Of jobs and jets

COYNE on the F-35 controversy

Minister of National Defence and Minister for the Atlantic Gateway Peter MacKay checks out the cockpit of the F-35. THE CANADIAN PRESS/Adrian Wyld

I’ll leave to others, at least for the moment, whether the F-35 contract makes sense in military terms: that is, whether this is the best expenditure of scarce defence funds. I remain to be persuaded either way. But  if the F-35 is so far superior to other planes as the government maintains, and if the benefits in defence terms are worth the extra dollars, then I think the contract can be defended, notwithstanding the absence of competitive bidders. You can’t have a competition for something that’s only made by one firm.

As I say, I’m keeping an open mind on its military merits. All I would suggest is that that is how any such purchase should be assessed — based on its costs and benefits in military terms, and not on the basis of its so-called “industrial benefits.” Indeed, that is the best thing about the contract as signed: it doesn’t have any “industrial benefits.”

That is, not as that phrase is used in procurement jargon: a requirement imposed on the contractor to set aside a certain portion of the subcontracting work for Canadian firms. Remarkably, the government has eschewed any such requirement in the deal — remarkable, both because defence contracts are usually riddled with such protectionist riders, and because this government has not previously shown much aversion to pork-barrelling.

Why are these a bad idea? The same reason as protectionism is generally. You don’t make yourself rich by paying too much for things, any more than you do by selling things for less than they cost to make — as in that other favourite tool of industrial interventionists, subsidies. “Buy low, sell high” is the recipe for prosperity, not “buy high, sell low.” The only reason to require a contractor to source from Canadian firms is if they would not do so willingly; the only reason they would not do so willingly is if the Canadian firms were not the most cost-effective option; and so the effect of such set-asides must be to inflate the cost of the contract. If the government were purchasing from these sub-contractors directly, that would be obvious enough. But it doesn’t change with the intervention of an American aerospace firm as the middle-man.

But what about all the extra economic activity so generated? If the government is going to spend all that money anyway, doesn’t it make sense to spend it in this country, creating jobs here rather than elsewhere? And won’t the extra taxes from all that additional output offset any extra costs?

The key to this enduring fallacy lies in those words “extra”, “additional.” The assumption is that productive resources are somehow called into existence by the government’s willingness to spend money on something. But that’s not the case. They are not created; they are diverted. The resources used to make parts for planes might have been used for other purposes. They are only diverted into aerospace by the availability of subsidy (in this case, the difference between the Canadian subcontractors’ costs and their foreign competitiors). Were there no subsidy, the same resources could be put to other uses, offering higher economic returns — and sending higher tax revenues back to the treasury.

How do I know they would offer higher economic returns? Because they don’t need a subsidy: that is, they offer a greater benefit to society, in terms of the price consumers are willing to pay for them at the margin, than they cost society to make, in terms of the resources they consume in production. Whereas subsidy only becomes necessary where the reverse is the case: where the costs to society exceed the returns. I say “society,” because that’s ultimately what’s involved. We may assign private title to these resourced, but ultimately they are society’s, in the sense that they must all come out of the same pot: one person’s use of a scarce resource leaves that much less for everyone else.

This is as true of labour as anything else. A widget firm is in the business of making widgets, not jobs. Jobs are not the product: they’re the cost. Likewise for military jets. The fundamental objective of the government should be to get the best jets for the lowest price — not to “create jobs.”

A final point. As I said off the top, I don’t know whether the jets are worth the price. Maybe the contract should have been put out to competitive tender. We’ll see. But it’s utterly incoherent of the Liberals to argue, on the one hand, that the government is paying too much for the jets (because of the lack of competitive bidders) and that it is not paying enough (because of the lack of domestic content quotas). Pick one!




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Of jobs and jets

  1. A very resoned and well written peice; however, haven't you heard……the Russians are coming, the Russians are coming!

    • No, as usual Coyne has his facts wrong. As I understand it this project was multinational and the competition was begun many years long before the Conservatives came to power. And the Liberals, on behalf of our armed forces were there. The competition resulted in Lockheed's submission being chosen. If the project is not killed (never happen un less Layton got his left hand on it. I undersatnd Canadian firms will have the opportunity to build parts for 5000 airplanes, not 65. As far as the suitability of the plane it is clearly designed to do main things, the principal one being to secure air superiority over the battlefield. Which battlefield. There I can't say nor can anyone else.

      But i hear today that I am not alone in my guess that China is one day going to be in a likely candidate for competition, despite Emily's belief. The opther candidate is a continuing issue with terrorism fo the forseeable future, particularly as the West desires a share of Mid-East oil. Having read a number of Coyne's columns over the years, I am afraid the only thing ha has gooing for me is that he has the same name as the once head of the Bank of Canada.

      The irony is that if the Libs had been inpower all along they woould have come to exactly the same conclusion. Also, there is no contract yet, the negotiatons are still to come and negotiators will be nose to nose over the all the costs and benefits.

      As usual, flatulence from the Opposition.

      And as usual, the Liberal spokesman on Power Play on CTV , l had his head well up where it usally is..

  2. the only reason they would not [willingly subcontract Canadian firms] is if the Canadian firms were not the most cost-effective option

    Not true. These subcontracting arrangements are political bargaining chips for companies like Lockheed. Even if a Canadian firm is the most cost-effective, Lockheed may well choose another firm to bolster support for this or other contracts in other countries.

    Do the other countries involved in this project have "industrial benefits" in their agreements? Because that would be another good reason why subcontracts would go to less cost effective firms.

    • Who cares what other countries do? Why should we imitate them? It only seems necessary if you take as a given that Canada should be in the aerospace industry. But it isn't. No natural law decrees we should. Indeed, the willingness of other countries to subsidize their aerospace firms is an argument against our involvement, not in favour. We're hardly likely to outbid them, and if we do it only means we wasted more resources and distorted our economy more than they did.

      • And if other countries are willing to subsidise their industries in order to sell us things even more cheaply than we can make them, our proper response is to pocket the savings and say "Thank you very much."

        • Are we pocketing the savings on a $16B purchase of fighter jets? How do you know the price is right? Just because somebody is authorizing the purchase, doesn't mean it is good value. If none of the manufacturing takes place here in Canada, that $16B is out of our economic loop.

          Prima facia, doesn't seem like a good deal to me.

        • So the best idea would have been not to enter the consortium in the first place, then we could have said thank-you very much or no thank-you?

        • But there aren't exactly subsidies. I don't think there is any reason to expect that the cost of the overall contract to the taxpayer will be higher if we require "industrial benefits".

          Let's say that an American firm recieves a subcontract as a result of these "benefts". There is no reason to think that they will sell their product any cheaper. Even if a Canadian company makes the same product for less money, the American company has no incentive to bring their costs down since Canadian companies are no longer competition.

        • Just as the Americans say to China? Importation of deflation?

          Coyne's argument would hold if all other countries were doing the same with their Lockheed contracts but they're not.

        • And if other countries are willing to subsidise their industries in order to sell us things even more cheaply than we can make them, our proper response is to pocket the savings and say "Thank you very much."

          And then whispering "Suckers!" under your breath.

      • I agree with your general point that forcing Lockheed to subcontract Canadian firms is a distortion of the market. But it's not like we're choosing between a distorted market and a non-distorted market. With "industrial benefits" as you describe them, we're choosing between a market distorted ostensibly in our favour and a market distorted in someone elses favour.

        I think rather than requiring subcontracting in Canada as a condition of the contract, we should require fair, open and accountable subcontract tendering processes. This would remove the market distortion completely. But maybe that's hopelessly naive.

        • I don't agree that forcing Lockheed to subcontract to Canadian firms is a distortion of the markets. Markets be damned. An advanced economy has to produce advanced things. If we are not involved in the technologically sophisticated aspects of production, how are the skills developed supposed to be available for other projects that we, as Canadians, might and do need?

