VICTORIA, BRITISH COLUMBIA — The Canadian government’s decision to hold back spending CAN $3.1 billion (US $2.9 billion) on defense procurements over the next four years will further delay major aircraft purchases, including a next-generation fighter jet, industry representatives and defense analysts said.
The move, announced Feb. 11, is designed to help the federal government close its budget deficit and defer spending the funds between 2014 and 2017-18.
The Department of National Defence (DND) has declined to publicly release a list of affected procurements. However, equipment programs with deliveries underway won’t be touched.
The Department of Finance said those projects affected will be “major capital procurements.”
Industry sources say some money will be saved from the Dec. 20 cancellation of the proposed purchase of a fleet of close combat vehicles.
Other projects affected include the acquisition of new fixed-wing search-and-rescue aircraft. A contract for that project was supposed to be awarded in 2014-15, with aircraft deliveries in 2017. But that appears unlikely, as a final request for proposals has not yet been released to industry.
The purchase of a next-generation fighter to replace the CF-18 also will be further affected, industry representatives said. The first replacement aircraft were supposed to be delivered in 2016, but the government put its planned purchase of the F-35 joint strike fighter on hold in December 2012.
Since then, a federal government team has been studying fighter jet options, but has not said whether it will hold an open competition or proceed with the F-35 purchase.
“The work is being completed as expeditiously as possible,” said Pierre-Alain Bujold, a spokesman for Public Works and Government Services Canada.
But Alan Williams, the DND’s former head of procurement, said the analysis of options, as well as the deferral of funding, plays into the hands of those in government and the Royal Canadian Air Force who want to buy the F-35.
“As it stands, the F-35 would lose any competition Canada held today, but if that is delayed for several years, then its chances of winning improve as development issues are worked out,” Williams said.
Lockheed Martin Canada spokesman Mike Barton said the budget deferral is not expected to have any effect on the company’s F-35 program or other projects underway in Canada.
“We stand back to wait for the [fighter options] process to work itself out, and wait for the government to make a decision,” he said.
The Feb. 11 release of the federal budget for fiscal 2014-15 gives a broad overview of government spending plans while the release of more specific department budgets, including those for the DND, are to come later this month.
Finance Minister Jim Flaherty said the deferral is not a cut to the military’s budget or to the government’s commitment to rebuild the Canadian Forces.
Government officials also have noted that the DND has a large number of equipment projects on the go, more than its procurement staff can handle.
“There’s no point in having money sitting there when they can’t spend it this year,” Flaherty said. “So we’re pushing it forward, not taking it back, just pushing it forward so they can use the money when it’s useable.”
The money was to have been spent between 2014 and 2017.
But Liberal Party leader Justin Trudeau said the deferral is another example of how the ruling Conservative Party government has bungled defense procurement.
Tim Page, president of the Canadian Association of Defence and Security Industries, said the budget decision is concerning.
“Any hit to the capital budget of the Department of National Defence will have an impact on the Canadian industrial base,” Page said. The government has pointed out that the CAN $3.1 billion is not being removed from the military budget, only delayed, he said.
Other savings are expected to come from temporarily putting on hold a plan to increase the size of the regular forces from 68,000 to 70,000 troops.
In addition, the Army has eliminated a number of weapon systems and vehicles from its inventory, and the Air Force is pulling its personnel out of the NATO Airborne Warning and Control System program and also has withdrawn from NATO’s Alliance Ground Surveillance system.
PS, it's unlikely that the USAF would have went with a twin F414 anyway because they were interested in commonality with the F119 (for cost and other reasons).
