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F-35 cost controversy

March 10, 2011, Ottawa - The parliamentary budget officer estimates the F-35 stealth fighter program will cost far more than the Harper government claims.


March 10, 2011
By The Canadian Press

Kevin Page figures the package will cost taxpayers $22.6 billion over 20 years and the total price tag for the high-tech fighter could reach $29.3 billion if maintenance costs are extended over another 10 years to cover the full, expected service life of the aircraft.

Page's estimates are billions of dollars higher than government figures. He said the Defence Department did not include initial set up and logistics costs in its forecast.

Defence Minister Peter MacKay has said the purchase price is roughly $9 billion, or about $75 million for each plane.

In a report issued Thursday, Page said the government bases its numbers on data provided by the manufacturer, Lockheed Martin. Page figures the purchase price could actually hit $9.7 billion

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The Pentagon now estimates the unit purchase price will be between US$91 and US$128 million, well over the Harper government forecast.

"Unless there is compelling evidence to the contrary, it is difficult to see prices reducing to their original level,'' Page's report said.

The Liberals asked Page to look at the cost of the entire deal, including purchase price and maintenance support.

They say they would cancel the purchase and hold an open competition to replace the air force's aging CF-18 jets.

MacKay has said killing the purchase would cost $1 billion in lost benefits.

But the report said no contract has been signed and there are no penalties. It's not like the situation in the early 1990s, when the then-Liberal government cancelled the purchase of the EH-101 helicopter and paid $500 million to get out of the deal.

"Canada has not signed any binding contract for acquisition, nor is it under any legal obligation — international or domestic — to go ahead with the purchase,'' the report said.

The maintenance costs are the biggest unknown.

The budget officer estimates they will total $19.6 billion over 30 years, which includes $3.9 billion in upgrades after 20 years of service.

The budget officer was given a look at the air force's statement of requirements, which sets out the rationalization for buying the plane. The Harper government has refused to release the document to the House of Commons defence committee.

The statement is dated June 1, 2010, just weeks before the government announced the purchase.

NDP defence critic Jack Harris said that means the requirements were written to suit the F-35.

"We've been sold a bill of goods,'' he said after being briefed on the report.

He called Page's price tag a "shocker.''