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MacKay sits in F-35 cockpit  (Source: The Star)
Canada still unsure of F-35 program

The reaction of some Canadian citizens and lawmakers has been mirroring the reaction we've seen in United States over the F-35 program. There's a lot of uproar over continually rising costs of the program and in Canada. There have also been allegations that some government officials knew the cost the program would be significantly more than originally promised, yet said nothing.
 
Canadian Defense Minister Peter MacKay has recently admitted that he knew the F-35 fighter program could cost as much as $25 billion. That price is billions of dollars more than the Canadian officials have publicly acknowledged. However, MacKay maintains there was never an effort to mislead Canadians on how much the project would cost.
 
MacKay maintains that the $10 billion difference between what the F-35 program has been officially acknowledged to cost and what the program could really cost is an accounting difference. The cost for Canada to purchase 65 F-35 fighters was originally said to be $15 billion. Some of MacKay's opposition in the Canadian government have gone so far as to request his resignation over the price row.
 
According to MacKay, the $10 billion difference is money the Canadian government already pays for things like fuel, salaries, and maintenance of the fleet of CF-18 fighters the F-35 replace.
 
“Yes, and it was explained to me just that way,” MacKay said.
 
“The additional $10 billion was money that you could describe as sunk costs. What we’re paying our personnel and the fuel that is currently being expended in CF-18s, jet fuel, maintenance costs — what we’re currently spending, so not part of a new acquisition,” MacKay said.
 
He continues saying that similar accounting methods are used in acquisition of other military hardware.
 
“I don’t agree that there was a manipulation of information,” MacKay continued. “Of course ministers are responsible for what takes place in their department. I’ve acted in good faith, always with an eye to providing the men and women in uniform with the best equipment that we can possibly get.”
 
While MacKay fights allegations that he misled Canadian citizens on the price of the F-35, other officials in the Canadian government still maintain that additional oversight of acquisition will be performed. Conservative party Prime Minister Stephen Harper noted last week that Canada has signed no contract to purchase the F-35. That statement hints that Canada could reduce the number of F-35 that purchases. Cuts in proposed purchases have been talked about in the past.
 
“The auditor-general has identified a need for greater independence and supervision over some of the activities of the Department of National Defence,” Harper said. “The government will put that supervision in place before we proceed.”
 
The amount of funds assigned to purchase 65 F-35 aircraft has also been capped. The cap placed on the purchase is C$9 billion, which works out to about $8.9 billion in the US. That funding includes money spent for the acquisition of associated weapons, infrastructure, initial spares, and training simulators.
 
“Funding will remain frozen and Canada will not purchase new aircraft until further due diligence, oversight and transparency is applied to the process of replacing the Canadian Forces’ aging CF-18 fleet,” Public Works Minister Rona Ambrose said in a statement.

Sources: DefenseNews, TheStar



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Canadian dollar.
By Trisped on 4/9/2012 5:55:28 PM , Rating: 2
quote:
The cap placed on the purchase is C$9 billion, which works out to about $8.9 billion in the US.
This is not accurate. According to xe.com http://www.xe.com/ucc/convert/?Amount=9000000000&F... and Yahoo Finance http://finance.yahoo.com/currency-converter/?u#fro... 9 billion CAD would be 9,026,182,173.33 USD or 9022556390.9774 USD (XE, Yahoo at 2012/04/09 2:45 UTC -8).

While this value may fluctuate daily, both sites indicate that the USD has been higher valued for about 2 months.




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