Fighter Aircraft (3): Industrial Strategy as Defence Policy
See The Simons Foundation's Disarming Arctic Security page for briefing papers on military policies and practices in the Arctic region by Ernie Regehr, Senior Fellow in Arctic Security at The Simons Foundation.
When in 1997 Canada first joined the US-led Joint Strike Fighter program, critics, including this one, feared that what was then a strictly industrial participation program would in time be promoted as a de facto decision to buy whatever aircraft emerged from that venture – namely, the F-35. Of course, all assurances at the time were to the contrary, but by 2010 a decade-old industrial strategy had indeed become defence policy.
Canada’s connection to what became the F-35 began in 1997 when the Government of the day signed onto the US-led Joint Strike Fighter (JSF) program as an aerospace industry initiative. At the time, Canada contributed (US) $10 million for the Department of National Defence to participate in the Concept Demonstration phase and to become an “informal partner.” During this phase the two US bidders, Boeing and Lockheed Martin, developed and completed prototype aircraft. That process led to the selection of Lockheed Martin as the JSF manufacturer in 2001. In 2002, Canada joined the System Development and Demonstration phase with an investment of (US)$100 million, with an additional (US)$50 million contributed through federal Canadian technology investment programs. This phase runs through 2015. In 2003, the United States invited the current partners to participate in the Production, Sustainment and Follow-on Development phase of the program, and in December 2007, Canada signed the JSF Production, Sustainment and Follow-on Development Memorandum of Understanding. DND projects the cost to Canada for this phase to be about (US) $551 million from 2007 to 2051. To date Canada has paid out $344.4 ($288.7 US) on the Joint Strike Fighter Program plus another US $55 million to companies in Canada through the Industry Canada Strategic Aerospace and Defence Initiative.
But those expenditures have all been as part of an industrial development effort, not as a military procurement program. By mid-2014, Canadian companies had received contracts valued at $637 million and the Fall 2014 update from Industry Canada indicated that Canadian companies would have opportunities to bid on more than (US) $10 billion in F-35 production and sustainment work. The report says, “if the Government of Canada decides to acquire the F-35 JSF through the F-35 JSF partnership, companies in Canada will be able to sustain currently contracted work and continue to have access to compete for additional production, sustainment and follow-on development work over the next several decades.” The implication is that such access would be denied if Canada were not to buy the F-35, but all Canadian participation to date has been independent of whether or not Canada buys the F-35, and the Government has never indicated that buying the F-35 is a formal condition of continuing industrial participation (just as Canadian companies bid on and win contracts related to a wide range of US weapons systems that Canada never plans to buy). The US prime contractors have a stake in Canada buying the F-35, but contracting with particular Canadian companies for particular production elements is based on price, quality, and timely fulfillment of contracts, not on Canadian procurement decisions. Continue reading...
Ernie Regehr, O.C. is Senior Fellow in Arctic Security at The Simons Foundation, and Research Fellow at the Institute of Peace and Conflict Studies, Conrad Grebel University College, University of Waterloo.