          • You just don't have an "open tendering process." You have a development process and Canada has been doing this ever since the 50's (North American Sabre, Lockheed Starfighter, ) and others As well as buying off the shelf airplanes (Hercules) which I think was the right way to do it. If things had been different (if Eisenhower hadn't bullied Canada) the Avro Arrow which was the best all-weather fighter going in 1957, designed, made in Canada and would have been built in Canada; but I'll bet you, if it had been accepted by the US there would have been similar licencing production deals. But Canada cannot compete on its own. It has to be a part of these joimnt developments.

          • It has become a commonplace in Canadian discourse that it was a great national shame that the Avro Arrow was cancelled. But a couple of months ago I met an old timer at the local Air Force veterans club. I do not recall what his roll was in the air service, but wanting to get some conversation going I commented to the effect that it was a shame that the Arrow was cancelled. He looked at me slightly askew with a tone of I know better than thou and said, "The Arrow wasn't cancelled because of politics. It was cancelled because it couldn't turn." In his opinion, the Arrow wasn't the plane that it's mythololgy now says it was. I can't say either way.

            The tragedy is that the whole program was scraped – all serious aerospace development in Canada – because they got it wrong. Heck, that was their apprenticeship! All those very valuable manhours toasted and given to private enterprise in the USA.

            It isn't wrong for government to be involved in the start up of industries to exploit new scientific discoveries. frequently that is the only way to get them going. Soceity as a whole benefits. The Apollo program is said to have generated $14 for every $1 the federal government invested in it.

          • That my friend, is absolute nonsense. Your acquaintance didn't klnow what he was talking about. I also was there. Dief was all for it but cabinet reluctantly had to cancell it for the reasons I gave above. In fact, the US Airforce wanted to buy a couple of copies so they could copy it but Eisenhower said no way. What did happebn was that the collection of top notch engineerts, desikgners and test pilots who had beeen assembled from Canada, Britain and the US scattered to the winds – some to the space program ultimately, some to design somewhat similar US fighers and some back to the UK.

            Tell your friend for me that he was full of sI**t.

            In fact, what was supposed to be a taxit test turned into a first flight in which the pilot quickly turned, came back to Malton and landed. jubilantly.

          • I'll pass along your comments. Thanks. As I said, I am in no position to judge. It was a notable in that I had never heard anybody challenge the legend that has built up around the history.

            Now my interest is piqued & I'll search for more indepth info. I am skeptical of getting to the truth, clouded as it is in political dealings that tend not to make it to the printed page.

          • You might choose to leave out BT's second paragraph as you pass along the comments.

          • Really? I find that is always the best way to start a conversation.

          • And the best way to make new friends.

          • Also, a few facts. On the day the Arrow made it's first fliight, it was engined withPratt and Whitney J75s engines (dry thrust 12, 350 lb, wet thrust 18,500 lb.. because the Iroquois had not yet finished its development. (Dry thrust 19250 lb, wet thrust 26,0-00 lb. So it's first lift off (not expected) was rather sluggish because it was not benefitting from the designed power. secondly, this was a radically new shape. It was a big airplane and the first designed as a supersonic interceptor northward from Canada's population area. Some one commented earlier as to why theF35 only had one engine and we have had two engine interceptors. The answer is in those thrust figures. The F35 engine is a P&W turbofan which probably pushes out somewhere around 80,000 pounds (I don't know the answer to that). An indication is that such engines in multiples of two (Boeing 757 and four Boeing 767 can fly many times the distance of an airframe with the old engines. This improvement in all up weight and distance is mainly due to the kind of turbofan engines that are used in firstline airplanes now.
            As for the Arrow and turns, it wasn't designed to act like a Spad or Spitfire. It's job was to go high and fast and be vectored onto a bomber target by ground radar with the aircraft radar taking over for the kill. I doubt if any turns would be tight. Either it would get shopt down or it was onto another target if it had fuel remaining. The who design was postulated on taking down a bomber with a nuclear warhead. That would be worth losing the fighter, if necessary (and the pilot and the radar navigator).

            Aircraft previous to the Arrow were for a different purpose in most cases. The exception was the CF-100 also built and designed by AV Roe. It was subsonic and not very mkanoeverable for the same reasons. Aircrews that I knew called it the "LedSled"

          • Have you ever heard of the Komet? Your description reminds me of that. I also think that experience in actual combat has shown that there is still a significant need for manuverability for interecptors, see the Phantom F-4 with air to air missles only.

          • I don't agree that forcing Lockheed to subcontract to Canadian firms is a distortion of the markets. Markets be damned.

            Your second sentence proves you have no actual support for your first.

      • It isn't a given that Canda should be in the aerospace industry, but it is a given that an advanced economy needs to be producing advanced things. Aerospace being one prime example.

        Unless Canada isn't an advanced economy. What advanced things are we doing, anyways? Nuclear? No. Developing our manufacturing? Less and less. Advanced value added to raw materials? Not none, but not as much as we should.

        • Actually, according to my MacLean's today, the US is about to becom, a third world country, or a good imitation of one!

        • Andrew is thinking like an economist, instead of someone in charge of running the country. Money is never the issue when it comes to defence. Capabiltiy is. In particular having industry that is capable of producing advanced weapons systems. Conflct is unpredictable. You need to be able to produce your own defence systems — cost be damned. Look at neutral Sweden. They produce advanced fighter aircraft of their own, as well as sophisticated missile systems, firearms and more. Why? They don't depend on anyone else for security. The reason Canada entered the consortium was to maintain capability in advanced weapons system engineering. End of story.

          • 'Money is never the issue when it comes to defence'? I'm hoping you're joking.

          • Sweden, always, is an interesting case. For a very long time they were a declared neutral. It was a conclusion of this declared neutrality that purchasing weapon systems from outside the country would go against that neutrality. Hence the build your own approach.

            In somewhat realted news. Sweden, in what might be a change from the policy of neutrality, has ended manditory military service. They have switched or are switching to a volunteer-based military.

      • The purpose is not industrial benefits. Its National Defence. But if you can have a more business-like deal, what is wrong with that? I repeat: the purpose is National Defence. .

  3. The answer to all of this though, Andrew, is open competition.

    First, the government should detail, clearly and publicly, what its requirements are for a replacement fighter jet. What are the expected missions, operational requirements, etc. This is something the government has yet do to very well:make the case for just what we need new jets for, and why.

    Second, you call for tenders and invite bids from qualified vendors that can meet the requirements. Ideally, you haven't tourqued the requirements to favour or exclude certain suppliers unfairly (see several past Conservative and Liberal defence tenders.) They all make their best bids, and you evaluate them on their merits.

    And here is a chance for the private sector to compete. Obviously, they may feel offering business for Canadian suppliers as part of the bid would be seen as attractive by the government, where it is set as a requirement in the tender or not. Another supplier might choose to not offer regional setasides. Maybe the latter will come in with a cheaper bid. But maybe not. I'd argue a smart bider would look for ways to absorb the extra cost of the setasides (if any, I don't concede there would be) elsewhere in the contract to put in a bid that is still just as competitive on bottom-line cost.

    The point is the government isn't opening competition to get the best cost, and it's not even securing any benefit for Canadian businesses (unlike I'd wager every other purchaser). It's a double-fail.

    • Talking about securing benefits for businesses is the wrong way to think about it; the only people whose interests matter are taxpayers.

      • So, how does this deal secure tax payer interests? Do you have a short list of values that are in the tax payer's interests?

      • If you're going to spend X anyways, why not buy as much of it as you can locally, if all else is equal? And if it's not equal, judge if the extra cost of buying local outweighs the benefits.

        • Are Canadian firms explicitly shut out of this project? That would be silly. But if they're not, I don't see why this is a question worth worrying about. If the Canadian firm is the lower-cost supplier, then the Canadian firm is the profitable choice.

          • Profitable for Lockheed Martin. Whom last time I checked only ran a small part of our census but not the whole government.

          • Exactly so. The unstated – and erroneous – premise of the original post is that $16 Billion is a price that's been set by normal market forces; that it is an efficient price arrived at through market competition. It's nothing of the sort.

