Party of One (16 page)

And what is Stephen Harper? A nerdy guy who doesn’t like being questioned, much less contradicted. It seemed as if Harper’s favourable impressions of Page, including the ones that underpinned his appointment to the PBO, were now water under the bridge. The government was not only defending a hugely expensive and controversial acquisition, but its credibility was squarely on the line.

If the PBO chief had it right, voters had been purposely misled during the 2011 election about the biggest planned expenditure of the Harper government—the fleet of F-35s. And that would mean that Michael Ignatieff, the Cassandra-like Liberal leader of the day, had been right when he claimed the government was lowballing the numbers for the acquisition. Not surprisingly, the Harper government turned on Page like a junkyard dog.

Finance minister Jim Flaherty accused the PBO chief of incompetence. According to Page, Flaherty had “taken PBO criticisms personally” and stopped inviting the parliamentary budget officer to Finance meetings. The prime minister and the
Department of National Defence rejected Page’s numbers, insisting that Canada would get the F-35 for $70 million to $75 million apiece. Furthermore, defence minister MacKay said the annual service bill for the new fighter jets would be approximately the same as for the F-18s. Both statements were pure fantasy. The price of the F-35 was at least $20 million more per plane than the government’s number, and maintenance costs were 42 percent higher than claimed.

Behind the government’s categorical denials of the PBO’s much higher cost estimates, and the vicious personal attacks on Page, a whiff of nervousness hovered in the air. Stubbornly maintaining that the F-35 was “the only option available,” the prime minister failed to provide any evidence for that statement other than the usual variety—his own pronouncement. Perhaps that’s why he told a Toronto news conference in the run-up to the 2011 election, “I’m not going to get into a lengthy debate on numbers.”

The controversy over numbers and facts surrounding the F-35 simmered for nearly a year until the spring of 2012. Despite the government’s constant cheerleading for the project, the issue wouldn’t go away. This was partly because of ominous news about the F-35 coming out of the United States, and partly because the government was persisting in the very behaviour that had triggered a contempt-of-Parliament finding against the previous Harper minority. The issue then had been the government’s refusal to give financial information about the cost of government initiatives to Parliament, including the F-35 project—a practice it was still pursuing, according to Kevin Page. But whether you believed the government’s numbers or the PBO’s, buying the stealth jet would be the single most expensive acquisition in Canadian military history—in other words, a major test of the government’s claim to be sound financial managers.

O
N
THAT
SCORE
, April proved to be the cruellest month— at least April 2012. On April 3, Canada’s auditor general (AG) released his report into the F-35 program. Michael Ferguson, new to the job, took over his post on November 28, 2011, under circumstances that didn’t have the high-altitude controversy of the F-35 but were nonetheless bumpy enough.

Although the Harper government had advertised the AG’s position as bilingual, it chose Ferguson, a unilingual anglophone from New Brunswick, where he had served as deputy minister of finance. The selection of a unilingual candidate prompted Michel Dorais, an official in the Auditor General’s Office, to resign as a matter of principle: his position was that the auditor general had to be able to speak both official languages or the working atmosphere in this important institution would be damaged. Treasury Board president Tony Clement responded in the House of Commons by tabling a previous political donation by Dorais to the Liberal Party—the usual government tactic of returning all things to politics. That contretemps quickly receded in the blowback from Ferguson’s findings. In either language, his scathing report was a heat-seeking missile into the government’s undocumented claim that the F-35 was the right aircraft at the right price.

The new auditor general revealed that the Harper government’s costing for the F-35 was astronomically and deliberately out of whack. The cost of acquiring and maintaining sixty-five F-35s over twenty years was not the $15 billion the government claimed, but $25 billion—and even that number might be low. The proof cited by the AG for his astonishing finding came in the form of incontrovertible evidence: the DND’s own internal estimates.

