Pressure increases on [Canada] to stay or leave F-35 program

[popcorn]

Will Bogdan's projections constitute "official" O&S costs or will they have to wait for updated CAPE figures?


http://www.ottawacitizen.com/technology ... story.html


F-35 computer programming facility still in Canada’s plans, DND documents say


OTTAWA — Canada is still involved in the planning of a $650-million computer programming facility for the F-35 aircraft, but is holding off paying its share of the project until the government makes a decision on whether to buy the fighter aircraft.

The facility for reprograming the software-intensive stealth fighter would be operated by Canada, Britain and Australia. Canadian military officers are currently involved in the early stages of the project, according to Department of National Defence documents obtained by the Citizen.

But the Conservative government’s decision to rethink its F-35 purchase is limiting the country’s ability to influence the establishment of the software reprogramming infrastructure for the high-tech jet, warned the September 2012 briefing note for then-associate defence minister Bernard Valcourt.

“An inability from Canada to make financial commitments to a reprogramming solution for the F-35 will transfer the financial burden of on-going activities to JSF Partners, restricting Canada’s ability to influence requirements development and design of the program solution,” it added...

Public Works official Lucie Brosseau stated in an email to the Citizen that Canada has not committed to participating in the software facility, nor has it contributed any funds. “Canada remains a partner in the Joint Strike Fighter Program to benefit from economic opportunities resulting from its partnership and to keep the option on the table while it undertakes an evaluation of options,” she added.

On Aug. 9, the government issued an update on its ongoing review of the fighter jet procurement, stating that the DND had completed an analysis of the estimated life-cycle cost for the F-35. It also noted that “anticipated United States budget restrictions and their potential effects on F-35 prices remain an area of risk, as do the current forecasts for sustainment and operating costs, which would put pressure on future budgets.”

[cantaz]

I wonder if the recently announced Canadian re-verification of the F-35's lifetime cost (procurement, support, fuel, basing, and disposal) took these numbers into account?

Not holding my breath.

Most recent report on our side talks about a 12% drop in bilateral sustainment cost estimate, based on info JPO submitted in July.

Canada received a bilateral cost estimate from the F-35 Joint Program Office on 7 June 2013. The bilateral sustainment cost estimate provided to Canada showed a significant year-over-year decrease in cost, in the order of 12%. However, this 12% reduction contrasted with the Selected Acquisition Report 2012 (SAR 12) that the US Department of Defense tabled in Congress on 23 May 2013, which showed no significant change in the sustainment cost estimate. The SAR sustainment estimate did not change because it was based on the 2011 estimate prepared by the office of the Cost Analysis and Program Evaluation (CAPE), an independent US Government agency, which wasn't updated in 2012. The CAPE estimate is a more conservative position and does not take into account 2012 updates to the technical baseline and estimate inputs, whereas the F-35 program office estimate does.

And

In order to mitigate the situation wherein the 12% reduction in sustainment costs reported by the F-35 Joint Program Office were not independently confirmed by CAPE nor reported to Congress in the SAR 12 report, National Defence has significantly increased sustainment contingency, such that it is comfortably in the range recommended by KPMG and significantly higher than last year’s provision.

So it looks like we are looking for corroboration from CAPE or maybe GAO.

Link to report: http://www.forces.gc.ca/en/about-report ... -2013.page

[XanderCrews]

I'll try and find out if KPMG will amend their report or if the Canadain Gov. will adjust it themselves.

[hb_pencil]

There are multiple figures:

There is the annual update, (which just came out and was just linked to) which is based on the running tally within DND on costs. Then there is the fighter secretariat who sent out the questionnaires in late spring. Those were sent out to the manufacturers, who probably gave their numbers. LM has always claimed the lower number, so its possible that its already part of the secretariat's analysis.

I don't think KPMG will amend the report: I believe their contract is over and a new one will be tendered.

[spazsinbad]

Seems like someone wants to get ahead of any reductions to be made - nothing applies to Canada? Maybe this story was posted before 'cost reduction' stories surfaced? I like the last sentences in this excerpt below (more at the jump as always):

Future of F-35s in question as program nears $9B spending cap set by Tories 22 Aug 2013 Lee Berthiaume, Postmedia News

"OTTAWA — The military’s dream of buying a fleet of F-35s appears to be in growing danger of bumping against a hard spending cap imposed by the Conservative government.

A new Defence Department report shows the anticipated cost per plane has increased since December, which combined with other factors has left very little room for error if Canada is to buy 65 of the stealth fighters for $9-billion.

That number is politically important because the government has stated it will not pay more than $9-billion to buy a replacement for Canada’s aging fleet of CF-18s.

