OTTAWA - Defence Minister Peter MacKay says last week's auditor general report will force the military to recalculate the costs of tens of billions of dollars worth of planned equipment purchases.
MacKay says routine, lifetime operating costs — everything from salaries and fuel to shoe laces and boot leather — will have to be factored into the projections for new programs.
In his criticism of the F-35 stealth fighter program, auditor general Michael Ferguson took the Defence Department to task for not including $10 billion in continuing operating expenses.
Those operating costs, separate from the maintenance bills on military hardware, include such things as the salaries of pilots and the fuel that goes into the planes.
MacKay has said including those expenses is something the Defence Department has never done, but it will comply with the instructions.
"If this is the way the auditor general wishes us to present program costs in the future, to include those salaries and fuels and fixed costs, we'll do so," he said in Halifax on Tuesday.
"And that's part of the, I guess, lesson learned."
That means coming programs, such warship construction under the $33-billion National Shipbuilding Strategy, will have to be re-costed to include the salaries of sailors and other routine items.
"We did not calculate it with a view to including the salaries of military personnel, or fuel, or oil," he said, referring to shipbuilding program announced with fanfare last fall.
MacKay seemed exasperated at the thought of such an accounting exercise.
"If you went out ... and bought yourself a new minivan and you wanted to drive it off the lot ... you wouldn't calculate the gas, the washer fluid the oil and give yourself a salary to drive it for the next 15 or 20 years."
The Conservatives have a shopping list of ships, planes and armoured vehicles either on order or in the planning stages as part of their often-hyped Canada First Defence Strategy.
When it was announced in 2008, officials estimated the strategy would cost as much as $490 billion, most of it on new hardware and sustainment, over several decades.
Ferguson's report accused the air force of keeping decision-makers in the dark about the short-comings of the F-35 project and essentially rigging the process in order to get the stealth fighter.
The defence industry levelled a similar accusation a few years ago when the Defence Department was shopping for a new search-and-rescue planes. In that instance, MacKay called for an outside assessment in the form of National Research Council report.
He ducked a question Tuesday about whether such practices indicate a systemic problem with air force procurement.
A series of briefing notes for MacKay show senior defence officials have paid a lot of attention over the last few years to the turmoil and lessons Australia has learned in the way it buys military equipment.
The Australian Defence Organization, a procurement agency separate from that country's defence ministry, was trashed a few years ago by their auditor general for the way warship construction was handled.
The appointment of Julian Fantino as associate defence minister last year was seen by some in military circles as a step toward setting up a completely separate procurement branch.
But MacKay said Tuesday that such a decision belonged on the prime minister's desk.
Asked why he seemed more willing to defend the F-35 purchase than some of his cabinet colleagues, MacKay replied: "I'm just an optimistic guy."
The opposition parties have called on him to resign or be fired.
FIIn this file photo taken on July 14, 2011 and released by U.S. Air Force, a USAF F-35 Lightning II joint strike fighter (JSF) aircraft soars over Destin, Fla., before landing at its new home at Eglin Air Force Base. Japan selected the Lockheed Martin F-35 stealth fighter Tuesday, Dec. 20, 2011, to replace aging jets in its air force and bolster its defense capability amid regional uncertainty. (AP Photo/U.S. Air Force, Staff Sgt. Joely Santiago)
A F-35 Lightning II sits on stage during the United Kingdom F-35 Lightning II delivery ceremony on July 19, 2012 at Lockheed Martin Corporation in Fort Worth, Texas. The ceremony marked the first international delivery of an F-35 Joint Strike Fighter to a partner nation. (Photo by Tom Pennington/Getty Images)
(Photo by Brendan Smialowski/Getty Images)
Plane models stand outside the Lockheed Martin Corporation during the United Kingdom F-35 Lightning II Delivery Ceremony on July 19, 2012 in Fort Worth, Texas. The ceremony marked the first international delivery of an F-35 Joint Strike Fighter to a partner nation. (Photo by Tom Pennington/Getty Images)
The F-35 Joint Strike Fighter jet sits in front the entrance of the Asian Aerospace 2004 show in Singapore 24 February 2004. The Asia Pacific offers one of the world's strongest prospects for defence-related spending, US aerospace giant Lockheed Martin said Tuesday as it expressed confidence in remaining a major supplier to the region's governments (AFP PHOTO/ROSLAN RAHMAN)
(AFP PHOTO/CARL DE SOUZA)
A Lockheed Martin's F-35 Lighning II fighter jet sits on the tarmac for static display at the Singapore Airshow in Singapore on February 12, 2012. Boeing's much-delayed 787 Dreamliner is set to star at the Singapore Airshow this week where companies touting private jets and defence hardware to the Asian market will also be out in force. (ROSLAN RAHMAN/AFP/Getty Images)
(ROSLAN RAHMAN/AFP/Getty Images)
On Feb. 16, 2012, the first external weapons test mission was flown by an F-35A conventional takeoff and landing (CTOL) aircraft at Edwards Air Force Base, Calif. The F-35A is designed to carry up to 18000 pounds on 10 weapon stations featuring four weapon stations inside two weapon bays, for maximum stealth capability, and an additional three weapon stations on each wing.
IN AIR, NAVAL AIR STATION PATUXENT RIVER, MD - FEBRUARY 11: (EDITORS NOTE: Image has been received by U.S. Military prior to transmission) In this image released by the U.S. Navy courtesy of Lockheed Martin, the U.S. Navy variant of the F-35 Joint Strike Fighter, the F-35C, conducts a test flight February 11, 2011 over the Chesapeake Bay. Lt. Cmdr. Eric 'Magic' Buus flew the F-35C for two hours, checking instruments that will measure structural loads on the airframe during flight maneuvers. The F-35C is distinct from the F-35A and F-35B variants with larger wing surfaces and reinforced landing gear for greater control when operating in the demanding carrier take-off and landing environment. (Photo by U.S. Navy photo courtesy Lockheed Martin via Getty Images)
Courtesy: NAVAIR/JSF Program/Lockheed Martin
Highlights of F-35 flight testing at NAS Patuxent River, Md., NAS Fort Worth Joint Reserve Base, and Edwards AFB, Calif.
The first night flight in the history of the Lockheed Martin F-35 program was completed on Jan. 19, 2012 in the skies above Edwards Air Force Base, Calif. Piloted by Lockheed Martin Test Pilot Mark Ward, AF-6, an F-35A conventional takeoff and landing (CTOL) variant, launched at 5:05 pm PST and landed after sunset at 6:22 pm
An F-35 test pilot talks about airstart testing at Edwards AFB, Calif., in early 2012.