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

[spazsinbad]

I wonder how one 'joins an MoU' without signing:

"...Canada has been a partner since the inception of the Joint Strike Fighter competition in 1997. In 2006, Canada joined, the United States, United Kingdom, the Netherlands, Denmark, Australia, Turkey, Italy and Norway in a memorandum of understanding for the “Production, Sustainment and Follow-On Development” of the F-35....." https://www.f35.com/news/detail/sealed- ... -submitted 31 Jul 2020

from LM report above. An official website below:

Canadian Industrial Participation in The F-35 Joint Strike Fighter program December 2012
"...1. The F-35 JSF Program
Since 1997, Canada has been involved in the development, design and initial production phases of the F-35 JSF Program.

On December 11, 2006, the Deputy Minister of National Defence, on behalf of the Government of Canada, signed a Production, Sustainment and Follow-on Development Phase Memorandum of Understanding (PSFD MOU). The PSFD MOU was also signed by all the other F-35 JSF partner countries: the United States, the United Kingdom, the Netherlands, Denmark, Australia, Turkey, Italy and Norway. The overall objective of the PSFD MOU is to establish a framework to allow the partner countries to cooperatively produce, sustain and do follow-on development (e.g. future technology improvements) of the F-35 JSF. The PSFD MOU details the partners' responsibilities and benefits in these areas. The PSFD MOU does not commit Canada to buy the F-35, but it does establish the conditions for its on-going participation in the F-35 JSF Program.

In the PSFD MOU, the F-35 JSF partners, including Canada, agree to an industrial participation approach that has two key features:
--- • Companies from the partner countries can compete for design, production and sustainment contracts on the F-35 JSF Program. This competitive approach helps to ensure that the Program has access to the best technologies at the best prices.
--- • In order to achieve best value through the competitive approach, the partners agree that “no requirement will be imposed by any Participant for work sharing or other industrial or commercial compensation in connection with this MOU that is not in accordance with this MOU.”Footnote 1 This commitment precludes the application of what are known as "offset policies", such as Canada's Industrial and Regional Benefits (IRB) Policy. Canada's IRB Policy requires companies that win defence and security contracts with the Government of Canada to place business activities in Canada at the same value of the contract. Footnote 2

In 2006, the Government of Canada was not making a procurement decision, rather it was agreeing to conditions that would allow it to remain in the F-35 JSF Program. While the Government of Canada was therefore not making an irrevocable decision to forego the application of IRB Policy to its procurement of next generation fighter capability, its decision to sign the PSFD MOU did imply that:
--- • If Canada chose to remain in the Program and acquire the F-35, it would do so according to the conditions of the PSFD MOU, including that the IRB Policy would not be applied.
--- • If Canada wanted to apply its IRB Policy to the acquisition of the F-35, it would need to exit the F-35 JSF Program and forego preferential access to JSF industrial opportunities...." https://www.ic.gc.ca/eic/site/ad-ad.nsf ... 03962.html

[Corsair1963]

Honestly, doubt we are going to actually see any 4th Generation Fighter flying around as a missile truck with 12+ Air to Air Missiles. Just PR by companies like Boeing trying to sell the aforementioned.

[jessmo112]

I wonder how one 'joins an MoU' without signing:

"...Canada has been a partner since the inception of the Joint Strike Fighter competition in 1997. In 2006, Canada joined, the United States, United Kingdom, the Netherlands, Denmark, Australia, Turkey, Italy and Norway in a memorandum of understanding for the “Production, Sustainment and Follow-On Development” of the F-35....." https://www.f35.com/news/detail/sealed- ... -submitted 31 Jul 2020

from LM report above. An official website below:

Canadian Industrial Participation in The F-35 Joint Strike Fighter program December 2012
"...1. The F-35 JSF Program
Since 1997, Canada has been involved in the development, design and initial production phases of the F-35 JSF Program.

On December 11, 2006, the Deputy Minister of National Defence, on behalf of the Government of Canada, signed a Production, Sustainment and Follow-on Development Phase Memorandum of Understanding (PSFD MOU). The PSFD MOU was also signed by all the other F-35 JSF partner countries: the United States, the United Kingdom, the Netherlands, Denmark, Australia, Turkey, Italy and Norway. The overall objective of the PSFD MOU is to establish a framework to allow the partner countries to cooperatively produce, sustain and do follow-on development (e.g. future technology improvements) of the F-35 JSF. The PSFD MOU details the partners' responsibilities and benefits in these areas. The PSFD MOU does not commit Canada to buy the F-35, but it does establish the conditions for its on-going participation in the F-35 JSF Program.