          • And you would choose to use that as an argument to distort things further by insisting on making the production even more inefficient? Hello?

          • Hello.

            I'm not arguing for or against further distortions, I am arguing for accuracy in describing the situation as it actually exists. Coyne is making arguments about economic theory while ignoring political reality. The market for fighter jets is not an efficient market and wishing will not make it so.

            The Harper government – it seems to me – is trying to be more Catholic than the Pope. It reminds me of the sanctimonious behaviour of the Chretien government when they accepted those ridiculous Kyoto targets back in the early 90s. (Not that they ever intended to meet them). In both cases it's ideological posturing at the expense of our own self-interest.

          • That's all nice in abstract theory, Stephen. But tell me. Is everyone competing on this same level playing field? Is every contract being awarded by the vendor to every sub-contractor solely on the basis of business merit, and with no other considerations? Because if that's the case then fine, I'm confident our aerospace companies can compete with the best of them, and I say let them have at it.

            I suspect, though, that we don't live in that ideal world. I suspect that, when huge multinationals are selling jets in multi-billion dollar contracts, that sweeteners are inducements are being thrown in here and there that bend the traditional rules of free-market theory.

            Lockheed-Martin promised Israeli companies $4 billion in contracts and they've only agreed to buy 20 planes, and they weren't part of the original consortium. Our Canadian companies may be awesome, but they'll never have a chance to compete for that business. And that's just one deal. For just 20 planes.

            If everyone is going to play by one set of rules, and we're going to play by another, what exactly is the point of that?

          • Canada is reportedly getting $12 billion in reciprocal procurements. Meanwhile, Israel's reciprocal procurement ratio is unusually high at 150%, twice the Canadian ratio. Why are Israeli companies getting contracts that are disproportiate to Israel's military procurement? We don't know, because the information isn't publicly available.

            Let's review some possibilities:

            1. Perhaps market forces are at play, and Israel companies won contracts through business merit because they were the most competitive bidders.

            2. Perhaps the process is fair, but these Israeli companies are able to offer the lowest bids because they're subsidized by government. In that case, Coyne's argument about subsidies applies. Canada doesn't win by subsidizing domestic players just because other countries choose do so.

            3. Perhaps the process is unfair, and Israeli firms won a seemingly disproportionate ratio of contracts not because of economics but because of secret US Government machinations to divert business to Israel (or some similar conspiracy theory).

            I take it you think it's #2? Government sweeteners and subsidies?

          • Crit, you're being disingenuous. Of course the process is unfair, but it has nothing to do with any conspiracy.

            As I mentioned before, companies like Lockheed use these subcontracts as political bargaining chips. If Israeli firms won a disproportionate ratio of contracts, I'd bet it's because the Israelis sought "industry benefits" just like most other countries do and Lockheed provided them to ensure they got the contract.

            Needless to say, Israel would be in a better position to get those benefits if they had a competitive bid process for the aircraft in the first place.

          • I'm not being disingenuous in the slightest. As you mentioned, most countries seek "industry benefits" in the form of reciprocal procurements. Here's the real reason why Israel got such a sweetheart deal.

            Defense Ministry Director-General Udi Shani reportedly said that one of the considerations in approving the deal was an American offer of $4 billion in industrial offset contracts to Israeli defense industries. Their exact composition will be part of negotiations and future agreements with Lockheed Martin, who already has good relations with Israeli defense firms in a number of spheres. The entire deal will be funded by American military aid dollars, and still needs the Israeli cabinet's approval before a contract can be signed and announced.

            http://www.defenseindustrydaily.com/israel-plans-

            A significant portion of the Israeli contracts are for modifications to the jets that Israel is purchasing. Basically, the American taxpayers are paying to subsidize the Israeli defence industry. American taxpayers lose, Israeli industry wins, and Canadian taxpayers are completely indifferent to the whole thing.

          • If these contracts are for modifications to the jets and are funded by American military aid dollars, then we're no longer talking about the Lockheed subcontracts for which Canada could concievably seek concessions. These are a separate deal. It may have influenced the Israeli decision to go with this jet as opposed to a different jet, but it's not comparable to Canada's decision not seek "industry benefits".

            I took exception to your implication that an unfair procurement process is the result of "secret US Government machinations to divert business to Israel." It's simply in America's interests that Lockheed sells as many of these jets as possible, especially to close allies like Israel.

          • Canada is already getting $12 billion in reciprocal procurements. Just to be clear, you're arguing that this number should be higher, because the Canadian government should have "sought industry benefits", as other countries do, by lobbying aggressively for more Canadian subcontracts? Isn't this precisely the "enduring fallacy" that Coyne tries to debunk above?

          • For some reason I was under the impression that there were no reciprocal procurements.

            Either way, I haven't to this point argued that this number should be higher. I've argued that the market for these subcontracts will be hopelessly distorted whether we seek "industry benefits" or not, and that free market rules don't necessarily apply. I've also argued that lobbying isn't a form of subsidy as Coyne suggests.

            Now that you ask, I think it would be better for us to lobby aggressively to get these subcontracts, with the caveat that it shouldn't affect the price. Coyne's "debunking" falls flat because he assumes that free market principles apply in these cases (they don't), and that lobbying for Canadian subcontracts is a form of subsidy (it isn't).

          • Again, you're talking about a game in which aerospace firms are the only people who can win, and taxpayers can only lose.

            Mike Moffatt has a nice post on this. Those jets will be made with Canadian labour regardless of which firm does it. The only question is which technology will be used – and trade is just another form of technology.
            http://bit.ly/agoWlf

          • If everyone is going to play by one set of rules, and we're going to play by another, what exactly is the point of that?

            The eventual direction of that kind of moral shorthand is downward, not upward. We should try to do better.

          • If everyone else is wrong, and they're all busy distorting the market and costing their own taxpayers plenty, I don't see why we should imitate them.

        • I love watching Stephen Gordon educate Jeff Jedras about economics.

          Liberal talking point fail. In fact, it's a "double-fail", as Jeff might say.

          • So far this is a calm, rational argument between reasonable people. Please, let's not go into the usual nonsense.

          • Thanks, Peterborough Dave. I'll try to restrain myself from the enjoyment that comes from watching Andrew Coyne and notorious Conservative apologist Stephen Gordon debunk incoherent Liberal talking points about the F-35 contract.

          • notorious Conservative apologist Stephen Gordon…

            Um… Uh… Ah… Oh! It was a joke!

          • I don't think anyone on this thread (even me and I had 25 years of it) understands just how complex one of these fighters is. We do not have the industrial base any more to do more than make parts, and even those are extremely complex. If our industries get a parts contract along with it will come the knowhow and special tooling, specs for alloys et. If you did it the way several of you have suggested you would wind up with a two-wing Tiger Moth. (very efrfective as a trainer in 1940. Because that's about all the low-cost bidder in Canada could build. Get Real!
            Canada is about to have one of its astronauts appointed to be engineering chief and then chief of the international space station. And that's because we co-operated, we built what we could (Canadarm) in a joint project.

          • Always good to hear the perspective of a retired pilot.

            I think you're right that the F-35 detractors are being jaw-droppingly naive about the ability of Canadian firms to mount competitive bids for comparable aircraft.

            To put things in perspective, the F-35 program is a megaproject that required hundreds of billions of dollars in development costs, significant multinational cooperation and it has been in the works since the American JSF development contract was signed in 1996.

          • I don't think anyone is arguing that Canadian firms could mount competitive bids for the aircraft contract. Most of Coyne's article is about the ability of Canadian firms to mount competitive bids for subcontracts after Lockheed is awarded the contract.

          • We're buying just over 1% of the jets that will eventually be manufactured by this half-trillion dollar, two-decade program. We don't exactly have the clout to say: "We'll buy some of the aircraft, but only if the pilot's cup holder gets subcontracted to a firm in Windsor or Montreal."

            Meanwhile, the sole-source manufacturer, Lockheed Martin, has a competitive procurement process that is open to Canadian bidders.

