted about building its Gripen fighter in Canada if it were to receive the jet contract. To be sure, if the U.S. withdraws the F-35 from the competition, retired Canadian military officers and the defence analysts working for think-tanks closely aligned with the Department of National Defence be featured in news reports about how the Royal Canadian Air Force will be severely hindered without the F-35. Some Canadian firms involved in the F-35 program may complain publicly about lost work on the F-35 program but companies tend not criticize governments for fear they won't receive federal contracts or funding in the future. There will be talk about how U.S.-Canada defence relations will be hurt but then critics will counter that U.S. President Donald Trump used national security provisions to hammer Canada in ongoing trade disputes. And let's face it. Defence issues are rarely a factor in federal elections or in domestic politics. The Trump administration, which is not the most popular among Canadians, may have just given Trudeau a political gift. https://nationalpost.com/news/national/defence-watch/trump-may-have-given-trudeau-the-excuse-he-needs-to-ditch-the-f-35/wcm/08b1313f-81eb-4adc-9ebf-b54ffc19c2c7

By: David Pugliese VICTORIA, British Columbia — The U.S. is threatening to pull the F-35 from Canada's fighter jet competitionif the ally to the north doesn't change requirements for the winning bidder to stipulate specific industrial benefits for domestic firms. The U.S. government is arguing that since Canada is a partner in the F-35 program it cannot request guaranteed industrial benefits for its companies. Canada has pre-qualified four aircraft for its fighter jet project worth up to 19 billion Canadian dollars (U.S. $14 billion): the Lockheed Martin F-35, Boeing Super Hornet, Eurofighter Typhoon and the Saab Gripen. The Canadian government plans to purchase 88 new jets to replace its aging CF-18 fighter aircraft fleet. Canada will require that a robust package of guaranteed industrial benefits or offsets be provided by the winning bidder, government officials have said. But the U.S. government has objected to that, as Canada is still a partner in the F-35 program, which does not guarantee participating nations a set number of contracts. Work on the F-35 program is based on best value and price. U.S. Navy Vice Adm. Mathias Winter, program executive officer for the Joint Strike Fighter, wrote Canadian procurement officials Dec. 18, 2018, pointing out that the F-35 agreement prohibits partners from imposing requirements for industrial benefits. “We cannot participate in an offer of the F-35 weapon system where requirements do not align with the F-35 Partnership," he noted in his letter. Winter's letter was leaked this week to defencs analysts and the Canadian journalists. The letter has prompted ongoing discussions between Canadian and U.S. procurement officials in an effort to work out some kind of solution, multiple industry and government sources told Defense News. But the Canadian government will also respect any decision by the U.S. to not bid the F-35 if an agreement can't be reached, sources added. The Canadian government is putting the final touches on the bid requirements for new fighter jet project. That bid package is expected to be issued sometime this year. Asked about the U.S. ultimatum, Ashley Michnowski, spokeswoman for Procurement Minister Carla Qualtrough, said feedback from aircraft suppliers is continuing to be collected by the Canadian government. That process has yet to be finished and a final request for bids is expected to be released soon, she added. Michnowski said Canada continues to be a member of the Joint Strike Fighter program, giving the country “the option to buy aircraft through the program, should the F-35 be successful in the competitive process for the future fleet.” Lockheed Martin Canada noted in a statement that Canadian firms have earned more than $1.2 billion in work on the program, resulting in hundreds of domestic jobs. “We continue to provide our feedback to the U.S. government, which leads all government-to-government discussions related to the Canadian fighter replacement competition,” the statement added. Email: dpugliese@defensenews.com https://www.defensenews.com/air/2019/05/08/us-canada-talks-underway-to-decide-if-the-f-35-will-be-pulled-from-canadas-fighter-competition/

DAVID PUGLIESE, OTTAWA CITIZEN The defence and aerospace industry is abuzz about the letters the U.S. government sent to Canada over the upcoming competition to acquire a new fleet of fighter jets to replace the RCAF's CF-18s. In short, the Trump administration has given an ultimatum to Prime Minister Justin Trudeau and his government. If Canada insists that industrial and technological benefits must come from the outlay of $19 billion for a new fighter jet fleet then Lockheed Martin's F-35 stealth jet is out of the race. Full stop. The U.S. argument is that because Canada is a partner in the F-35 program it cannot ask Lockheed Martin to meet specific industrial benefits for a Canadian competition if the F-35 is selected. Under the F-35 agreement, partner nations are prohibited from imposing requirements for industrial benefits as the work is determined on the best value basis. In other words, Canadian firms compete and if they are good enough they get work on the F-35 program. Over the last 12 years, Canadian firms have earned $1.3 billion U.S. for their work on building F-35 parts. The U.S. had boldly stated it cannot offer the F-35 for the Canadian competition if there are requirements to meet for set industrial benefits. But that ultimatum could seriously backfire on the Trump administration. Trudeau and the Liberal government has never been keen on the F-35 (Trudeau campaigned against purchasing the jet). There have also been a number of negative headlines over the last