In the PSFD MOU, the F-35 JSF partners, including Canada, agree to an industrial participation approach that has two key features:
--- • Companies from the partner countries can compete for design, production and sustainment contracts on the F-35 JSF Program. This competitive approach helps to ensure that the Program has access to the best technologies at the best prices.
--- • In order to achieve best value through the competitive approach, the partners agree that “no requirement will be imposed by any Participant for work sharing or other industrial or commercial compensation in connection with this MOU that is not in accordance with this MOU.”Footnote 1 This commitment precludes the application of what are known as "offset policies", such as Canada's Industrial and Regional Benefits (IRB) Policy. Canada's IRB Policy requires companies that win defence and security contracts with the Government of Canada to place business activities in Canada at the same value of the contract. Footnote 2

In 2006, the Government of Canada was not making a procurement decision, rather it was agreeing to conditions that would allow it to remain in the F-35 JSF Program. While the Government of Canada was therefore not making an irrevocable decision to forego the application of IRB Policy to its procurement of next generation fighter capability, its decision to sign the PSFD MOU did imply that:
--- • If Canada chose to remain in the Program and acquire the F-35, it would do so according to the conditions of the PSFD MOU, including that the IRB Policy would not be applied.
--- • If Canada wanted to apply its IRB Policy to the acquisition of the F-35, it would need to exit the F-35 JSF Program and forego preferential access to JSF industrial opportunities...." https://www.ic.gc.ca/eic/site/ad-ad.nsf ... 03962.html

So the penalty is a double wammy. You:
A. Lose all favorable status, and industrial participation written in the MOU.
B. You get hit with some unspecified cancellation penalty.
I waa going to ask if another coubtry3can join the program. But Then I thought about the partner nations scrambling to take Canada's work share during an economic downturn.
There is a good south park meme out there that canadians would do well to remember.
https://youtu.be/QGmhLtsK2ZQ

[weasel1962]

Well, one can always wait for the MOU to expire so penalty provisions don't apply.... which is sometime in year 2052 (45 years after signing and we're already almost at the 1/3rd mark!).

The penalty provisions are actually limited to the contribution ceiling (TY $334m) if there hasn't been any F-35 contracts entered into by Canada, so not too bad but it will add to the costs of any new selection. Its the possible loss of future production participation that hurts more.

Any questions, do ask Ward Elcock since he's still alive and was the one who signed the MOU.

[Corsair1963]

Canada honestly has two choices the F-35 or Super Hornet. Yet, the former is more capable and offers a better deal to their industrial base....


So, who do you think is going to win???

[charlielima223]

Canada's fighter competition and the F-35 summed up...

[ricnunes]

I am somewhat surprised that they didn't just pull out like Eurofighter and Dassault did.

I think theyre maybe worried about Finland and looking bad. They were expected to drop out. they were seemingly hanging on to see what was included in 2 eyes. industrial look-e-loo.

Yes, I agree that Finland or more precisely the Finnish competition is reason why Saab didn't drop from the Canadian competition. Just imagine how bad would Saab look at the eyes of the Finns (and to other potential customer/nations) if they abandoned the Canadian competition? (this would be like an admission by Saab that their aircraft is inferior)

Besides, if or when the F-35 wins in Canada (or even in the case that Super Hornet wins) then Saab can always (and IMO will likely) claim that the Canadian competition was 'rigged from the start' (something that I'm 100% sure that it will be echoed by all those folks as BF4C ).

[ricnunes]

Canada honestly has two choices the F-35 or Super Hornet. Yet, the former is more capable and offers a better deal to their industrial base....


So, who do you think is going to win???

On top of that one have to remember that like happened with present and past Royal Canadian Air Force aircraft like the CF-18 or the CF-101 Voodoo and the CF-104 Starfighter, the RCAF will likely operate the new aircraft (hopefully the F-35) for many decades to come and it will operate the type until it becomes obsolete and as such there's only one aircraft that allows the RCAF to operate the new fighter aircraft in this 'fashion' without quickly become obsolete in the next decade or less and that aircraft like you already know, is the F-35 and only the F-35.

[kimjongnumbaun]

I'm really curious to see how Saab got around the 2 Eyes requirement, if at all. It would be nice if the documents for the competition were released.

[ricnunes]

Speaking of 2 Eyes and Saab, I believe that Saab will get '2 Black Eyes' after they lose in Canada and Finland

More seriously, I don't know how Saab will be able to get around the 2 Eyes requirement but on the other hand the Gripen's 'inside' is everything but Swedish - actually the equipment inside the Gripen seems to be mostly US and British anyway.