The AG also pointed out that the DND’s secret costing had been done in 2010. The revelation of the timing was explosive. It was in 2010 that the DND had made the internal decision to select the F-35. The $10-billion discrepancy between the AG’s
number and the government’s was bad enough—a difference of 40 percent. But there was now another elephant in the room that could not be blanketed by speaking points. Why had senior officials in the DND told Parliamentary Budget Officer Kevin Page in 2011, nearly a year after they had set the real cost of the F-35 fleet at $25 billion, that the bill to taxpayers was only $14.7 billion? An officer of Parliament had ordered the DND to produce public information of the highest importance and the department had failed to do so.

There was worse news in Ferguson’s report. The AG said that the Harper cabinet would have known that the government’s public number had been off by $10 billion. In addition to the mismanagement represented by that order of miscalculation, there was the issue of garden-variety dishonesty. This revelation also meant that while Harper ministers and DND bureaucrats were castigating Kevin Page for getting the costs wrong for the F-35, they were perfectly aware that his numbers were far more accurate than their own. A good public servant had been trashed for getting it right by the very people who, as it turned out, had covered up the true costs.

Speaking to reporters in a scrum after an appearance at the public accounts committee on April 5, Ferguson said, “I can’t speak to individuals who knew, but it was information that was prepared within National Defence, and it’s certainly my understanding that that would have been information that, yes, that the government would have had . . .”

If the F-35 debacle didn’t reflect well on the government’s ability to manage huge sums of money, it did afford an excellent glimpse into the heart of its modus operandi: the notion that the incumbent gets to mint his own facts, the penchant for secrecy at the public’s expense, the reflexive blame-shifting. Looked at over the six years the project was in the Harper government’s hands, the F-35 is a story of hoodwinking the public, misleading
Parliament, and risking billions of taxpayers’ dollars—all that without the federal government having the foggiest idea of what Canadians were getting for their money. As a saga of institutional manipulation and political mendacity, it is unparalleled in modern Canadian politics.

One of the oddities of the F-35 debacle is that the Conservatives inherited the whole mess from a previous Liberal government. It was an orphan they didn’t have to take in. As avowed reformers eager to change the way Ottawa did business, the Harper government should have seen the inherently flawed F-35 program as a golden opportunity to show both fiscal prudence and a commitment to getting value for the potentially massive public expenditure involved. It showed neither. And not because, as a participant in the nine-member consortium developing the aircraft, Canada was under any obligation to buy the F-35. It wasn’t. Instead, when Gordon O’Connor became minister of defence in 2006, he stayed with, and his successors perpetuated, a procurement process that was a stunning example of “worst practices” public policy.

The F-35 was chosen by the Department of National Defence without a competitive bidding process, an approach that federal procurement experts such as Alan Williams point out adds at least 20 percent to the fly-away price. In fact, the June 1, 2010, letter sent by DND assistant deputy minister Dan Ross to Public Works to justify sole-sourcing the mammoth contract was just 150 words long! The DND tried to justify its approach with the claim that it had done its own review in which the F-35 bested the competition: Boeing’s F-18 Super Hornet; the Swedish-built Saab Gripen; the Dassault Rafale from France; and the Eurofighter Typhoon, built by a consortium led by Britain.

In fact, the Harper government and the DND ceded due diligence to third parties, and very strange ones at that—the US Air Force, the principal client for the jet, and Lockheed Martin, its
manufacturer. Even more inexplicably, the official in the DND whose job it was to issue the Statement of Requirements (SOR) for this massive acquisition ignored the established process, which is to first produce a formal statement of the military’s requirements, and then have the civilian side choose the best equipment at the best price. “That was the responsibility of Assistant Deputy Minister-Materiel Dan Ross. But Ross did exactly what bureaucrats are not supposed to do. He committed to the F-35 and recommended to then defence minister Gordon O’Connor that this was the choice,” Alan Williams, former DND procurement chief, told me.

Ross, who retired as the DND’s procurement boss in January 2013, admitted that Canada’s procurement system was “broken,” partly as a result of split ministerial responsibilities for military acquisitions, and partly because of a lack of audits and reviews, and a too-distant working relationship with the auditor general. Above all, Ross told the
Hill Times
newspaper, procurement has to be somebody’s full-time job: “Right now . . . you have requests for lunch, juice, and sandwiches sitting on Minister MacKay’s desk [along] with Fixed Wing Search and Rescue budgets.”