          • So, has Lockheed Martin become an arm of the government? They use a competative bid structure for their subs, but aren't subject to the bid process themselves? What kind of margin are they getting for running the bid process? Do you have a comparable instance by which we can assess the cost of an in-house government supervised procurement program vs. a P3 procurement process where the outcome is a piece of infrastructure in the public interest?

            I will freely admitt that I would love to have clients that say, "Just send me a bill when your done." They'd get an excellent end-result, but I'd have difficult collecting in many instances. "You want how much?" followed by chest clutching, followed by falling to the gound, followed by 911.

          • I am not sure how many firms were in the main competitive process; it doesn't matter because most of them have merged into com pacts MacDopnnel-Douglas, Lockheed Martin. There are probably very few left in the USA even.

            The process for parts itself will be competitive for those made in CanadaThe subs have been doing this before. One company bif for the CF-18 tail contract and so on. We are no longer in the aircraft business – I don't rtegard Bomardier as a compact but an assedmbly of failed Canadian giants given to Quebec for a song. As I said before, de Havilland Canada, Canadair, Short etc.

          • Sorry, I forgot the obvious – Boeing which had a candidate in the finals.

          • They use a competative bid structure for their subs, but aren't subject to the bid process themselves?

            Here's what the Public Works Minister had to say about it:

            Public Works Minister Rona Ambrose said the government researched the possibilities extensively and determined that the F-35 was the only jet to match Canada's specific needs. She said the Canadian government's defence strategy, laid out two years ago, stipulates that Canada needs a next-generation fighter jet.

            Ambrose said since no other jets could work, there was no point to open bidding.

            "Competitions do not need to be held when there is only one product available that meets the requirements set by the client," Ambrose said. "Frankly, it would be dishonest. It would be a waste of time and a waste of resources."

          • Frustrating on so many levels.

          • How is that frustrating? There are currently two next generation jets, the F-35 and the F-22 but you can't buy the F-22. The Russians, Chinese and Indians are working of an alleged fifth-gen fighter but it won't be anywhere near the F-35.

          • You'll be both disappointed and pleased (more pleased, I suspect) that I haven't learned anything here yet…

          • I'm neither pleased nor disappointed. I'm somewhere between "bedazzled" and "bemused".

          • Crit, you were asked above to keep it civil. You even promised to try to restrain yourself…

          • Are you suggesting that bedazzlement and bemusement are inconsistent with self-restraint?

            Well, maybe you could make that case for bedazzlement…

    • Second, you call for tenders and invite bids from qualified vendors that can meet the requirements

      You make it sound like buying a jet plane is like buying a sofa. There are a small number of fighter plane vendors. You cannot invent an imaginary plane and then discover it does not exist. It make more sense to simply evaluate the options that exist from the various vendors.

      In particular, CR above has summarized my thoughts: "To put things in perspective, the F-35 program is a megaproject that required hundreds of billions of dollars in development costs, significant multinational cooperation and it has been in the works since the American JSF development contract was signed in 1996."

      You can't invent some kind of blueprint and then expect a vendor to magically pop out the plane of your desires. Development of this technology takes billions of dollars and many years.

      • Correct

  4. Andrew,

    You write your whole article to conclude that the Liberal's are contradicting themselves in there argument. This hardly addresses the contradiction of the Conservative government crying they are being fiscally responsible.

    • Andrew's very first sentence: "I'll leave to others, at least for the moment, whether the F-35 contract makes sense in military terms: that is, whether this is the best expenditure of scarce defence funds."

      Before you admonish Andrew for not addressing "the contradiction of the Conservative government crying they are being fiscally responsible", why not take the time to explain why you feel this decision is fiscally irresponsible?

      And just in case you were going to argue that we can't afford it right now, I'll point out that this is a long-term expenditure with payments spread out over the years, rather than a lump sum.

      • I'm sorry, that was a sarcastic comment from myself after my battle with Andrew the previous day. I read the article, I was being cheeky… sorry I wasn't clearer.

  5. Defence review first, procurement decisions after. Otherwise, it's totally irrational. But this government has abolished rationality, so, whatever.

    • Do you have some sort of inside Canadian Forces knowledge that isn't available to the rest of us? Why do you assume that this decision wasn't properly evaluated?

      • I am sure that DND and officers and engineers from Canada have had thier oar in all the way. Why? Because that is how it has been done ever since this cooperative process started 50 yeart ago when, with the demis of the Arrow, Canada and the RCAF realized that joint projects were the only way to go. BUT and a big but, the US take us alongb probabl;y as a favour. NORAD is one of the reasosn (we are trying to defend the same continent, we are both in NATO, our economies are intertwined. Notwithstanding, the US will use the majority of the 5000 fighters produced. The scraps of our aircaft industry of the 1950-60s (Canadair, DeHavilland, and some smaller ones) were virtually given to Bombardier by your Liberal government.

      • According to Alan Williams the former person in charge of this, it is only possible to evaluate it with a competitive bid process. I'm taking his word for this.

        • Defence needs must be defined first. Then a list of the things that the plane should do and the standards associated with these roles comes next. Then a competitive bidding process. The Harper Conservative government is just making it up as they go along, because they don't believe in rational government.

          • Nonsense. This was well underway when the libs were in the chair. I can only assume that DND and the RCAF (there it is) have known for ages what direction the West's strategy is moving and likke it or nopt we are part of the West.

            As much as I personally do not agree with Harper chumming with his evangelical fundamentalist friends, I don't believe he sits back with darts to determine what Canada's objectives are.

          • No White Paper and no Parliamentary debate = no long term strategic evaluation and thus no rationality.

          • They need a White Paper before any major purchase?

      • It reinforces his narrative. Everything must be blamed on Harper.

        • Harper is the Prime Minister. If the responsibility to govern the country doesn't sit well with him, he should get out of the way and let somebody who is willing to govern in a rational way take over – even within his own party.

          • Get out much? We have had a minority parliament since 2004. We don't live a dictatorship! Try taking your talking points to a Marxist Banana Republic Facebook Group. You may find your views compatible. Cheers.

          • "Cheers" – you drinking already ?

      • Because there was no defence Green Paper, no defence White Paper, no examination of the issues in Parliamentary committees including in the Senate, nothing whatsoever except a Harper Conservative government flying by the seat of its collective pants, so to speak. Do you have any evidence whatsoever to the contrary ? No, you don't.

        • Nonsense. You don't have such a review every time you turn around. there is always a plan in place LONG TERM. They are not going to trot out a new role just to please you. It is quite true that there are embellishments from time to time, for examp[le, when the Soviets as Soviet Empire bit the dust or when the dimensions of Islamiist terrorism were made evident at 254/11. We are still in NATO, still in NORAD, still concerned for our Arctic regions.

          • When is the last time we had a complete defence review including a White Paper ?

  6. A post at "Unambiguously Ambidextrous": http://unambig.com/f-35-video-of-govt-ministers-b

    "F-35: Video of Gov't ministers before Commons' national defence committee/Real reason for decision Update

    …The truth about the government's decision. At 11:00 industry minister Clement said that if Canada had not agreed this year to purchase the F-35 LM would have shut Canadian companies out of participating in much bidding for future contracts for the overall F-35 program. All about industrial benefits, made clear.

    Ministers made no case as to why we need specifically “next generation” (“fifth generation”), i.e., stealth, fighters. The only military argument made for the new fighter was that it is necessary for airspace control/defence–for which stealth is not necessary. No mention was made by either the government or opposition that the F-35's primary role is as a bomb truck. Otherwise almost all the the talk, from all parties, was about those industrial benefits.

    What a pathetic Commons. The F-35 may be the right fighter for our Air Force. But the government cannot explain why convincingly in military terms, only in potential economic advantages. The ministers kept referring to a supposed “statement of requirements” developed by the Air Force. Yet those requirements seem to boil down solely to that stealth. Without, to repeat, any clear indication from the government of why stealth is in fact essential.