[XanderCrews]

I'm really curious to see how Saab got around the 2 Eyes requirement, if at all. It would be nice if the documents for the competition were released.

I just presume they can say they'll get it done. Gripen E is still not in service yet. If you're going to make big bold "someday soon" promises, why not swing for the fences?

Yes, I agree that Finland or more precisely the Finnish competition is reason why Saab didn't drop from the Canadian competition. Just imagine how bad would Saab look at the eyes of the Finns (and to other potential customer/nations) if they abandoned the Canadian competition? (this would be like an admission by Saab that their aircraft is inferior)

Besides, if or when the F-35 wins in Canada (or even in the case that Super Hornet wins) then Saab can always (and IMO will likely) claim that the Canadian competition was 'rigged from the start' (something that I'm 100% sure that it will be echoed by all those folks as BF4C ).

far be it from me to critique the sales "strategy" behind Gripen E, but they seemingly have a better chance in Finland. of course Saab already committed to Canada. I honestly guess they are just willing to gamble. hoping to win one or the other maybe they don't really expect to win either? Or think they will win both? maybe no press is bad press?

I have no idea. in both cases Boeing offers politicians an "easy out" if there is too much whining about f-35. this puts Gripen in a 3rd place spot.

Hopefully we get info from both contests when they are over.


Gripen E has had a lot of missteps. This may only add to that list.

[XanderCrews]

So the penalty is a double wammy. You:
A. Lose all favorable status, and industrial participation written in the MOU.
B. You get hit with some unspecified cancellation penalty.
I waa going to ask if another coubtry3can join the program. But Then I thought about the partner nations scrambling to take Canada's work share during an economic downturn.
There is a good south park meme out there that canadians would do well to remember.
https://youtu.be/QGmhLtsK2ZQ

Within the JSF program, it was apparent that Ellen Lord’s August 31 letter had no effect on the draft RFP. The US
DoD subsequently sent a second, far more directly worded letter to make clear the stakes involved. On December
18, 2018, the JSF Program Executive Officer (PEO), Vice Admiral Mathias Winter, had his letter delivered to the
Senior Director of the Future Fighter Capability Office (Annex C). It reiterated much of Undersecretary Lord’s
messaging about the incompatibility of the FFCP’s proposed draft RFP, but was more direct in its language and
laid out specific consequences for Canada’s actions.
Fundamentally, the F-35 program is different from Foreign Military Sales or Direct Commercial Sales
procurements. The F-35 Partnership includes Canada as an integral member of a global enterprise
containing multiple Partners, with both shared, and unique strategic, operational and tactical,
requirements and investment opportunities. As a Partner, Canada remains subject to the terms of
the F-35 cooperative Partnership. As such, the current FFCP procurement process does not allow for
the F-35 to participate in a fair and open competition that recognizes the special nature and distinct
advantages of the Partnership…
… Partners are prohibited from imposing requirements for work share or other industrial or commercial
compensation. Instead, IP [industrial participation] is determined on a competitive, best value basis to
maximize affordability across the F-35 enterprise. This approach to IP has a 12-year track record and
has resulted in over $1.33B USD in economic benefits to Canada in the form of F-35 production work,
assigned on a best-value basis and implemented though the F-35 IP MOUs... These benefits will extend
well beyond the 15-year ITB obligation period defined in the DRFP [Draft RFP]. As a Partner
in the F-35 enterprise, Canada will continue to be eligible for best-value opportunities that
span work on the entire F-35 fleet for the next 50 years. (emphasis added.)
14 THE CATASTROPHE: Assessing the Damage from Canada’s Fighter Replacement Fiasco
The bolded portion is critical to understand in context: it was a veiled reference to Canada’s untenable
position concerning ITBs and guaranteed offsets. The country would receive far better industrial outcomes
through the partnership, from which it had already benefited for the past 15 years. It was also an embarrassing
indictment that effectively called out the credibility of the government position: a large portion of the Canadian
bureaucracy understood the impossibility of what Canada was asking, yet the JSF partnership needed to spell
it out directly.
The final part of the letter laid out the consequences if Canada proceeded with the guaranteed offset policy in a
final RFP.
In summary, we cannot participate in an offer of the F-35 weapon system where requirements do not
align with the F-35 Partnership. Such an offer would violate the JSF PFSD MOU and place the entire
F-35 Partnership at risk. In order to provide for a fair process that allows us adequate time to make
a Bid/No-Bid decision and prepare a response, if necessary, we would appreciate if you advise us by
January 31, 2019, regarding which approach Canada will take. We are convinced that the F-35 is the
best solution for Canada’s future fighter requirements. We look forward to Canada reaffirming its
status as a F-35 Partner and hope the ITB issue will be resolved quickly so the F-35 is able
to compete in the FFCP. (emphasis added.)
The last paragraph contains a very clear threat. The PFSD MOU states that only by procuring the F-35 within
the JSF program will Canada receive contracts. Meanwhile, the request for clarification on Canada’s status in
the program refers to the industrial contracts that Canada currently enjoys. If the country voluntarily leaves the
program, or is terminated from the program, its present contracts would be removed and redirected to other
partner firms.
Despite the request for clarification by January 31, 2019, the JSF PEO received no response. The government
instead moved ahead with the issuance of a final RFP, which reports claim will come sometime in May 2019
(Confidential interview with the author). The government would select an aircraft by 2022, and expect deliveries
to start by 2025, a schedule that even its own staff view as “very aggressive” and could be subject to delays


