What was the PM talking about?

What did Stephen Harper mean when he talked about "ripping up those contracts?"

After his exchange with Bob Rae this afternoon, Stephen Harper had this exchange with Thomas Mulcair (who made a rare foray beyond the leaders’ questions).

Thomas Mulcair: Mr. Speaker, the Prime Minister keeps repeating that no money has been spent on acquisition, but of course, several hundred million dollars has been spent on the F-35 fiasco. It is as if it was not real money because the product does not exist yet. The reason that it is such a fiasco is because they never defined Canada’s needs, they never went to public tender, so there is a basic question of public management involved. Are they going to go to public tender and give it to the lowest conforming bidder, yes or no?

Stephen Harper: Mr. Speaker, as I have said repeatedly, the government is following a seven-step process to ensure that Canada will have new fighter aircraft when the air force will need those aircraft. In the meantime, for some years, in fact even under the preceding government, Canada has been involved in the development of new fighter aircraft. Canadian companies, based actually in his city, have hundreds of millions of dollars of contracts for that work, and the government has no intention of ripping up those contracts. If he does, he can go explain that to the workers in Montreal.

What did Mr. Harper mean by “ripping up those contracts?” As a result of Canada’s participation in the Joint Strike Fighter program, Canadian companies were able to bid on and acquire contracts related to the F-35. Was Mr. Harper suggesting those contracts would be declared null and void if Canada pulled out of the program and decided not to buy the F-35? Was the Prime Minister indicated some kind of commitment to the F-35?

I asked the Prime Minister’s Office for an explanation: What did the Prime Minister mean when he referred to “ripping up those contracts?” Here was the response.

The government is committed to completing the seven point plan and moving forward with a comprehensive, transparent approach to replacing Canada’s aging CF-18 aircraft. The Seven Point Plan includes a review of options that will not be constrained by the Statement of Requirements.

The 2006 Memorandum of Understanding states that continued access to industrial opportunities is contingent upon the Government of Canada remaining a partner in the Program and procuring the Joint Strike Fighter aircraft. As such, the continued availability of industrial opportunities to companies in Canada is subject to Canada remaining a partner in the JSF Program and acquiring the F-35. Canada will not end Canadian industrial access to these contracts before the Seven Point Plan is complete and a decision has been made.

For the sake of clarity, I specified: Would existing contracts be ripped up if Canada decided to not buy the F-35? Here was the response.

Canada will not end Canadian industrial access to these contracts before the Seven Point Plan is complete and a decision has been made.

Colin Horgan, who has been following the F-35 file closely, tries to explain.

With his remark about “ripping up those contracts” to Mulcair Monday, Harper suggested that by pulling out of the JSF MoU, current contracts that Canadian companies have would somehow disappear. That’s not necessarily the case. What Ross said in 2010, and what the MoU outlines, is that those contracts might not be renewed if Canada was no longer part of the program. It does not mean they would be terminated immediately.

Rather, it likely would depend on what terms those companies had agreed to with Lockheed Martin, the F-35’s manufacturer. In some cases, Lockheed might even be hard-pressed to find a company elsewhere who could complete the same work (after all, one assumes that’s why the Canadian company won whatever contract it has in the first place), so ending such a relationship altogether might add further delays to the project, and might not be in Lockheed’s best interest.

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