Questions swirl as Canada launches negotiations for F-35 stealth fighter

OTTAWA -

Canada's decade-long search for a new fighter jet to replace its aging CF-18s came full circle on Monday as the Liberal government announced negotiations with U.S. defence giant Lockheed Martin to purchase the F-35.

Yet even as the end to that circuitous search appeared to finally be in sight, many unanswered questions remained: how much the aircraft will cost? When they will start to arrive in Canada? And were the past 12 years of debate and delays worth it?

Procurement Minister Filomena Tassi and Defence Minister Anita Anand confirmed during a news conference that Lockheed Martin's stealth fighter beat out Sweden's Saab Gripen in a competition many had long considered the F-35's to lose.

The government will now launch formal negotiations with the company this week for the purchase of 88 F-35s to replace Canada's CF-18s, with officials anticipating the talks will take about seven months and result in a final contract by the end of the year.

Tassi and Anand emphasized the negotiations do not mean a deal for the F-35 is done, and that the government retains the option to talk with Saab about its Gripen fighter should discussions with Lockheed Martin stall.

Despite what Anand described as a "rigorous" competition designed to ensure Canada gets the best fighter jet at the lowest cost with the most economic benefits, a senior procurement official indicated the scope of the negotiations will be broad.

"We need to discuss capability requirements, we need to discuss costs, we need to discuss timelines, when are we going to get these aircraft," said Public Service and Procurement Canada assistant deputy minister Simon Page.

"So there are still quite a few parameters and variables to bring home with the company."

As for the anticipated $19-billion cost, Anand said that will be "further refined."

Officials did express optimism that a deal will be finalized in the next seven months, and that the first F-35 will arrive by 2025 and the last around 2032.

Lockheed Martin Canada chief executive Lorraine Ben in a statement welcomed the launched of negotiations, while Saab Canada spokeswoman Sierra Fullerton said the firm respected the government's decision while leaving the door open to future talks.

The move into final negotiations for the F-35 has also prompted questions about whether Ottawa should have pressed ahead with its original deal more than a decade ago.

Stephen Harper's Conservative government committed to buying 65 F-35s without a competition in 2010, before concerns about the stealth fighter's cost and capabilities forced it back to the drawing board.

The Liberals promised in 2015 not to buy the F-35, but to instead launch an open competition to replace the CF-18s. They later planned to buy 18 Super Hornets without a competition as an "interim" measure until a full competition could be launched.

Some at the time questioned that plan, suggesting the Liberals were trying to find a way to lock Canada into the Super Hornet without opening itself up to a legal challenge from Lockheed Martin or any other jet makers.

But the government cancelled the plan after Boeing launched a trade dispute with Montreal aerospace firm Bombardier. Ottawa initiated the current bidding process in July 2019, at which point the Super Hornet and F-35 were allowed to compete.

In the meantime, the government has been forced to invest hundreds of millions of additional dollars into the CF-18 fleet to keep it flying until a replacement can be delivered. By 2032, the CF-18s will have been around for 50 years.

Tassi sidestepped questions about the Liberals' original promise not to buy the F-35, but did defend the decision to move ahead with the stealth fighter more than a decade after the Conservatives' announced their planned sole-source purchase.

"There's a difference from speculating and saying in a sole-source contract: `We think that this bidder is going to give us the best deal that we can possibly get,' and actually going through the process," she said.

"We are basing this decision on fact and on evidence based on all the evaluations that have been done. And I can tell you that it's rigorous. … The second point is that the competition itself drives bidders to come forward with their best bid."

She also described the decision as "free from political interference," saying the bids submitted by the two companies were evaluated by non-partisan public servants from three departments who unanimously recommended the F-35.

"Because we designed a process that is free from political interference. neither myself nor my colleagues were told which bidder was top ranked, only the results of the analysis led to this conclusion and recommendation," she said.

"I agreed with the recommendation. This morning, officials informed me that the top-ranked bidder is Lockheed Martin, and officials will now enter into the finalization phase of the process with Lockheed Martin."

Many had long considered the F-35 the front-runner to win the competition.

Not only has Canada contributed US$613 million into the F-35's development since 1997, with another multimillion-dollar payment due in the coming weeks, but the stealth fighter is being used by the U.S. and a growing number of allies.

Many observers had seen the Boeing Super Hornet and F-35 as the only real competition because of Canada's close relationship with the United States, which includes using fighter jets together to defend North American airspace on a daily basis.

Those perceptions were only amplified after two other European companies dropped out of the competition before it even started, complaining the government's requirements had stacked the deck in favour of their U.S. rivals.

In particular, both Airbus and Dassault had complained about what they saw as onerous requirements associated with adapting their aircraft -- the Eurofighter and Rafale respectively -- to meet Canada's intelligence-sharing requirements.

Sweden is not a member of NATO or Norad, the joint Canadian-American defence command responsible for protecting the continent from foreign threats. That had prompted questions about the Gripen's compatibility with U.S. aircraft.

Many were therefore surprised when Boeing was kicked out of the competition in December, setting the stage for a final dogfight between the F-35 and Gripen.

Airbus, which dropped out of the running in August 2019, also expressed frustration over the government's decision to change a long-standing policy that requires bidders on military contracts to legally commit to invest in Canada.

That change followed U.S. complaints the previous policy violated an agreement Canada signed in 2006 to become one of nine partner countries in developing the F-35. The agreement says companies in partner countries will compete for work.

This report by The Canadian Press was first published March 28, 2022.