Canada changing rules of competition for $19B fighter jet fleet to allow consideration of F-35: sources

David Pugliese, Ottawa Citizen

The Canadian government is changing the terms of the $19-billion competition to replace its aging fleet of fighter jets to allow the U.S. to enter its F-35 stealth fighter.

The changes will allow for a more flexible approach in determining the value of the benefits bidders offer to Canadian defence firms, industry sources say, and come after a series of discussions with the U.S. government and threats by the Pentagon to withdraw the jet from consideration.

Under the current terms, bidders were required to offer industrial benefits to Canada as part of the competition. That system, which would have disadvantaged the F-35, will now be amended, sources say. But those companies that do guarantee work for Canadian firms will receive more consideration under the new rules.

U.S. officials had warned that the agreement Canada signed to be a partner nation in Lockheed Martin's development of the F-35 prohibits those partner nations from imposing requirements for industrial benefits in fighter jet competitions. “We cannot participate in an offer of the F-35 weapon system where requirements do not align with the F-35 Partnership,” U.S. Navy Vice-Adm. Mathias Winter told Canadian officials in a letter sent in December.

Under the agreement, companies from the partner nations are eligible to compete for work on the F-35s, and contracts are awarded on a best-value basis. Over the last 12 years, Canadian firms have earned more than $1.3 billion in contracts to build F-35 parts.

In a statement issued last week, Lockheed Martin Canada said that hundreds of Canadian jobs had been created by work on the jet. The firm noted that it continued to provide feedback to the U.S. government, which is involved with Canada in government-to-government discussions on the fighter jet program.

The competition to win the Canadian contract for a fleet of 88 new fighter jets was launched on Dec. 12, 2017 and at this point four fighter jets are expected to be considered. Those include the F-35, the Super Hornet, the Eurofighter Typhoon and the Gripen. The Canadian government expects to award the contract in 2022. A request for bids for the new jets was scheduled to be released in conjunction with the CANSEC defence trade show in Ottawa at the end of the month, with bids to be evaluated by 2021. However, the government now admits that schedule is risky.

In its latest update on major equipment projects the Department of National Defence said “The approved schedule is considered very aggressive,” and that “The project team is managing a number of risks which have the potential to impact schedule.”

The document doesn't outline the specific risks but DND officials have acknowledged that figuring out how to deal with industrial benefits linked to the project could cause delays.

The delivery of the first of the jets is expected in the mid-2020s, with the full capability available in the early 2030s, according to the DND document.

The plan to purchase used Australian F-18s in the interim, the first already delivered, is also outlined in the document. It noted the final delivery of those jets is set for the end of 2021.

https://nationalpost.com/news/canada/canada-changing-rules-of-competition-for-19b-fighter-jet-fleet-to-allow-consideration-of-f-35-sources