The 5G Argument
Jan 15, 2012

The Canadian Government’s July 2010 announcement that it was to replace the aging CF-18 Hornet with the Lockheed Martin F-35 Lightning joint strike fighter (JSF) aircraft was met with stern admonishment (and some ridicule) from Rideau Institute president Steven Staples, among others who oppose military purchases.

Their objections revolve around: (a) a belief that Canada does not need a fifth generation (5G) combat aircraft; (b) that there was an arbitrary selection of a single aircraft without a legitimate competitive process; and (c) that the cost is excessive.

If they agree with a fighter aircraft acquisition program at all, critics suggest that Canada purchase a 4G aircraft, presumably at a lower cost.

All key military acquisitions must be viewed with Canada’s usage history in mind. It cannot be argued that Canada squeezes all possible productivity out of its aircraft (and other military hardware) before it is retired. Examples include the DC-3 Dakota, affectionately called “The Dak,” purchased in 1943 and flown until 1988, and the Sea King maritime helicopter which will celebrate its 50th year of service in August 2013. Our current CF-18A fighter aircraft, purchased in the 1980s, will be approaching 40 years old when ultimately decommissioned and replaced. Clearly, the platform is fatiguing and needs to be replaced in five to 10 years.

The U.S. Joint Strike Fighter (JSF) program had its genesis in the 1980s and 1990s with programs to replace several fleets of tactical aircraft: the AV-8 Harrier jump jet used by the U.S. Marine Corps and the Royal Air Force, the F-16 Falcon, and the carrier-based Grumman A-6 medium attack fighter, all of which were nearing the end of their service lives. The end of the Cold War, however, reduced flying hours and the urgency for fleet replacement.

The JSF is the single largest fighter aircraft program in history, with expenditures expected to exceed US$383 billion to produce up to 5,000 aircraft. The requirements for the JSF were stringent and complex: there were to be three variants, a conventional take-off and landing model, a carrier-based model, and a short take-off and ­vertical landing model. All variants were to: provide increased lethality than its predecessors; be survivable during the demands of combat; be supportable in increasingly challenging operational environments; and be affordable.

Three bidding teams – led by Lockheed Martin, Boeing, and McDonnell Douglas – stepped up for the U.S. competition..

The Competitive Process
Canada signed onto the JSF program in 1997, entering the Concept Definition Phase with an initial investment of US $10 million shortly after the McDonnell Douglas designs had been rejected in 1996.

Over the next five years, Boeing and Lockheed Martin developed and constructed their prototypes, the X-32 and the FX-35 respectively, which were flight tested and reviewed until 2001, when the F-35 was ultimately selected by the U.S. government as the joint strike fighter.

In addition to Canada and the United States, the multi-national effort to build and sustain an affordable, multi-role, 5G stealth fighter aircraft includes Australia, Denmark, Italy, Netherlands, Norway, Turkey and the United Kingdom. All partner nations were given the opportunity to participate in the evaluation and selection process, and all, except the UK, deferred to the U.S. decision. Canada assigned National Defence personnel to the International JSF Project Office to keep the Canadian government informed about program developments, giving Canada full access to the results of the JSF competition.

F-35 Lightning

A Canadian Competition?
In a comprehensive article in Frontline Defence magazine (Issue 3, 2011), Lieutenant-General (ret) Ken Pennie noted that if a decision were made to conduct a purely Canadian competition, the competing ­aircraft would likely be:

  • Lockheed Martin F-35 (US);
  • Boeing F-18F/A (US);
  • Saab Gripen (Sweden);
  • Desault Mirage (France);
  • Desault RAFALE (France);
  • BAE Eurofighter.

LGen Pennie suggested this list would quickly be pared to three aircraft: the F-35, the F-18F/A and the Eurofighter, and then quickly reduced to the F-35. Insiders suggest the Eurofighter is the least capable and most expensive and that the remaining aircraft do not meet Canada’s mandatory minimum requirements, leaving the F-35 as the only possible choice.