    The ultimate silliness that points out the general ignorance involved in Canadian political discussions of defence: a Liberal M.P., Scott Simms, made it clear he thought stealth means invisibility to the naked eye. Help…"

    Much more at the post.

    Mark
    Ottawa

    • Yeah, that's the guy – Simms – pathetic.

      I wouldn't trust an MP of any party to understand, let alone contribute anything meaningful. A point: by 2015 if a fighter/bomber/high performance plane isn't stealth it won't be flying long.

    • Do you always pick up some thread from elsewhere ? Who cares? . Why is it any more acceptable than any other blog? And what I get from it is just common sense. He is saying, "If we are going to be a part of this we must get moving." After all, he is the Industry and Trade Minister. In other words a cabinet decision was required otherwise we would be out of it and that wouldn't bothered tyhe US too much. Don't have to pay attention to that nice little country to the North. We would be even less than another Mexico.

  7. Oh for gawd sakes Andrew, who gives a damn what you think.

    This is the aircraft our military says is the best one for its needs. When we as Canadians ask our pilots to go in harms way, we have a moral obligation to provide them with the best equipment we can get for them.

    We live in a crazy, unstable world. If you listen to the Greenie hysterics, over population, competition for resources, food, water and energy will bring great instabilties. If you read the newspapers, you know the whackjob that runs Iran, the nutters in North Korea, imperialist China, unstable islamic nations etc mean that you, me anyone has any idea of what will happen in the next twenty years, twenty years when we might need to deploy our Air Force.

    $16 billion over twenty years is a super bargain. In the same twenty years, Canadians will flush away about $40 billion dollars paying for the utterly useless CBC.

    I want the Air Force supported. CBC . . . needs to be killed off for the good of the country.

    • I want the Royal Canadian Air Farce back too.

      Damn that CBC.

      • Right on with that. So-called unification was a cultural clash, a management nightmare (Navy always appointed most senior officer to HQ committees so they would have the chair. Unfortunately the day of a separate service has long gone as is the concept of strategic bombing. It's ether air superieority or support fro ground and naval forces. Forget Mars and all that crap. Of course, there is always Transport, Search and Rescue. Even potentially some A/S but you don't do that with the kind of airplanes we are talking about. Andrew, I suggest you don't embarrass yourself further and go bnack to comment on, say, the US as a Third World country.

    • We're going to beat North Korea and China with those jets? They are a bargain!

    • Second best jets. The country that has the best and is dictating the price for thier castoffs won't give our pilots the best.

      • The most advance airplane for the next 20 years or so is hardly a cast off.

        What this board needs is a good spell checker or else a magnifioer for old eyes. Then I wouoldn't make so many typos.

    • In case you hadn't noticed (and it seems you hadn't) Andrew is not opposed to purchasing this aircraft. He makes that clear in his first paragraph. His argument was with the economic justification being given by the government. If, as you say, we badly need these new planes (and I agree that we do badly need new planes, and these well might be the ones we need) then the decision to purchase them should be made for exactly that reason. We need them. Period. Full stop. But the justification we're getting seems to have more to do with job creation and industry concerns than anything else. It is those more spurious justifications that are being addressed here. Because these same wobbly economic justifications get trotted out again and again and again, every time the government is involved in a big purchase or bailout or what have you.

  8. After hearing several MPs say the F-35 is the only plane that meets the requirements clearly laid out two years ago in the Canada First Defence document I looked up what that document has to say.

    Turns out it says we need 65 next generation fighters.

    It doesn't way why we need them rather than a 4th generation fighter, or why we need 65 of them exactly, but I trust there is a good reason.

    On the serious side, Lockheed wants to sell 2,000 F-35s to countries that weren't development partners (good luck with that). Israel, being the first such country to sign, was offered $4B worth of work. I'd say that's a pretty good signal that non-partner countries are going to be enticed to buy the F-35 through benefit guarantees. That would mean our companies aren't competing on a level playing field, and that would suck.

    • It does kinda seem we can howl about free market principles or manouevre for a bigger slice of the pie, doesn't it?

      Thoughtful article by Coyne aside, I know which I'd prefer from our elected officials.

  9. I'll readily concede to the the economists and economic-degreed folks hereabouts the argument over the hated economic offset game. I'll even admit that my rational brain agrees with them, because, at it's heart, the issue roughly is the same as government funding a for-profit arena in Quebec City (or anywhere, for that matter) — i.e., government distortions without which we'd all be better off.

    However, I must take issue with the reality of making a, what $9-16 billion purchase. Andrew wrote: "You can't have a competition for something that's only made by one firm. About this, he is wrong.

    You can. And, indeed, you must. It matters not one wit if, when planning a major purchase, that you know going in that only one of the prospective suppliers is capable of meeting the requirement. You structure the RFP to create competition. I've no doubt that government procurement rules make it more complex to structure such a competition. But I also have no doubt that a government that can ignore, it seems, any other legal obligation on a whim, can surely craft a solicitation to create competition. Indeed, I have no doubt our governments do it every day.

    Moreover, if I recall correctly, the government is saying they have yet to sign a definitive contract. Yet, they appear to have settled on a price. I cannot imagine a circumstance in which that is anything but fiscally insane.

    Regardless of the political spin offered, regardless of the true fiscal or military rationale for skipping a formal solicitation, skipping a competition for such a purchase is wrong. Wrong fiscally. Wrong economically. Wrong and damaging to the taxpayer.

    • A brief addendum… Why did this government skip the competition and announce a deal (with a price) that apparently has yet to be executed and , it seems, negotiated?

      Politics. They wanted a channel changer and rushed out a big announcement to burnish their bona fides. To hell with contracts and competition. Now, as so many issues, they are scurrying about offering up justifications after the fact. Initially weak and almost incoherent, their messaging improves with practice and time. So, today, we get Steamboat Tony finally looking almost convincing, some 5 weeks after the initial announcement.

      Fail.

    • Nonsense.

  10. The key to this enduring fallacy lies in those words “extra”, “additional.” The assumption is that productive resources are somehow called into existence by the government's willingness to spend money on something. But that's not the case. They are not created; they are diverted. The resources used to make parts for planes might have been used for other purposes.
    When did we achieve full employment — or m I missing something here?

  11. Canada needs credible presence in our airspace, on our lands, on and under ours seas in order to ensure our sovereignty. History demonstrates over and over again that if a nation does not have real and credible forces, they will lose some or all of their sovereignty.

    'Soft power' is a childish Liberal idea that has not worked anywhere in the world yet and doesn't look like it ever will.

    If we buy a second-rate fighter that few or no countries use it will prove to be far more expensive in the long run, and they won't provide a credible deterrent. Old Russian bombers, or any other platform, can carry brand new cruise missiles, and they are a credible threat.

    The US has provided the West with security for the past six decades, it now looks like they may not be willing or able to keep the peace anymore. Canada must be ready to defend its national interests.

    • Now there is someone who is wise and knowing which is a pleasure on this thread. I bow my head to your coomonsense, concise appraisal.

    • Michael Ignatieff visited Trinity College, Ireland in 2005 delivered a honest speech about American exceptionalism and the failures of Liberalism. He overlooked and made some factual mistakes about our peacekeeping role but his speech should be revisited and discussed. He was critical of the role of Canada and how we traded away our capabilities and chose to build a socialist welfare state instead of paying the bill and being a responsible international citizen. A Youtube clip is available the bottom of the post that covers his audio.Ignatieff admitted Liberalism failed in 2005 and Canada was trading on a bogus peacekeeping reputation.
      http://canadiansense.blogspot.com/2010/07/canadas

      Some in the military refer to the Liberals 1993- 2004 as the decade of darkness.

      • Yeah but that twit would have sent us to Iraq.

        • We were in Iraq. We were fourth in deployment enabling the US. Do you think JT2 were scouting fishing spots? Those ships on patrol? This is public information.

          Conservatives in opposition were correct in labeling Liberals as hypocrites for speaking on both sides of the Iraq war. Our media spun it for the home team. Feel free to Google the ships, support of military for Iraq war.