year outlining the increasing maintenance costs for the F-35s, not a good selling point for the jet. The U.S. ultimatum may have just given Trudeau a way out of his F-35 dilemma, particularly if the prime minister can say that it was it was the Americans themselves who decided not to enter the F-35 in the Canadian competition. Trudeau will also be able to point to the other firms ready and keen to chase the $19 billion contract. Airbus, a major player in Canada's aerospace industry, says it is open to producing its Eurofighter Typhoon in Canada with the corresponding jobs that will create. Boeing, which has a significant presence in Canada, will offer the Super Hornet. Saab has also hinted about building its Gripen fighter in Canada if it were to receive the jet contract. To be sure, if the U.S. withdraws the F-35 from the competition, retired Canadian military officers and the defence analysts working for think-tanks closely aligned with the Department of National Defence be featured in news reports about how the Royal Canadian Air Force will be severely hindered without the F-35. Some Canadian firms involved in the F-35 program may complain publicly about lost work on the F-35 program but companies tend not criticize governments for fear they won't receive federal contracts or funding in the future. There will be talk about how U.S.-Canada defence relations will be hurt but then critics will counter that U.S. President Donald Trump used national security provisions to hammer Canada in ongoing trade disputes. And let's face it. Defence issues are rarely a factor in federal elections or in domestic politics. The Trump administration, which is not the most popular among Canadians, may have just given Trudeau a political gift. https://ottawacitizen.com/news/national/defence-watch/trump-may-have-given-trudeau-the-excuse-he-needs-to-ditch-the-f-35

By Simon Carroll Like Canadians, Swedes are natural innovators. When faced with challenges like a shifting global economy, the threat of climate change or the rapidly evolving landscape of modern national defence – both countries adapt and innovate based on evidence, reason and shared progressive values. This is so much the case that Swedish and Canadian governments are both actively implementing innovation agendas intended not only to grow their respective high-tech and aerospace industries (among others) from the inside-out, but to help them access and leverage the very best global talent and expertise in these fields. Canada's Innovation and Skills Plan, for instance, seeks to encourage greater business investments in research and to capitalize on Canadian inventions through “shared risk taking and partnerships”. The more Canada and Sweden build and use these partnerships to innovate together, the stronger both countries will be, now and in the future. At Saab, we believe opportunities to develop and grow partnerships with Canadian government and industry are not only a ‘good fit' – we believe these opportunities will help actualize Canada's ambitious innovation vision for decades to come. In large part, Swedish companies are well-positioned to help Canada reach its innovation goals because innovation is inherent in their DNA. Sweden is consistently judged one of the world's most innovative countries by the annual Bloomberg Innovation Index, which placed Sweden second in 2018 (behind South Korea and ahead of Singapore, Germany and Switzerland), and by the World Intellectual Property Organization's Global Innovation Index, which ranks Sweden among the top three countries. This level of recognition is well-earned. Swedes are early adopters of new technologies, are highly trend-sensitive and, collectively, produce one per cent of the world's knowledge while constituting less than one-thousandth of the world's population. The Swedish government formalized this innovative spirit in 2001 when it created the national Innovation Agency, Vinnova – one of the first of its kind in the world. Of course, Sweden has long been home to a suite of classically innovative and instantly-recognizable brands like Volvo, Ikea, and Ericsson, but its government's exceptional focus on innovation in recent decades has grown this small but mighty nation's startup hub into a full-blown entrepreneurial powerhouse. By no coincidence, Sweden has produced more “$100 million-plus IPO exits” than any other country in the world, with examples including popular music streaming platform Spotify and the financial technology company iZettle. Having research-intensive companies, such as Saab, is yet another reason Sweden does so well in global innovation rankings. The majority of Saab's people are trained engineers and around 23 per cent of its total revenues are spent on research and development (R&D) every year. That's a lot compared with other companies, but it's what it takes to think ahead and develop products and solutions with future capabilities in mind. The Swedish approach to future technology generation is one that actively combines government- and university-based research and development capabilities with those of industry to solve common problems and to develop new, unique solutions. Harnessing the unique talents and energy contributed by each of these spheres builds a strong engine for innovative thinking and new technology development – all of which is central to Saab's corporate ethos. Saab Canada is already an extensive supplier of military equipment to the Canadian Armed Forces – from radars and sensors for the Royal Canadian Navy to ground combat weapons and signature management systems for the Canadian Army – as well as supplying transponders to the Canadian Coast Guard and maritime traffic management systems to the Great Lakes Pilotage Authority. Saab is also partnered with many small, medium and large-sized Canadian companies up and down its supply chain, across all