Theoretically, there could be another two competitors – China’s J-20 and Russia’s PAK-FA – but these aircraft are not options for Canadian purchase. If either nation should disagree politically with Canada over issues such as Chinese relations with Taiwan or India, or Russian challenge to our Arctic policies and activities, they could easily choke off access to vital spare parts. They would also know exactly what ­countermeasures to use, or to advise our adversaries to use, against our Air Force in operational deployments.

The Canadian government has been remiss in explaining why Canada did not hold its own fighter aircraft competition. Nor have they successfully explained the several unintended consequences of such a competition. A few points to remember include the following facts:

  • Canada would lose its place in the F-35 queue, adding years to the CF-18 replacement program;
  • While there would be no penalty, per se, and contrary to critics’ comments, Canada could be forced to withdraw from the memorandum of understanding with the U.S. Government because it would be pursuing a direct contract with Lockheed Martin. Thus, Canada would nullify the benefits of its $160 million investment. If Canada were to pursue the only other avenue of acquiring the F-35, through the U.S. Defence department’s Foreign Military Sales program, the cost would increase by $850 to $900 million;
  • Although immediate IRBs (industrial regional benefits) might increase, Canadian industrial involvement in the international JSF project would be eliminated, ending the high-value work which Canadian companies would contribute to the entire fleet, for the life of the global F-35 program for years to come. The Canadian government believes the proceeds of Canadian industrial involvement could ultimately exceed Canada’s purchase price;
  • The IRBs negotiated for only 65 aircraft pale when compared to the international program offered by the JSF program of 3,000 to 5,000 aircraft. In addition to Canada’s industrial involvement, Canadian membership in the nine-nation partnership to acquire this aircraft will result in royalties predicted to be as much as $130 million being paid into the Government of Canada’s Consolidated Revenue Fund from sales to non-partnership nations;
  • Canadian industry would lose its privileged position in competing for contracts to manufacture components or develop software for the entire fleet of JSFs, which currently sits at $350 million, and is expected to significantly grow.

The Department of National Defence (DND) has historically been unable to explain funding of major equipment programs to the public clearly and comprehensively. Cost estimates are clouded by terms like budget year, then-year, infrastructure costs, and a continuously confusing litany of cost factors and life cycle management statistics. The purchase of the F-35 is further obfuscated by the efforts to compare cost figures of the U.S. Government Accountability Office (GAO) with those of DND. Simply stated, this is an effort (and I apologize for the tired metaphor) to compare apples and oranges.

Canada joined the program’s System Development and Demonstration Phase in 2002 with an investment of US $100 million and an additional $50 million contributed through federal Canadian technology investment programs. This phase extends to 2015.

In 2003, the U.S. invited the current partners to participate in the Production, Sustainment and Follow-on Development phase, and Canada signed the JSF Production, Sustainment and Follow-on Development Memorandum of Understanding in December 2006. Canadian participation in this phase will cost approximately US $551 million over the 2007-2051 timeframe. This covers Canada’s portion of production, ­sustainment and follow-on development costs, including common tooling and sustainment. The U.S. is funding most of the research and development (R&D) costs.

Four types of costs are associated with the JSF acquisition of the F-35: (1) recurring flyaway cost; (2) procurement cost; (3) acquisition cost; and (4) total ownership cost. While each is an important element in the project, they continue to confuse those who are concerned about the cost of an aircraft purchase to replace the CF-18.

Canada undertook an extensive assessment of the options, including a detailed cost comparison based on data provided to Canada on a government-to-government basis. The information proved that the F-35 was the only aircraft that could meet the CF’s operational requirements at an affordable price. A big concern now, however, is the ability to control those costs in the face of an economic downturn which may affect the ability of other countries to adhere to their numbers commitments.

David Perry is a defence analyst with the Conference of Defence Associations Institute. His paper, Canada’s Joint Strike Fighter Purchase: Parsing the Numbers, which was published in the summer 2011 edition of On Track, details the cost components:

“The basic unit of analysis is the recurring ­flyaway costs … [which] include program ­management, hardware, airframe, vehicle and mission systems, propulsion and engineering change orders. Procurement costs are frequently expressed per aircraft as average procurement unit costs (APUC). The acquisition costs of the JSF include procurement costs, plus research, development, test and evaluation and cost of facility construction. Finally, total ownership costs include all the preceding costs, plus operations and support, improvements and modifications.”