          • okay, would have considerably upped our insignificant physical contribution and altered our sensible policy to a foolish one.

            Happy?

          • No, Pakistan (rogue states) was (remains) a problem and the world has dropped the ball. Our herbivore loving media and opposition have destroyed the political will to combat global terrorism.

            Are you happy?

  12. We might generally desire to maximize our productivity by ensuring that investment and labour is directed towards those efforts that we are most suited for. That said, a productive economy is not our only national interest. I would argue that, in this specific instance, another issue is even more important. There are certain capabilities that are of the utmost importance for a nation. The ability to defend ourselves is one of those capabilities. If we rely entirely on foreign suppliers for military hardware then our access to those supplies will have caveats attached to it. I think it would be a mistake to rely on the whims of other nations for our ability to arm our military.

    There are simply certain industries that are so valuable that having some control over them is more important than the cost of the hit to productivity that results from subsidizing them.

  13. When you guys are through playing with the figures, the fantasies of being 'fighter pilots', the various philosophies, and all the ridiculous scenarios in a global world….toss out the Cold War planes and buy search and rescue ones instead.

    You know….something useful.

    • Too bad the Liberals wouldn't even do that while in power…

      • Your response to a new world order is to drag local partisan politics into it???

        • A new world order??? Really? We're buying some new fighter jets. Get over it.

          • No, we aren't buying new fighter jets….that's the point.

            The world has changed and the 'fighter jets' are useless

          • I used to teach swimming lessons to a kid from Kosovo who would disagree loudly with you.

          • That's nice. Do you have anything relevant to say? About Canada?

          • The Canadian Air Force deployed a total of 18 CF-18s, enabling them to be responsible for 10% of all bombs dropped in the operation. The fighters were armed with both guided and unguided "dumb" munitions, including the Paveway series of laser-guided bombs.

            The YEAR was 1999.

            http://canadiansense.blogspot.com/2010/07/herbivo

          • Yes, last century. Pre-911.

            In this century, we are dealing with insurgencies, quagmires, working and trading with Russia and China, and a melting Arctic.

            Whole different ballgame.

          • As the resident Liberal apologist you and Holly need new material. Try a new moniker. The socialist dogma is just pathetic, please find a cave and wear you hemp clothing, grow your crop in your collective. Best of luck. Give Castro a call for the new Coles notes on socialism.

            REALITY
            A North Korean submarine's torpedo sank a South Korean navy ship on 26 March causing the deaths of 46 sailors, an international report has found. http://www.bbc.co.uk/news/10129703

            Thankfully Herbivores such as you don't decide how to best equip our military. You may have NO problem with ignoring Genocide, rogue states and calling our PM a dictator.

            Thankfully I don't live in your fantasy world and suggest our democracy is in danger because a Census employee can't threaten me for refusing to fill out the long form.

          • Sorry I'm not a Liberal….and I loathe the leftwing as much as I loathe the right wing.

            The rightwing wants us to live in a church, and the leftwing wants us to live in a cave. I have no intention of doing either.

            I understand why you guys see so many lefties in the world now though. It's apparently anyone who disagrees with you…..which is 99.99 % of the population.

            I oppose buying fighter jets we don't need, and suddenly I'm a vegetarian who wants to live in a collective and smoke pot??? Get real.

            No we aren't going to war with pathetic little N Korea. I've opposed all the genocide we have indulged in….and I personally call our PM a dictator.

            Your world is over. Live with it.

          • Sorry, I've never used drugs.

            Love the tune though, even tho it's from the last century. LOL

            Kim Jong-il will be dead shortly.

            Maybe you should change your name to AmericanSense….constantly poking tiny countries with a sharp stick, and then screaming bloody murder when they hit back is an American trait.

          • Give Mullet, Holly and Atwood a call perhaps you can go on a tour together with your socialist revival show to stop those scary Conservatives from spreading their message of less government and more personal responsibility.

            You should start with Cuba, they have recently fallen of the socialist bandwagon. Give George Soros a call he has many Global outreach organizations that might have an opening. (Just don't rent a car in Cuba)

            Or you can try your luck in the US. November appears to be a big date for Democrats.

          • Focus dude….not everyone who disagrees with you is a socialist.

            Libertarians are rightwing hippies…and just as stupid as the leftwing ones were.

            Get over yourself.

          • everyone = 3 internet aliases + one author

            Dick Pound is on line one for a blood test.

            I am going back to the dutchie theory.

            Have D.P. forward the test results.

          • The world has changed and the 'fighter jets' are useless

            I'll take the air force's assessment of that over yours. Not that I don't appreciate your obvious expertise and infallible judgement in every conceivable subject.

          • The air force wants equipment….did you ever know a time when it didn't?

            Toys for the boys.

            Doesn't matter if they're either needed or useful.

            Except to the taxpayer of course.

          • Are those test results back from D.P?

          • Emily, don't be such a pain in the butt.You don't know anything about this subject except your b,leats about Harper and your fixation that you are personally ushering in a world where the lion lies down with the lambs. And everything isn't 9/11.
            My wife is like you. Wouldn't it be wonderful if people would just be friends. While I appreciate her hopes, she knows as well as I do that the nature of human nature doesn't allow for that.

  14. One question: who is going to attack us if we don't have these fighter jets (or if we opt for less expensive jet)?

    • One question: who's going to shoot you if we get rid of the gun registry?

    • ,,,, My question.

      Can you guarantee me that noone will? If you can, then there is no need to buy the jets… if you can't guarantee me 100% that we will be safe, then you must agree that we need some method of defense.

      Can you define what is a less expensive jet? Or are you just arguing against this one because the tories are involves?

      • There is an infinitesimal chance that a rogue Intercontinental Ballistic Nuclear Missile lands on your house.

        Make sure you buy an american bunker, I hear they are cheaper in the US.

      • Nope I can't guarantee you that 100% just like you can't guarantee me 100% that no one will attack us WITH these jets. Since neither of us can offer metaphysical certainty perhaps we would be better off judging what is LIKELY To happen. Let's entertain some follow-up questions…

        1. Which countries – if any – are LIKELY to attack Canada?
        2. HOW likely is this to happen?
        3. If this were to happen how likely is it they would do so using weapons that these fighter could defend against?
        4. What would the United States do if another country were to attack Canada? How might this U.S. response affect the likelihood of any such attack?
        5. Which state or states – or non-state actors – is Canada likely to attack with these jets?
        5. How much of this debate has to do with Peter MacKay not being embarrassed when he meets other Defence Ministers?

        Why don't we just buy more CF-18s since this is largely symbolic anyway? The price must have come down by now :P

        • Very true. These purchases enable us to live up to our committments with our allies. They are not strictly speaking for the defence of our territory.

          This reminds me of the Boxing Day tsunami, when we had to rent airplanes from some other country to bring in aid, something the Conservatives claimed we should be 'ashamed of being Canadians' for doing. Are economics the only consideration to be given to the maintenance contracts? We can't build these planes, and for the sake of economics we should not be concerned whether we can or cannot maintain them either? We would have to rely on our allies to maintain our planes – so let's hope no 'tsunami' occurs cause if our forces are grounded because we don't have the capacity to maintain our planes someome will claim that we should be ashamed of being Canadians for letting this happen.

          • Let's hope that while the planes are off helping our allies we don't need anyone to protect our northern area, because apparently that icebreaker that Mulroney then Harper promised ain't a-comin', neither.

  15. Hi Andrew, you are alllllll over the map my son.

    Cheerio.

  16. The F-35 is probably the right fighter, but we'll never be completely sure as the decision abrogates any international competition. The contract for this purchase will not be signed for another three years; there is no reason at this time to preclude an international competition. There are two difficulties here – first the purchase did not go through the rigorous procurement process of identifying requirements, putting weighted values to them, then comparing the ability of all possible fighters on the market to meet those requirements. Second, this early announcement will give Lockheed Martin a significant advantage when it comes time to negotiate the final purchase and the support package; long experience tells us that they will use that advantage to the detriment of taxpayers. The Canadian Forces are now a captive market and they will surely pay more as a result. An international competition would have given more certainty to this decision and could have resulted in significant savings. I am a strong supporter of the need to equip our military with the best equipment. The approach to procurement in this instance does not give the best bang for the buck for the Canadian Forces; further, it will cost the taxpayer more money.

