National Defence undertook the acquisition of the F-35 fighter jet as a replacement for the aging CF-18 without establishing a procurement process that reflected unique aspects of this project, says Michael Ferguson, Auditor General of Canada, in his report tabled today in the House of Commons.
“National Defence did a good job of managing Canada’s participation in the US-led Joint Strike Fighter program to design and develop the F-35,” said Mr. Ferguson. “However, the Department did not acknowledge that the decision to purchase the F-35 was well underway four years before it was officially announced.”
The audit found that National Defence did not establish an appropriate plan with other federal entities for managing the unique procurement aspects of the JSF program. When it recommended that the government purchase the F-35, it applied the traditional procurement rules to an acquisition that in effect had already been decided by a sequence of earlier actions.
As a result, the process was redundant, with key approvals obtained after decisions were made. Public Works and Government Services Canada was not engaged in its role as the government’s procurement authority until late in the process, and it endorsed the decision to sole source the acquisition of the F-35 without required documentation and completed analyses.
The audit also found that National Defence did not develop full life-cycle costs for the F-35. The budget for acquiring the jet and operating it over 20 years is capped at $25 billion, and it does not include significant cost elements such as replacement jets. The Department did not provide parliamentarians with complete cost information or fully inform decision makers about risks created by problems encountered in the program.
“National Defence did not exercise the diligence that would be expected in managing a $25 billion commitment,” said Mr. Ferguson. “It is important that a purchase of this size be managed rigorously and transparently.”
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