Thursday, May 03, 2012

If They Told You the Truth, How Were They Supposed to Lie?

Oh the naivete of Parliamentary Budget Officer Kevin Page.   He says that, despite being ordered by Parliament to do so in 2010, the Department of National Defence did not provide him with full information about F-35 costs.

"Over the past few weeks, it has become clear that the Department of National Defence provided the PBO with figures that did not include all operating costs," Page told Parliament's public accounts committee on Thursday.

"The PBO understood that it had been provided with full life-cycle costs from DND as required."

Those operating costs — which have been estimated at around $10 billion over 20 years — have become central to the question of whether Canadians were misled in the weeks before the last federal election.

At that time, Page released a report which estimated that acquiring, maintaining and operating 65 F-35s would cost taxpayers nearly $30 billion.

The Defence Department responded by telling Parliament that the stealth fighter would actually cost $14.7 billion.

Page says it seems the government has kept two sets of books on the F-35 deal.  Apparently the Parliamentary Budget Officer simply doesn't realize this is an advanced business practice pioneered by industry leaders such as EnRon.
Meanwhile Australia has just announced it will delay the purchase of its first squadron of F-35s to help ease budget pressures.   The Aussies have decided to push the decision on when to take delivery of the first dozen F-35s by two years.

There's an interesting aspect to this.   With the US having deferred its own initial purchases of F-35s, Lockheed seemed to be looking to "partner" nations to take up the production slack.  It appeared that Lockheed was looking to peddle its surplus production to these other countries via advanced deliveries.   Australia seemed right in Lockheed's crosshairs.  That may have been the real pressure Australia was trying to duck, Lockheed's.

And the price of Japan's F-35 deal keeps rising.   Including tools, training, testing equipment and spares, it now stands at $238-million per aircraft.

US periodical, Foreign Policy, has a new name for the F-35.   They're dubbed it the "Supersonic Albatross".  

"...with regard to cost -- a particularly important factor in what politicians keep saying is an austere defense budget environment -- the F-35 is simply unaffordable.
"...Hundreds of F-35s will be built before 2019, when initial testing is complete. The additional cost to engineer modifications to fix the inevitable deficiencies that will be uncovered is unknown, but it is sure to exceed the $534 million already known from tests so far. The total program unit cost for each individual F-35, now at $161 million, is only a temporary plateau. Expect yet another increase in early 2013, when a new round of budget restrictions is sure to hit the Pentagon, and the F-35 will take more hits in the form of reducing the numbers to be bought, thereby increasing the unit cost of each plane. 
"...The F-35 isn't only expensive -- it's way behind schedule. The first plan was to have an initial batch of F-35s available for combat in 2010. Then first deployment was to be 2012. More recently, the military services have said the deployment date is "to be determined." A new target date of 2019 has been informally suggested in testimony -- almost 10 years late.
"If the F-35's performance were spectacular, it might be worth the cost and wait. But it is not. Even if the aircraft lived up to its original specifications -- and it will not -- it would be a huge disappointment. The reason it is such a mediocrity also explains why it is unaffordable and, for years to come, unobtainable.

... A virtual flying piano, the F-35 lacks the F-16's agility in the air-to-air mode and the F-15E's range and payload in the bombing mode, and it can't even begin to compare to the A-10 at low-altitude close air support for troops engaged in combat. Worse yet, it won't be able to get into the air as often to perform any mission -- or just as importantly, to train pilots -- because its complexity prolongs maintenance and limits availability. The aircraft most like the F-35, the F-22, was able to get into the air on average for only 15 hours per month in 2010 when it was fully operational. (In 2011, the F-22 was grounded for almost five months and flew even less.)

"This mediocrity is not overcome by the F-35's "fifth-generation" characteristics, the most prominent of which is its "stealth." Despite what many believe, "stealth" is not invisibility to radar; it is limited-detection ranges against some radar types at some angles. Put another way, certain radars, some of them quite antiquated, can see "stealthy" aircraft at quite long ranges, and even the susceptible radars can see the F-35 at certain angles. The ultimate demonstration of this shortcoming occurred in the 1999 Kosovo war, when 1960s vintage Soviet radar and missile equipment shot down a "stealthy" F-117 bomber and severely damaged a second.

"The bottom line: The F-35 is not the wonder its advocates claim. It is a gigantic performance disappointment, and in some respects a step backward. The problems, integral to the design, cannot be fixed without starting from a clean sheet of paper." 

For some reason, our Parliament is still stuck on first base - squabbling over costs.   We need - but are not having - parallel debates on delay and, most critically, performance.   Harper is going to fudge on the costs issue, fall back on simple denial, and let it run its course as a public relations problem.   He's counting on getting the opposition so mired down bitching about costs that they give him a pass on the most important points - delay and performance.  And so they will.   It is those sidelined issues that ultimately make the case for ditching the F-35 in favour of an alternative.   


Beijing York said...

I don't understand how Canadians aren't outraged by this useless, unnecessary and most expensive budget item being rammed through at the expense of so many valuable public programs and services.

So far, audits have shown that Parks Canada programs, for example, pay for themselves. Others like the OAS are completely sustainable as is.

Owen Gray said...

It' all about priorities, isn't it? It's not about costs -- or quality -- at all.

Anonymous said...

"Apparently the Parliamentary Budget Officer simply doesn't realize this is an advanced business practice pioneered by industry leaders such as EnRon."

Few industry leaders and others get punished for these "advanced business practices", so the public keeps seeing them used.

If the CxOs can keep any documentation pointing to them from being created they can safely claim "I'm the CEO and I know nothing."

The auditors that signed off on the frauds are safe because the courts killed off secondary liability. The auditors aren't responsible to the investors or the public, but to the corporation itself, ie its management.

When you have a fraud and failure like Enron or Nortel, especially in Canada, nobody goes to prison.

The Mound of Sound said...

@ BY. I'd guess one reason so few Canadians are outraged about this is that it comes across as just another squabble about money. Stripped of context about delay and, above all, performance deficiencies, they're left thinking its still a good, albeit costly, piece of kit.

I haven't heard the opposition criticize the F-35 as a "virtual flying piano" or a "supersonic albatross." I'm guessing they're too spineless to handle this controversy.

No one wants to open the discussion of what saddling our forces with the F-35 means in the context of Canada's foreign policy. That it virtually indentures our forces to serve in America's aerial Foreign Legion in future foreign air campaigns isn't so much as whispered by the opposition.

They're worse than useless - NDP, the Libs, the lot.

Anonymous said...

"They're worse than useless - NDP, the Libs, the lot"

I don't disagree, but what about the idiots who are keeping this overpriced 'flying piano' on the budget agenda - the Reform-Conservatives? They are the ones who deserve the most criticism and contempt.

The Mound of Sound said...

Anon, it's the opposition's job - their fundamental responsibility - to raise these other, vital issues. They have to attack the government on the contractor's delays, ongoing cost escalation, performance deficiencies and, above all else, they myth of stealth invincibility.

As for Harper, well, he's beneath contempt. I see no reason to waste breath on him on this one but, if you insist, "Harper's a real shit." There, I said it.