04/29/2014 11:53 EDT | Updated 06/29/2014 05:59 EDT

F-35 Maintenance Costs Could Double Over Lifetime Of Program: Expert


OTTAWA - A new report by two think-tanks says the operating costs of Canada's proposed new stealth fighter could be considerably higher than what Harper government is acknowledging — and perhaps even expecting.

The Centre for Policy Alternatives and the Rideau Institute estimate the current numbers for the F-35 could be off by between $12 billion and $81 billion, depending on a variety of factors and risks over 40 years.

An independent analysis of the program, conducted by the Public Works secretariat overseeing the plan to replace Canada's CF-18s, pegged the total lifetime cost of owning 65 stealth fighters at just over $44 billion over four decades.

Michael Byers, the author of the report, said his estimate would be on top of that.

"The numbers I have generated are produced by DND," Byers said. "I am extrapolating and filling in some of the gaps in their work."

Byers, a University of British Columbia professor and defence expert, said he questions the math in the secretariat's report because, among other things, it bases its long-term maintenance on data numbers from the existing fighters.

But Alyson Queen, a spokeswoman for Public Works Minister Diane Finley, immediately dismissed the assessment and claims.

"Real independent third party experts, with access to the real facts, are working to ensure that the reports being prepared by DND are rigorous and impartial," Queen said in an email.

The government's assessment was validated by senior officials and experts such as former auditor general Denis Desautels and economist Ken Norrie, she added.

"An independent panel consisting of people who have the technical know-how, strong financial backgrounds and detailed knowledge of Canada's military and procurement systems are overseeing the evaluation of options."

A senior executive with the F-35's U.S. manufacturer was even more blunt, describing the report as "inaccurate and false."

Steven O'Bryan, Lockheed Martin's vice president for F-35 business development and customer engagement, said some of data quoted in the study is from 2011 congressional reports, information that is out of date and has been surpassed by recent developments in the program.

He suggested the think-tanks were deliberately trying to inflate the price tag.

The figures are significant because the Harper government is close to deciding whether to stick with the troubled F-35 program or open up the CF-18 replacement to competition, Byers said.

The report says the F-35 has operating and maintenance costs that are about 1.5 times higher than the CF-18s, but O'Bryan said in all of the recent international competitions that has proven not to be the case.

A National Defence estimate on the long-term operating costs of the F-35 will be among the pile of reports cabinet is expected to consider.

Byers said his numbers, which project the total cost could reach $126 billion, are based on figures coming out of the U.S. Government Accountability Office in Washington, which has tracked the program extensively.

He also said other structural costs, such as modifying the air force's tanker fleet to operate with the F-35, are not included in the secretariat's public estimates.

The research done by Byers also examines risks such as volatile fuel prices, inflation and a fluctuating exchange rate.

A one per cent increase in the rate of inflation would add $5 billion to the overall price tag, he noted.

O'Bryan countered that the report uses outlandish assumptions such an inflation rate of 10 per cent and sky-high fuel costs in order to make its case.

The air force has already publicly suggested that in order to keep costs down, it will fly the F-35 less often than the CF-18s, cutting 4,000 flying hours per year out of its training plan and using simulators more often.

But parking the jets simply creates a false economy, Byers said.

The Harper government signalled in 2010 that it intended to buy the F-35, but a set of scathing reports — including one by the auditor general — accused both National Defence and Public Works of not doing their homework and deliberately low-balling the cost.

The program was put on hold in December 2012.

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