DND’s announced program states that the unit recurring flyaway cost (URF) is $70 to $75 million. David Perry insightfully notes that DND’s URF cannot be meaningfully compared to the GAO’s $133 million estimate. The GAO’s figure is an average procurement unit cost (APUC) and includes spare parts, logistics and other cost figures, and is an average cost for all three variants of the aircraft, while Canada is purchasing the conventional take-off and landing version – the cheapest of the three.

The Canadian Defence department accounts for these other costs separately.

These seemingly contradictory figures even have Ottawa’s Parliamentary Budget Office (PBO) questioning DND’s estimates. PBO estimates the total acquisition costs for the 65 fighters to be $9.7 billion and $1.7 billion for logistic set-up, plus 30 years of operating and support costs ($14 billion) and operating and support costs ($3.9 billion).

This is an astounding and confusing series of figures to be included in the procurement package, but the bottom line is that any aircraft that is purchased will have follow-on costs associated with training – and storing, operating, maintaining and arming. The chosen aircraft will also require retooled and redesigned facilities at the two fighter bases. We can expect that the costs will probably increase from those associated with our CF-18s.

For a purely accurate figure we should look at the costs of the aircraft as it sits in a Canadian aircraft hangar – which DND has stipulated will be approximately $75 million per airplane, or $4.55 to $4.88 billion. The remaining funds in the budget envelope will, as DND’s Assistant Deputy ­Minister for Materiel Dan Ross wrote in a letter that was published in the Ottawa Citizen on 15 June 2011, be for “weapons, supporting infrastructure, initial spares and training simulators.” Associate Defence Minister Julian Fantino and Dan Ross ­confirmed these estimates in joint remarks to the Parliamentary Standing Committee on Government Operations and Estimates that month.

The GAO estimates the APUC to be $133 million, which is the average unit cost of for all three variants over the entire production line, including the very expensive aircraft at the earliest production period. By way of comparison, Boeing’s F-18E/F Super Hornet would cost about $5 to $10 million more per aircraft than the F-35.

Canada’s acquisition is expected to begin in 2016, after the production line will have been in operation for several years, and the unit cost will be at its lowest. Production lines are most expensive as they begin production, then decrease and taper off quite dramatically once the assembly line has fully established. DND believes it will be able to adjust the purchase date to coincide with the start of the multi-year production, if desired, to take advantage of the reduced price point.

When all of these factors are considered, David Perry notes that “DND’s cost estimates for the F-35 (CTOL) appear very similar to the GAO’s when expressed in comparable terms, although the PBO’s estimates are significantly higher.”

With nine nations and their collective industrial capabilities engaged in the aircraft’s development, the JSF program is a new model of international partnership in aircraft production. This multinational approach to is intended to cut costs by reducing redundant research and development, providing access to the technology and replacement parts in partner nations and creating economies of scale. Component commonality across the three variants reduces the requirement for unique spare parts and the logistics footprint on the assembly line, in shared wing platforms, in common systems that enhance ­maintenance, field support and service interoperability.

Industry Canada has signed agreements with member companies of the Lockheed Martin team. This participation has already provided Canadian aerospace industry with long-term, high technology industrial opportunities for its advanced composite manufacturing, mission systems and high speed machining, to mention only a few.

To date, Canada has invested just over $200 million in this program, and since 2002, the Canadian government’s participation has led to more than $350 million in contracts for more than 64 Canadian companies, laboratories and universities.

With Canada’s commitment to purchase the F-35, Canadian industrial opportunities could be extensive for years. Sustainment and follow-on opportunities for Canadian industry are emerging and will be available over the 40-year life of the program. Industrial participation agreements include all 19 Canadian companies that are involved in ­F-35 manu­facturing; they will also repair and overhaul those components for the entire global fleet.