Whatever the cause, something had gone terribly wrong with the jet-fighter program. The Statement of Requirements for the F-35 was issued four years after the decision had been made by the DND to acquire it without competitive bidding—an absurd reversal of how sound procurement unfolds. When the equipment is chosen before the SOR is issued, you may be sure that when it is issued, only one aircraft will qualify—the one already chosen. It is not a rational process, but an exercise in “wiring” the specifications to get what you want.

Think of it as brochure fever, followed by a few whoppers to get the bank loan.

At one level, the military simply wanted the F-35 the way a teenager might eschew a Malibu and lust after a Corvette: DND
bureaucrats enabled the acquisitive instincts of the generals by making unsubstantiated recommendations to the political side, all the while ignoring the well-known and agreed-upon rules. As one general told me, “The chief of the defence staff should be at the bottom of the Ottawa River over this. I know for a fact the prime minister is furious over this.”

But it was not, as some have argued, entirely a case of the government being asleep at the switch. Far from it. Successive ministers in the Harper government lent the full weight of their uncritical support to a project headed in the direction of the disastrous F-22 Raptor, a US fighter jet so over-budget that the production line was shut down by former secretary of defense Robert Gates after the assembly of just 187 aircraft.

The F-22 bill to American taxpayers was $65 billion. For that, they got a stealth “hangar queen” or “maintenance hog” that never saw combat in Iraq or Afghanistan, a disastrous fate for a piece of equipment that came in at 400 percent over budget. One of the reasons stealth aircraft like the F-35 need more maintenance is that aero-systems that feature low observable (LO) or radar absorbing materials (RAM) rely on plastic as an important element of construction. Metal or even ceramics can’t be employed because they reflect electromagnetic waves, which show up on radar. That was the main reason the US Navy never bought the F-22: stealth materials require enormous maintenance and do not hold up well in adverse weather or at Mach speeds—conditions otherwise known as combat.

Nevertheless, the busiest promoter for Canada’s acquisition of the F-35 “stealth” fighter was Peter MacKay. During his five years as minister of defence, MacKay earned his keep by posing with the F-35, including one shot in the cockpit of a plywood mockup of the fighter jet that was trucked to Ottawa all the way from Lockheed Martin headquarters in Fort Worth, Texas. Though
the wooden aircraft was shipped free of charge by the manufacturer, the photo shoot of MacKay at the plastic controls cost Canadian taxpayers $47,000. MacKay’s claims about the stealth fighter, taken straight from the company’s talking points, ran the gamut from the confusing to the contradictory, from the absurd to the downright deceitful. The F-35 was not, as MaKay claimed, the only stealth fighter in the world. Canada’s new chief of the defence staff, General Tom Lawson, told the Commons defence committee, “There are countries around the world flying [other aircraft with stealth capabilities] to great success these days.”

T
HE
H
ARPER
GOVERNMENT
announced its intention to buy the F-35 on July 16, 2010. In the 2011 election, Harper spoke of the “contract” to make the unprecedented purchase, complained it shouldn’t be an election issue, and implied that political opponents who criticized the F-35 were unpatriotic deadbeats. Tellingly, he insisted the price he was quoting for the so-called “fifth generation fighter” was accurate, despite directly contrary evidence from the United States. “A lot of the development costs you’re reading [about] in the United States, the contract we’ve signed, shelters us from any increase in those kinds of costs. We’re very confident of our estimates and we have built in some latitude, some contingency in any case. So we are very confident we are within those measures,” the prime minister told the
Waterloo Record
on April 9, 2011.

While both the prime minister and his defence minister were cheerleading for Lockheed Martin, it was becoming evident from more forthright sources that no one could make any solid claims about the F-35. The simple reason for this lack of certitude was that the F-35 went into production before it was ever flight-tested. It was an experimental aircraft. The manufacturer never built a combat-ready prototype that could engage in a fly-off against
competitors so that the best plane could be determined based on merit. In the case of the F-35, it was “buy before you fly.”