  17. "the only reason they would not do so willingly is if the Canadian firms were not the most cost-effective option;"

    From an American perspective, it's entirely possible that the only reason a Canadian option would not be the most cost-effective option would be shipping costs. A situation applicable from our perspective as well. The labour and materials in the USA are more expensive not to mention taxes and real estate as well so its safe to assume that it would cheaper to add a clause in the purchasing contract that replacement parts are manufactured in Canada under licence. This clause would encourage the Canadian Aerospace industry WITHOUT the use of a subsidy and would turn out to be cheaper for us.

    You've been very selective in your analysis. I guess you wouldn't have much of article to write otherwise.

  18. Quick question: if the big issues are, in no particular order:a)world class plane, b)stealth, c) cost, and d) twin-engine, isn't the russian Sukhoi PAK better than the F35 on at least 2 of those counts?

    I mean, it's fairly clear that the Sukhoi PAK is much better suited to Canada's needs, if only that it is twin-engined and much cheaper. It isn't quite ready yet, but why not consider it part of the conversation?

    • Considering how closely allied we are to the Americans, would the Russians sell them to us even if we were interested?

      • I dunno, that's a totally fair point, but apparently they need the money and hope to sell to France, Germany, and Japan.

  19. Liberalism in Canada is being rewritten by many apologists for the Liberal Party but the facts remain without the Conservative actions and response to prioritize the military, humanitarian spending Canada would have remained the butt of jokes on the international scene.
    http://canadiansense.blogspot.com/2010/07/canadas

    • I'm not sure what to make of the blog. The fact you have pictures of dear leader plastered all over the page probably tells me you are not at all objective. Carry on with the propaganda!

        • Well, I would rather a decade of darkness than a bankrupt country.

          But I am confused by what you are trying to say, should you not be applauding Ignatieff for this and should this not give you hope that the Liberal Party under Mr. Ignatieff would feed the Military Industrial Complex that you think makes us safer?

          • If you can get the rhetoric you are stating of the MIC, bankrupt country (Canada) you might have discovered I applauded Ignatieff in 2005. He made some errors regarding our contributions towards peacekeeping.

            Do you confuse strategic lift, new equipment with colonial empire building?

            Paul Martin stepped up late 2005 for election purposes with some money for the military, and the CPC did not cut the planned spending.

            Conservatives, pragmatic people understand you don't turn to herbivores to enforce peace or stop genocide with rescue planes and coast guard ships. As I noted earlier with General Hillier comments about the decade of darkness, our military is no longer the laughing stock. Talk to people serving in the military if things have improved.

            Equipment needs to be replaced and priorities have been made public. The F35 will be replacing the CF18 at the end of their useful life.

            The Liberals blew it with the Sea Kings and taxpayers paid out $ 500 million in penalties. I have zero interest in playing political games with lives of the military over a plan adopted in 1996-1997 by the Liberals.

            We were able to respond to Haiti earthquake within 24 hours. The mismanagement under the Liberals required we skipped Indonesia for Sri Lanka and rented a Russian plane to send our D.A.R.T.

            The blog post includes the "air taxis" purchased to fly cadets and VIP by the Liberals.

            The Liberals and CPC take turns in running government. The disconnect is attacking every single issue as wrong and having 30 MPs skip the vote against it. Does anyone believe the Liberals line in the sand?

            Is the Liberal Party reduced to a shell? Bereft of policies for slogans, gimmicks or props now?

  20. Now I may have missed something but I was under the impression that it was the Bloc and NDP who were hung up on the domestic content quota's not so much the Liberals.

  21. Not knowing a lot of technical detail about this particular purchase, or frankly about defense contracts in general, I revert to the principles with which I was raised:

    1. When you're about to make big purchases, you comparison shop and don't let sales people pressure you into making a decision that's bad for your own bottom line.

    2. You have to evaluate what you need first and prioritize, and not purchase things out of order; to do so would be to preclude yourself from performing optimally given situations of need.

    3. You don't claim to have 'run out of money' for things which you prioritize and then spend copious amounts of money on things that you haven't declared as priorities. That's silly.

    To my mind, this purchase fails all three – first, it didn't really comparison shop to find the best fighter to meet its needs; second, there are lots of things this $16B could have been spent on first, such as supply ships (if we're going to keep it in the defense boat) or designing a fix for our health care system (which is about to get bloody expensive if we don't do something about it); third, that we're in a structural deficit position, and spending billions of dollars on something that was never raised as a top priority.

  22. Last I checked there WERE options out there in the Lockheed/Boeing F-22 Raptor, the Boeing Super-Hornet, The Eurofighter Typhoon and the Dassault Rafale. Perhaps the F-35 is the best plane for the job but stating it is the only plane out there is a crock.

  23. Here is where Economics 101 runs afoul of reality: "The only reason to require a contractor to source from Canadian firms is if they would not do so willingly; the only reason they would not do so willingly is if the Canadian firms were not the most cost-effective option…".
    All these foreign companies recieve huge subsidies and other non-written quid pro quos from their own governments and this creates the (often unwritten) requirement that they grease hands in their country (USA included). So when Dudly DoRight canadians say "just choose the most cost-effective bid" you can be sure that these foreign companies will take the bids of those in their own country so that they can satisfy their own political masters.

  24. What I don't understand is why our Australian cousins seem to think that a purchase of between 75-100 F-35s represents the 'bare minimum' number of jets (enough to form three operational squadrons)? If they think 75 is the bare minimum, why is it that the Government of Canada thinks it can manage with only 65 jets?

    On a related note, how do our Australian cousins always manage to 'out-do' us in the defence department when they only have 2/3 of our population? Where are they getting their defence funding from?

    • The Liberals always tried to skinny on defence expenditures, that's why. War is bad so we won't take part in it, until the boom is lowered (as in 1939 and 1950). In other words, until there is no option. Viet nam was a stupid war and we quite rightly took no part in it (except informally contributing about 50000 men, a number of dead in proportion to the USD, and we received into our bosom about the same number of young Americans who didn't want to go.Iraq? Whether Chretien smelled a rat or didn't want to get entangled in Bush/Cheny game, it is to his everlasting credit that he didn't fall for it as there was nothing antiterrorist about it. Afghanistan? Should have bowed out there but I guess we would have been mnore pariahs for not taking part. I still feel strongly that we never should have been there.

      But Australia is another thing. It obviously felt it's essential interests were involved in Korea, Viet Nam, but Iraq????

      • I know you love to slam "liberals" and everything, but could you maybe at least attempt a little balance?

        I believe the leading question was: "If they think 75 is the bare minimum, why is it that the Government of Canada thinks it can manage with only 65 jets?"

        So that would be the current government, which it occurs to me might be Conservative, though that's hard to confirm given their penchant for spending gobs of money.

        If you accept the premise that Australia "out does" us, then you have to also accept that in the last thirty years, 13 of those years in Canada were under Conservative management and not under Liberal control.

  25. A couple points:

    1) Only DND can determine the needs of the military, but in order for me to believe those needs were fairly assessed, I want to see the methodology employed to determine that, and I want to see a paper released detailing it, so that experts can weight in and tell us whether everything is above board.

    Governments don't get the benefit of the doubt from me anymore.

    Following this, only an open competition based on those needs can ensure we get good value for money, and I want a transparent process so that the public can see that the process hasn't been manipulated.

    2) The CPC says that getting involved in the design process was an investment that paid dividends for the aerospace industry, but did it pay off for the public in general?

    I ask, because it was the Canadian people that supplied the investment money, so I certainly hope the Canadian people got out enough out of it to justify the opportunity cost. Company profits that benefit a small subset of the public doesn't count.