https://macdonaldlaurier.ca/files/pdf/2 ... a_FWeb.pdf

[ricnunes]

far be it from me to critique the sales "strategy" behind Gripen E, but they seemingly have a better chance in Finland.

I do agree with you above. However I believe that if Saab dropped from the Canadian competition that this would or could somehow damage Saab's 'reputation' in the Finnish competition.

maybe no press is bad press?

Yes, that definitely what I think.
In the case of Saab which for some very odd, strange, mysterious and even twisted reasons only seem to get good press, I would definitely say that 'no press' for Saab is definitely 'bad press' for Saab.

[hornetfinn]

I think Saab is still in Canadian competition because of timelines of Finnish and Canadian competitions.


Canada:
https://www.tpsgc-pwgsc.gc.ca/app-acq/a ... 8-eng.html

Evaluate proposals and negotiate agreement from 2020 to 2022
Anticipate contract award in 2022
First replacement aircraft delivered as early as 2025

Finland:
https://www.defmin.fi/en/administrative ... m_timeline

A more specific RFQ was sent in the second half of 2019; this will be followed by the second phase of negotiations during which the content of procurement packages will be finalised. The second phase of negotiations will end in 2020; the manufacturers will then be requested to submit final tender documents. The government will make the decision on the replacement of the Hornet fleet in 2021.

I think dropping out from either competition now would not be smartest strategy for Saab or Boeing as these competitions overlap. Also the cost of staying now is probably not that high as most of the work has been done in both (for the manufacturers).

All 3 manufacturers still in Canadian competition have given their proposals:
https://defpost.com/canada-receives-pro ... y-project/

Government of Canada has received responses to the formal Request for Proposals (RFPs) for the Future Fighter Capability Project, the government announced on July 31.

The following eligible suppliers have submitted proposals:

+ Swedish Government—SAAB AB (publ)—Aeronautics with Diehl Defence GmbH & Co. KG, MBDA UK Ltd., and RAFAEL Advanced Defence Systems Ltd.
+ United States Government — Lockheed Martin Corporation (Lockheed Martin Aeronautics Company) with Pratt & Whitney
+ United States Government — The Boeing Company with Peraton Canada Corp., CAE Inc., L3 Technologies MAS Inc., GE Canada and Raytheon Canada Limited Services and Support Division

The proposals will be rigorously evaluated on elements of capability (60%), cost (20%) and economic benefits (20%). During the evaluation, a phased bid compliance process will be used to ensure that bidders have an opportunity to address non-compliance related to mandatory criteria in their proposals.

The initial evaluation of proposals is anticipated to be completed by spring 2021, at which point Canada may choose to enter into dialogue with two or more compliant bidders and request revised proposals.

Canada will finalize terms with the preferred bidder prior to the contract award, which is anticipated in 2022. Delivery of the first aircraft is expected as early as 2025.

[XanderCrews]

I could be wrong. I'll give myself some wiggle room. Maybe Gripen wins 1 or both of these. I highly doubt it.

I guess if you want to win the lottery you have to buy a ticket. I'm still very amazed that Saab makes these attempts. Their odds of winning In Canada are slim, but they go anyway. Add to the list of Losses. But thats ok because the real prize is Finland? which they might also lose? will there be yet a 3rd possible contender, forcing them to stick out yet another competition they're likely to lose in the bizarro method of "losing to entice"? is it a Beta male thing?

at what point does the lightbulb go on? Theres a real chance they not only get beat in Canada and Finland but are humiliated in the process.

I just don't understand why they keep entering the contests they do. maybe I'm wrong and they win, in which case they are smarter than me. But if they don't win Canada or Finland, I'm going to offer that as further evidence of their absolute stupid strategy and wasted money on the bizarre notion that the more they don't win and expose their fighter to the truth of evaluations, the more they somehow improve their position.