The plane that ate the Canadian military

A new report by UBC professor Michael Byers shows that the total project cost of the Harper government’s proposed F-35 purchase is likely to be at least $56.7 billion, far higher than the $45.7 billion claimed by the government. Published by the Rideau Institute and the Canadian Centre for Policy Alternatives, The Plane That Ate the Canadian Military also examines how the cost of the program could skyrocket if optimistic assumptions about the operating and sustainment costs of the aircraft turn out to be wrong:

The cost of F-35 program first became an issue in July 2010 when the Harper government announced it would purchase 65 of the aircraft for $9 billion, with an additional $7 billion in maintenance costs bringing the total cost to $16 billion. After highly critical reports from the Parliamentary Budget Office in 2011 and the Auditor General in 2012, the Harper government now anticipates a total project cost of $45.69 billion.

In his new report, Professor Byers explains that even that $45.69 billion figure is low, because it is based on the operating cost of CF-18s rather than the actual operating cost of F-35s.

Nor does the $45.69 billion include a number of other actual costs associated with F-35s, such as modifying Canada’s mid-air refuelling fleet.

Once the actual operating cost of F-35s and these other actual costs are taken into account, the total project cost rises to $56.7 billion – which is $11 billion higher than the cost presently acknowledged by the Harper government.

In the second part of his report, Professor Byers explains that the Harper government has also ignored the considerable “cost risks and uncertainty” associated with a fleet of F-35s, risks that are amplified by the developmental character and the unusually high operating and sustainment costs of these aircraft.

The “worst-case” scenario, once all the actual costs and “cost risks and uncertainty” are taken into account, is that the fleet of F-35s could cost as much as $126 billion – $81 billion higher than the cost presently acknowledged by the Harper government.

As Professor Byers says: “An additional $81 billion in unplanned cost could destroy the Canadian military, which would be forced to carry most of that cost through reduced expenditures on other equipment, maintenance, infrastructure, salaries and training.”

Even small changes to the exchange rate, interest rate, or price of aviation fuel could result in tens of billions of dollars in unplanned costs.

“A careful analysis of life-cycle cost raises serious questions about the wisdom and financial feasibility of an F-35 procurement, as well as the Harper government’s lack of attention to substantial financial risks.”

The full report can be downloaded here.

Photo credit: DND

Tags: Canadian military spending, CF-18, F-35, Joint Strike Fighter, Lockheed Martin, Michael Byers, Military procurement, Royal Canadian Air Force