Too much aircraft?
The end of the Cold War sowed expectations for a peaceful world with a greater level of international development and cooperation. Since then, Canada has experienced several geostrategic shocks where Canadian air power was deployed:

  • Persian Gulf War (1999-1991) CF-18 aircraft provided air cover for multinational maritime operations over the Persian Gulf
  • Kosovo (1999) CF-18 aircraft participated in UN-sanctioned NATO operations to protect ethnic-Albanian Kosovars
  • Libya (2011) CF-18 aircraft deployed to support allied operations.

Without exception, each of these operations came as a surprise to Canadians, requiring fighter aircraft to deploy quickly. Future operations can be expected to happen in a similar manner – with little or no notice. But as military technology develops and becomes less expensive, older and less sophisticated aircraft will be flying into increasingly perilous situations.
Many of the arguments against the F-35 are seriously misinformed. The need to replace Canada’s CF-18 aircraft cannot be argued. We also need to upgrade air combat capabilities to meet emerging threats and challenges that cannot be foreseen at this point.

Idealists choose to disregard new and emerging security concerns emanating from sovereignty challenges, terrorism, illegal migration and climate change, as well as the global threats facing Canada in years to come. The reality is, however, that we cannot rely on our allies for domestic security and we must be prepared to participate in collective defence to honour our international commitments and treaty obligations. We must participate in pacification efforts whenever and wherever the Canadian Government decides to deploy our forces.

Several of these security challenges may be developing in the Canadian north. Critics scoff at the suggestion that the F-35 can contribute to Arctic sovereignty. However, this possible contingency may not be so far-fetched when considering the five-nation competition for ownership of the Arctic and the resources believed to sit beneath a rapidly-diminishing ice cap.

Several nations contest Canada’s claim that the Northwest Passage lies within the Canadian Arctic archipelago, and if they are successful in having the Passage internationalized, the airspace above it also becomes internationalized, creating yet another strategic challenge for Canada.
Canada is one of seven nations that share the Arctic coasts, and four are competing with us for increased ownership.  While all competitors have agreed to pursue their claims amicably and cooperatively, Russian actions do not match their words.

In March 2009, Russia announced it intended to create a special operations unit exclusively for military operations in the Arctic. While Canada has established a ­military Arctic Training Centre at Resolute Bay, we are still lagging behind our allies and our rivals. In March 2010, Russian ­president Dmitry Medvedev announced his intention to ensure Russian access to mineral resources in the Arctic and acknowledged that competition over these resources could spark future conflicts between Arctic states.

The Joint Strike Fighter is the first to have extensive partner nations’ engagement in the program. Unit production costs drop because of economies of scale; the logistics footprint is reduced; industrial engagement is spread among all participating nations for the life of the project; and, complete interoperability is assured among the participating nations – a previously elusive ideal.

To purchase a lesser aircraft that doesn’t have the same stealth qualities, armament and capabilities as the F-35, would jeopardize future mission success for our Air Force, and reduce the potential for pilot survivability. A Super Hornet or a Eurofighter might be good enough for today’s strategic demands but we would be effectively using yesterday’s technology to meet challenges in the coming decades – about which we can’t even hypothesize.

This is serious business and requires the best equipment available. The world of the 21st century has already proven to be unkind and unstable, and we cannot predict the threats and dangers that are in our future. But whatever happens, we have learned from hard experience that it will be a “come as you are” party.

Political decision makers should be mindful that those who oppose this purchase will never have to fly this aircraft into harm’s way. They will not have to defend their claims when Canada faces domestic or international adversity. They will not be held accountable if the Canadian Forces fail to meet mission objectives because we ­purchased an inferior aircraft with inadequate capabilities to achieve the mission aims and provide pilot survivability.

In aerial combat, you must be the best, or you die. You win, or you die. You reach your target and deploy your weapons, or you die trying. There is no second place.

Canada must buy the right equipment to ensure mission success.

Tim Dunne is FrontLine’s East Coast defence correspondent.
© FrontLine Defence 2012