(The full cost of the F-35s has been pegged at $45 billion, but only $9 billion of that is for actually buying the planes. The remaining $36-billion is for development, maintenance, operating costs and disposal when the aircraft reach the end of their usefulness, expected around 2052.)

Defence officials blame the most recent price hike on higher than expected production costs, foreign currency fluctuations and, in particular, changes some allies have made to their own F-35 purchase plans.

Because some allies have scaled back or delayed their plans to purchase the stealth fighter, Canada will be forced to buy them when they are in a more expensive period of production, the report indicates...." [WhereIsCanada in this?]

http://news.nationalpost.com/2013/08/22 ... by-tories/

[spazsinbad]

Here is the quote from that recent 09 Aug update for Canada...

Next Generation Fighter Capability - August 2013

"...Cost Methodology and Estimates
For the annual updates to Parliament the Department uses two distinct data sources to derive the acquisition cost estimate for a fleet of Canadian F-35A aircraft and the associated life-cycle costs estimates. The F-35 Joint Program Office provides estimates for over 90 per cent of the acquisition and sustainment cost data. The remainder of the life-cycle cost data is dependent on how Canada would operate its fleet, and the cost estimate is based on data from Canadian sources. National Defence also takes into account actual and projected differences between the Canadian and United States currencies, and other such economic factors that affect cost estimates.

Canada received a bilateral cost estimate from the F-35 Joint Program Office on 7 June 2013. The bilateral sustainment cost estimate provided to Canada showed a significant year-over-year decrease in cost, in the order of 12%. However, this 12% reduction contrasted with the Selected Acquisition Report 2012 (SAR 12) that the US Department of Defense tabled in Congress on 23 May 2013, which showed no significant change in the sustainment cost estimate. The SAR sustainment estimate did not change because it was based on the 2011 estimate prepared by the office of the Cost Analysis and Program Evaluation (CAPE), an independent US Government agency, which wasn't updated in 2012. The CAPE estimate is a more conservative position and does not take into account 2012 updates to the technical baseline and estimate inputs, whereas the F-35 program office estimate does. In SAR 12:
•the acquisition cost estimate is based on F-35 Joint Program Office calculations; and
•the most recent F-35 Joint Program Office sustainment cost estimate has not yet been reviewed by CAPE. As a result, the SAR 12 sustainment costs are essentially unchanged from the SAR 11 estimate.

In order to mitigate the situation wherein the 12% reduction in sustainment costs reported by the F-35 Joint Program Office were not independently confirmed by CAPE nor reported to Congress in the SAR 12 report, National Defence has significantly increased sustainment contingency, such that it is comfortably in the range recommended by KPMG and significantly higher than last year’s provision...."

http://www.forces.gc.ca/en/about-report ... -2013.page
&
http://www.forces.gc.ca/assets/FORCES_I ... e-2013.pdf (0.4Mb)

[lookieloo]

Seems like someone wants to get ahead of any reductions to be made - nothing applies to Canada? Maybe this story was posted before 'cost reduction' stories surfaced? I like the last sentences in this excerpt below (more at the jump as always):

Future of F-35s in question as program nears $9B spending cap set by Tories 22 Aug 2013 Lee Berthiaume, Postmedia News

"OTTAWA — The military’s dream of buying a fleet of F-35s appears to be in growing danger of bumping against a hard spending cap imposed by the Conservative government.

A new Defence Department report shows the anticipated cost per plane has increased since December, which combined with other factors has left very little room for error if Canada is to buy 65 of the stealth fighters for $9-billion.

That number is politically important because the government has stated it will not pay more than $9-billion to buy a replacement for Canada’s aging fleet of CF-18s.

(The full cost of the F-35s has been pegged at $45 billion, but only $9 billion of that is for actually buying the planes. The remaining $36-billion is for development, maintenance, operating costs and disposal when the aircraft reach the end of their usefulness, expected around 2052.)

Defence officials blame the most recent price hike on higher than expected production costs, foreign currency fluctuations and, in particular, changes some allies have made to their own F-35 purchase plans.

Because some allies have scaled back or delayed their plans to purchase the stealth fighter, Canada will be forced to buy them when they are in a more expensive period of production, the report indicates...." [WhereIsCanada in this?]

http://news.nationalpost.com/2013/08/22 ... by-tories/

Price increasing since December of last year? Either they're stupid, or they're assuming their readership is stupid, which isn't much of stretch given the comments under the story. Oh... there are some tasty ones this time.

-Statement that the Harrier is still in production and being sold to India for its carriers.
-Wide assumption that Canada buying a "vertical take-off" plane
-The "no comms in the arctic" trope.
-Mig-21s would be "good enough."
... and many other generic "military is bad" whines.

[FlightDreamz]

<b>f414/euro/grippenng/sbug</b>
That's a "story" about internet comments collected on their website?