of its product areas from Nova Scotia-based MilAero for electrical cable assemblies, to Bombardier with its Global 6000 business jet used for GlobalEye, an airborne early warning and control solution. As a contender for Canada's future fighter jet program, Saab's ‘future-proof' Gripen E aircraft presents even greater opportunities for collaboration and development activities between the military and aerospace sectors of both countries. These kinds of partnerships mean that Canadian companies not only benefit from Saab's innovative thinking, but are also empowered to further develop their own, Canadian-made innovations that can then be exported worldwide – generating economic benefits right here in Canada. Looking to the future, Saab will continue working closely with our Canadian partners to pursue opportunities here and abroad, where we can build on existing collaboration and continue to strengthen the innovation that runs deep in our respective countries. https://ipolitics.ca/2019/05/06/swedish-companies-like-saab-a-best-fit-for-canadas-innovation-agenda/

Murray Brewster · CBC News The Trump administration fired two warning shots last year over the Liberal government's long-delayed plan to replace Canada's CF-18 fighters, saying the procurement process discriminates against the Lockheed-Martin-built F-35 stealth jet, according to a new academic report. The study by a researcher at the Macdonald-Laurier Institute (MLI) cites leaked Pentagon letters written last summer and late fall to officials at Public Services and Procurement Canada. The report, released Monday, largely blames the Liberal government for the delays in the procurement, while making only a passing reference to the inability of the former Conservative government to deliver on the same program. The report's major revelation involves the leaked letters — which are expected to inflame the debate over the nearly decade-long on-again, off-again plan to replace the air force's 1980s-vintage CF-18s with modern warplanes. The source of the Pentagon's irritation is a federal government policy that insists defence manufacturers deliver specific industrial benefits to Canadian companies. Canada accused of angling for better deal That's not how the F-35 program is structured. Countries that participated in the development of the stealth jet — as Canada did — pay an annual fee to remain part of the program, which gives domestic aerospace companies in those countries the right to bid on F-35 work. The U.S. undersecretary for defence acquisition and sustainment wrote to Canada's assistant deputy minister of defence procurement in Public Services and Procurement Canada last summer to complain about the Industrial and Technological Benefits (ITB) policy. Ellen Lord warned the policy runs contrary to the F-35 participation agreement and accused Canada of trying to leverage a better deal than its allies. "This text basically stated that Canada had signed the [Memorandum of Understanding] clearly understanding these provisions and could not now try to renegotiate a better deal," said the Aug. 31, 2018 letter, leaked to MLI researcher Richard Shimooka. Lord went on to say the current procurement process "would be fundamentally and structurally prejudicial to any F-35 bid." The point was hammered home when former U.S. Vice-Admiral Mathias Winter, in charge of the Joint Program Office overseeing F-35 development, wrote to Canada's head of future fighter development at Public Services. After reviewing the federal government's draft request for proposals, Winter wrote that the F-35 would not be able to participate given the way the system is structured now. "Fundamentally, the F-35 program is different from Foreign Military Sales or Direct Commercial sales procurements," said the Dec. 18, 2018 letter. "The current [Future Fighter Capability Program] does not allow the F-35 to participate in a fair and open competition that recognizes the special nature and distinct advantages of the partnership." Lockheed-Martin is one of four manufacturers that plan to bid on the fighter jet replacement program. Several defence and defence industry sources told CBC News in a story published last month that the full tender was expected to be released at the end of May, with final bids to be delivered by the end of the year. There is considerable uncertainty about the timeline, however, because of questions and disputes about the project's industrial expectations. "A delay is inevitable," said one defence industry source on Monday. With the release of the letters, the institute's analysis peels back the curtain on perhaps the most contentious of the disputes: how to reconcile the existing F-35 benefits package with the federal government's standard procurement model. Lockheed-Martin would not confirm whether the issues raised in the letters remain active concerns, but sources within both the defence industry and the federal government say there is an ongoing dialogue. The U.S. defence giant, in a statement, said it did not commission the report but acknowledged it had provided "factual information to several think tanks in Canada" about its various programs. The company said the structure of the F-35 program means it is the U.S. defence department that does all of the talking. "We continue to provide our feedback to the U.S. government, which leads all government-to-government discussions related to the Canadian fighter replacement competition," said Cindy Tessier, head of communications for Lockheed Martin Canada. She touted the $1.25 billion in contracts already awarded to Canadian companies because of the F-35 program and said the potential is there for more work once the fighter aircraft reaches full production in a few years. "As a valued current partner on the program, Canadian industry has the opportunity to produce and sustain components and systems to a