    I don't think either of these points has been dealt with satisfactorily.

  26. Additional caveat: If Arctic sovereignty protection cannot be well fulfilled by the F-35 (as some who claim to know are claiming) then we may yet need another item on our shopping list.

    But it is nice to see a discussion about the federal government's role in carrying out one of its most important constitutionally-mandated responsibilities (national defence).

    • As I understand this, in my imperfect understanding, protecting arctic sovereignty is best served by a twin-engine fighter (if one engine freezes up, the other one can get the jet back to base).

      The Eurofighter Typhoon is a twin-engine. The Grippen is also comparable.

      I think we should be buying 20 fewer F-35s (for now), and approximately 30 Typhoons.

      That's my one criticism of the Conservative deal.

      • I recall there were criticisms that they didn't order enough of the F-35s. At the time, I thought to myself: if that's true, maybe that's good, because they are keeping resources off the table to acquire equipment better suited for other roles. Like Arctic defence, since there were also criticisms that the F-35s would be very poor in that setting.

        You are estimating this purchase is too much for now. You may be right. Or maybe Ottawa anticipates air combat in non-Arctic regions as a more likely imminent scenario?

  27. I'd be curious to see the head to head competition between the Eurofighter and the F-22. I always the thought the F-22 for far beyond anything else currently in use.

    • They don't take video of such things, unfortunately.

  28. You want to see, Phil? DND has been responding to that for 50 years witn Department of Supply and Services acting as your advocate (and delayers) . The Auditor General Branch also has a role in making sure the processes are efficient and effective. Have you heard from her lately? . Perhaps if you trained to be one or the other you might get such a jobs and then be part of the process. In the meantime you will have to be like the rest of us taxpayers. In other words, trust a little that someone is on the job who understands the complexities. We are not buying gravel for a county highway, you know.

  29. "…this government has not previously shown much aversion to pork-barrelling."

    That just about says it all, doesn't it?

  30. Did I miss it when someone commented on this week's issue of "The Economist" and their article on Canada's F-35 dilemma? Interesting perspective.

    Pat

  31. Come on Coyne. You need a better argument than that. How many Canadian Jobs will the jet purchase bring.

    Money spent on getting Canadian jobs is far more important these days, or do you not care if Canadians work, but if the Russians are coming, coming, coming, then many will agree with you.

  32. boys toys!!!

  33. Come on Coyne. You need a better argument than that. How many Canadian Jobs will the jet purchase bring.

    Better that our Government stop accepting bribes from the Americans, rather than purchasing what they want.

  34. Not sure how this has turned into an economic/jobs argument. Surely more effective ways to employ Canadians with our tax dollars than this. But about this "defense of sovereignty" thing. Who exactly are we "defending" against and why do we all-of-a-sudden need to spend 9 billion to do so? It seems that if we are purchasing this particular type of aircraft because the US and other NATO allies are- going to Afghanistan only because we weren't part of the "coalition of the willing" and are now waiting for the US to establish their environmental/energy policy first so we know what ours will look like then we really don't have much "sovereignty" left to defend.
    By all means buy more search and rescue planes and heavy life helicopters for aid to disaster hit areas but please leave the US style politics of fear far away from this discussion.

  35. The F-35 ,altho pricey, is a better option than the suggestion by Peter Worthington of Sun Media, who stated that Harper should be building battleships instead. Can you imagine the cost of a battleship ? You would first of all need a shipyard. Then you would need a 1000 plus peoplle to man it. And if you would go to battle with a landlocked country ,like Afghanistan, you may as well stay home.

    • A Battleship?No but an Aircraft carrier ,yes.But given how people are reacting to the thought of 65 advanced stealth fighter jets, id shelve that idea for a long time.

  36. Alas and alack! From a country that had the world's 3rd largest navy/army, and air force and envy of the world class aerospace and shipbuilding capabilities in 1945,Canada is now relegated to the sad rank of not as well equipped as Israel to enforce our own sovereignty.If we believe that our Defence department has excercized its' due diligence in picking the F-35 as the best successor to our 35 year old F-18's, then we should allow their judgement to stand and quit listening to left-wing politicians and media hacks who wear rainbow underwear. If Diefenbaker had not crippled our military many years ago, and if we were not saddled with Bob Rae /Michael Ignatieff socialists perhaps this discussion would be moot and Canada would simply build and maintain our own superior equipment and not depend on foreign design or manufacture with our involvement limited to outsourced maintenance. An old sports adage is "The best defence is a great offence". Iggy ,Jack and Rae/May need to remember that and quit trolling for votes amid the tree-hugger/peaceniks.I deliberately omit Duceppe and his party since they are hardly concerned with Canadian sovereignty,only Quebec's.
    And for those who foolishly ignore the Russians, don,t ever think for one second that their recon/intrusion flights or submarine incursions are simply innocent navigational oversights, they are constantly testing and training against our capability and response for a much deeper purpose.Like the Boy Scouts motto says"Be Prepared"

  37. Promising, gutsy policy move; great commentary essay Mr.Coyne.

    Defence procurement as industrial strategy is bad policy. Assigning multiple socio-economic mandates to policy decisions that affect security is only asking for trouble.

  38. Nice article however I believe that a very important consideration is being missed. For that amount of money and with the purpose of helping us define our sovereignty over the Arctic – are there better ways to spend money and make jobs.

    I would put forward that we could spend the money building a road/rail/pipeline corridor up into the NWT. This would make many more jobs than the jets 'might' provide us, it would go much further towards our sovereignty goals, it would open up the NWT for cheaper exploration of minerals and oil/gas, it would make many jobs for the people living in the Northern areas etc. etc.

    I know the F35's are good jets – but from reading the news I don't really see anybody using jets like the F35 for any purpose that requires that level of technology. We can out fly the Taliban with a Cessna from what I am reading.

  39. The F35 has numerous advantages over its cheaper counterparts.When researched its very difficult if not impossible to find ANY criticism of the the Russian,Indian or Chinese versions of fighters comparable to the F35.I find that hard to believe.Stealth tech cannot be underestimated.After all you cant hit what you cant see,physical or otherwise.

    The F35 can be modified.Extended fuel tanks can be added,air to air superiority weapons,and plug and play software.The Russian version offers "artificial intelligence" at 100 million each.Really?I didnt notice that that Russian software surpassed us AND is cheaper than ours.Its more like they hack and steal our tech then call it their own.Seriously just where does anyone expect to buy a hightech fighter aircraft?Come foward and throw your hat into the ring.

    In conclusion ive made my choice to back the F35 JSF and its purchase for this country called Canada.Ive patiently waited for this liberal "soft " power to work and it hasnt.This world is not a Kumbaya world unfortunately ,i wish it was.We are the second largest country on the planet.We can afford 65 F35s.

  40. "I remain to be persuaded either way…But if the F-35 is so far superior to other planes as the government maintains, and if the benefits in defence terms are worth the extra dollars, then I think the contract can be defended, notwithstanding the absence of competitive bidders. You can't have a competition for something that's only made by one firm."

    Well, for someone who remains to be persuaded, you sure do seem to have made up your mind. You throw in the "ifs" and the "notwithstanding" as though they are trivial, when in fact, they are very much to the point of the criticisms of the decision to buy these particular planes.

    Other companies do indeed make planes, and therefore one can't dismiss the idea of a competition in quite the cavalier manner that you have. Indeed, HAD the government sought additional bids from other manufacturers, the price from this particular manufacturer might have been billions less. Instead, the manufacturers of the F-35 could write their own ticket (and paychecque) knowing that there were no other bidders. ARE these planes superior to others? I guess we'll never know, now. In short, even if the contracts that we're now stuck with are defensible, the process by which we arrived at them is most definitely not.

    A final point: In your last paragraph, you take a slap at the Liberals for presenting two opposing arguments against this expenditure, and I say…who cares?? The Conservatives didn't consult anyone before making this huge decision. It's all theirs, planes, contracts, price tag and all.

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