Keep hearing rumors, RUMORS I never said there was a story and how does over fifteen pages of text equal "internet comments"?
Here's a link to a <a href="https://www.youtube.com/watch?v=4zB0ZxBurRc">YouTube video covering the same topic</a> maybe sound and moving pictures will be more to your liking. Sheesh.

[count_to_10]

Wait, wait. "No effective difference in stealth between the F-35 and the F-18"?
Seriously?

[Corsair1963]

Canada is not leaving the JSF Program. So, this whole debate is moot in my opinion..............

[cantaz]

Canada is not leaving the JSF Program.

EH101 had constructs signed, people hired and money changed hands before the Chretien Liberals killed it and kept it killed for almost ten years. I don't put anything beyond any party.

[XanderCrews]

<b>f414/euro/grippenng/sbug</b>
That's a "story" about internet comments collected on their website?

Keep hearing rumors, RUMORS I never said there was a story and how does over fifteen pages of text equal "internet comments"?
Here's a link to a <a href="https://www.youtube.com/watch?v=4zB0ZxBurRc">YouTube video covering the same topic</a> maybe sound and moving pictures will be more to your liking. Sheesh.

Calm down there. I mentioned it on the link where the news agency ran a story that was a collection of comments. Which I think is a tad disingenuous, and at the minimum wasteful. It would be like them writing a story about this thread. Its a collection of internet opinions. It was a comment about the story not about the F-18 debate. But if you would like I can gladly comment on that youtube Boeing ad disguised as a new report

Canada is not leaving the JSF Program.

EH101 had constructs signed, people hired and money changed hands before the Chretien Liberals killed it and kept it killed for almost ten years. I don't put anything beyond any party.

That was funny. Tore up the jobs, bought the helicopters anyway.

[cantaz]

That was funny. Tore up the jobs, bought the helicopters anyway.

Actually, they didn't buy the EH101 helicopters in the end. They kept the competition going for ten years, always finding ways to avoid re-awarding AW's bid, until Sikorsky finally came around to submit an impossible bid that became the winner.

In addition to getting a lot of newly hired Canadians across Canada fired, the government paid AW $300mil in cancellation fee. That's how far public opinion in Canada can go in f##king up military procurement, that's how far Canadian politicians will play the anti-Canadian Forces card to get elected.

[hb_pencil]

This article might give some context.

http://www2.canada.com/ottawacitizen/ne ... d5fe52&p=1

[spazsinbad]

Lockheed Martin: F-35 Cancellation Would Mean Canada Out $10.5 Billion 13 Sep 2013 Ross Marowits, The Canadian Press

"MONTREAL - Canada's aerospace industry could lose about $10.5 billion worth of contracts over several decades if the federal government ultimately decides not to purchase the controversial F-35 Stealth Fighter, says a senior executive at Lockheed Martin.

Orlando Carvalho, executive vice-president of the U.S. defence giant, says Lockheed will honour $500 million worth of business already awarded to Canadian partners but that other work would be in jeopardy without a Canadian jet order.

"If in fact the Canadian government were to decide not to select the F-35 we will certainly honour the contracts that we have here with the Canadian industry but our approach in the future would be to try to do business with the industries that are in the countries that are buying the airplane," he said in an interview after officially opening its new engine overhaul facility in Montreal.

Carvalho said Lockheed estimates that Canadian industry could potentially receive $11 billion of contracts over 25 to 40 years as its builds 3,000 planes for air forces around the world.

About 72 Canadian companies have secured work on the F-35 project. Industry Canada has estimated that the potential value could be US$9.8 billion, including the amount of contracts already awarded.

Gilles Labbe, the former head of aerospace cluster Aero Montreal and CEO of F-35 supplier Heroux-Devtek (TSX:HRX), last year warned that thousands of jobs would be at risk if lead manufacturers Lockheed Martin and Northrop Grumman remove work destined to be completed in Canada by members of the global supply chain.

Ottawa is evaluating potential alternatives to its original plan to purchase 65 F-35 aircraft. A KPMG report late last year warned that the total bill, including service and support, could be as much as $45.8 billion over 42 years to replace the current stable of CF-18s, which are due to be retired in 2020.

Carvalho said Lockheed continues to reduce the F-35's cost. He said each plane will cost Canada around $75 million in today's dollars, or about $85 million including inflation once they are expected to be delivered to Canada in 2018.

He said the contractor has removed 50 per cent of costs from when it started production and is looking at how to remove another 50 per cent as it gets into full production, making it "an affordable airplane" to the U.S. government.

"As we continue to gain the efficiency on the production line, the learning, as we continue to build more and more airplanes, as the production ramps up, the cost of this airplane will only come down."..."

http://www.huffingtonpost.ca/2013/09/13 ... a+Business