fleet that is expected to grow to more than 4,000 aircraft," she said. A spokeswoman for Public Services Minister Carla Qualtrough did not address the Pentagon letters directly, but did say the government has engaged in continuous dialogue with potential bidders as it sought feedback on the proposed tender. "The approach is inherently designed to encourage continuous supplier engagement," said Ashley Michnowski. "We do this so that suppliers are able to make informed business decisions. "Our government has been hard working to address as much of the supplier feedback as possible to ensure a level playing field and a fair and open competition with as many eligible suppliers as possible." The process is not yet complete, although it is nearing its conclusion and a final request for proposals will be issued soon, she added. https://www.cbc.ca/news/politics/trump-administration-claims-ottawa-s-jet-procurement-plan-is-unfair-to-f-35-says-report-1.5125009

By Lee Berthiaume, The Canadian Press OTTAWA — U.S. officials have threatened to pull the F-35 out of the competition to replace the Royal Canadian Air Force's aging CF-18 fighters over the Liberal government's plan to ask bidders to re-invest some of the giant purchase contract in Canadian industry. The warnings are in two letters sent to the government last year and obtained by defence analyst Richard Shimooka. They were released in a report published Monday by the Macdonald-Laurier Institute think-tank. They say the requirement is incompatible with Canada's obligations as a member of the group of countries working together to develop the F-35 stealth fighter in the first place. While the re-investment requirement is standard for most Canadian military procurements, the U.S. officials note Canada agreed not to include it when it signed on as one of nine F-35 partner countries in 2006. Companies in those countries must instead compete for work associated with the plane — only companies from those countries are eligible, but they're supposed to compete on equal footing. The U.S. officials say conditions on bidders that would privilege Canadian companies will mean the F-35 won't be entered in the race. The F-35, which is built by Lockheed Martin, had been expected to go up against the Eurofighter Typhoon, Saab Gripen and Boeing Super Hornet for an 88-plane procurement worth about $19 billion. French company Dassault pulled its Rafale from contention late last year. "In summary, we cannot participate in an offer of the F-35 weapon system where requirements do not align with the F-35 partnership," U.S. Vice-Admiral Mathias Winter, program executive officer for the Pentagon's F-35 office, wrote on Dec. 18. "Such an offer would violate (the F-35 agreement) and place the entire F-35 partnership at risk." In his letter to Paula Folkes-Dallaire, senior director of the fighter-jet program at Public Services and Procurement Canada, Winter asked for clarity by Jan. 31 as to the government's decision on the re-investment requirements. Winter's letter followed a similar one from Ellen Lord, the Pentagon's head of military procurement, on Aug. 31, 2018. In a statement, Public Procurement Minister Carla Qualtrough's spokeswoman said the government has engaged in several rounds of discussions and exchanges with potential bidders, which included providing them with opportunities "to ask questions, raise concerns and provide suggestions. "Our government has been hard working to address as much of the supplier feedback as possible to ensure a level playing field and a fair and open competition with as many eligible suppliers as possible," added Ashley Michnowski. "This stage of the process is not yet complete, though is nearing its conclusion and a final (request for proposals) will be issued soon." The Pentagon's F-35 office did not return requests for comment. Stephen Harper's Conservatives first announced plans to buy 65 F-35s without a competition in 2010, but backed off that plan over questions about cost and concerns over the Defence Department's tactics in getting government approval for the deal. During the 2015 federal election campaign, Justin Trudeau's Liberals promised they would immediately launch an open and fair competition to replace the CF-18s, but not buy the F-35. The Trudeau government has since said the F-35 will be allowed to compete while officials had been expecting to finally launch that competition in the coming weeks. That the re-investment requirement remains unresolved is both surprising and unsurprising given defence experts have long warned it would be a significant obstacle to running a fair and open competition that includes the F-35. Canada, which has already contributed roughly $500 million over the past 20 years toward developing the F-35, could in theory quit as a partner country, but would have to pay more for the stealth fighters if the F-35 won the competition. Canada could also be on the hook for hundreds of millions more in development fees despite quitting the program, while Canadian companies would not be allowed to compete for work related to the aircraft. In a recent interview, the Department of National Defence's head of military procurement, Patrick Finn, said the government is trying to strike the right balance between military and economic priorities when it comes to the fighter-jet competition. "The feedback we're seeing from some suppliers some are quite content, some would like to see some more flexibility in other areas," he said. "So it's making all of that work, respecting (companies') strengths, keeping everybody in the competition and doing it in a way that brings the right capability to the air force for decades to come." —Follow @leeberthiaume on Twitter Lee Berthiaume, The Canadian Press https://www.nationalnewswatch.com/2019/05/06/ottawas-planned-fighter-competition-incompatible-with-f-35-obligations-u-s-3