Checking DND’s math

By Aaron Wherry - Wednesday, June 20, 2012 at 10:56 AM - 0 Comments

From QP yesterday, Rona Ambrose explains why new cost estimates for the F-35 won’t be released for awhile yet.

Mr. Speaker, it is true that the costing figures are available from the joint strike fighter program in the United States, but what we have said is that we want those figures, that would be cost estimates from the Department of National Defence, to be independently validated. The secretariat has asked for more time to do that. It wants to do this comprehensively. It is also looking at independently validating the cost assumptions that the Department of National Defence is using and meeting the recommendation of the Auditor General.

In other news, it’s now been 50 days since I asked Julian Fantino’s office to account for the auditor general’s suggestion that National Defence already had the numbers for a 36-year lifecycle estimate.

The subjective time limit

By Aaron Wherry - Friday, June 15, 2012 at 1:37 PM - 0 Comments

When the Harper government offered its seven-point response to the auditor general’s concerns about the F-35 procurement in April, it included the promise of an update within 60 days.

The Department of National Defence, through the F-35 Secretariat, will provide annual updates to Parliament.  These updates will be tabled within a maximum of 60 days from receipt of annual costing forecasts from the Joint Strike Fighter program office, beginning in 2012.

Defence officials met with the JSF program office in early May. But instead of providing new estimates 60 days from then, the “National Fighter Procurement Secretariat” has now decided that new figures will have to wait until the fall.

The Secretariat has recommended that the first annual update be tabled in Parliament during the fall of 2012. Careful consideration has been given to the sequencing of the work required. The update needs to meet three conditions: it needs to be complete, it needs to provide a full project update and it needs to be independently verified. These conditions cannot be satisfactorily met prior to the fall.

Update 3:48pm. Public Works Minister Rona Ambrose responds to my suggestion that the seven-point plan was now a six-and-a-half point plan.

Secretariat will deliver on all 7 points. Want more time to independently validate DND’s numbers

Still waiting

By Aaron Wherry - Tuesday, June 12, 2012 at 9:00 AM - 0 Comments

A new cost estimate for the F-35 apparently won’t be ready until the fall, in contradiction of point three of the Harper government’s seven-point plan to rectify the procurement.

It’s now been 42 days since I asked Julian Fantino’s office to respond to the auditor general’s suggestion that the defence department already had a 36-year lifecycle costing. Those questions were forwarded to the defence department. I’m still waiting to receive the department’s response.

Protecting the minister

By Aaron Wherry - Tuesday, June 5, 2012 at 12:09 PM - 0 Comments

Laura Payton obtains correspondence related to the Defence Minister’s helicopter ride.

An email from Col. Jeff Tasseron, one of Natynczyk’s senior advisers, describes a phone call he got from MacKay’s chief of staff, John MacDonell, about Reid’s support. Describing the phone call as “odd,” Tasseron says MacDonell wanted to make sure there was no retribution against Reid for defending MacKay. 

“He [MacDonell] also made sure I understood that they were dissatisfied that this individual only came out on his own recognizance, rather than as part of a concerted plan to defend the minister,” Tasseron wrote to Natynczyk. ”He is clearly of the opinion that their own office’s handling of this was fine, and that it has been our lacklustre defence that has been the real problem,” Tasseron said in the email.

See previously: The Department of Peter MacKay Defence

No need to keep studying the F-35?

By Aaron Wherry - Tuesday, May 29, 2012 at 9:30 AM - 0 Comments

The work of the parliamentary committee studying the F-35 procurement is apparently done. At least so far as the Conservative members of the committee are concerned. Here was Conservative MP Andrew Saxton’s explanation yesterday.

Mr. Speaker, we have heard from the Auditor General three times: once for the report as a whole, once for the beginning of the chapter, and once at the end of the chapter. We have heard from senior government officials at two different sets of meetings that detailed the government’s response. We have heard from the Parliamentary Budget Officer to compare his numbers versus others. The purpose of the committee is to study the Auditor General’s report. We have done that. Let us get on with writing the report.

The public accounts committee met five times to consider the auditor general’s findings, though the first of those meetings was consumed by debating how to proceed with a study. David Pugliese suggests defence officials aren’t pleased with the latest turn of events.

At DND the talk is that the Conservatives have given the opposition MPs another PR windfall on the F-35 file. There has been widespread disbelief that the poor communications strategy has allowed the purchase to become a major political issue. This latest move will not help the situation at all, say NDHQ insiders.

Holding pattern

By Aaron Wherry - Tuesday, May 22, 2012 at 11:09 AM - 0 Comments

On May 1, as previously noted, I sent the following questions to the office of minister of state Julian Fantino.

Last week, the Auditor General suggested that the Department of National Defence possessed a 36-year lifecycle costing for the F-35. See here. Is the auditor general mistaken or does a 36-year lifecycle costing exist? If it does exist, why has it not been made public?

Those questions were then forwarded to the Department of National Defence.

As of this writing, I have yet to receive an answer. As of last Thursday, the defence department was “still working within the approval process” to provide me with a response.

Accounting for the Defence Department

By Aaron Wherry - Friday, May 11, 2012 at 9:30 AM - 0 Comments

The mission in Libya cost significantly more than the Defence Minister once suggested. And the government recently described the purchase of 13 new armoured vehicles as a purchase of transmission parts.

In early April the government awarded a $105-million contract to a German firm, FFG, to build 13 Leopard armoured engineering vehicles for the Canadian Forces. The only information put out by government was a brief and inaccurate notice stating that the company had been awarded a contract to provide “vehicular power transmission components.” The notice also claimed the deal was only for one item. But defence industry sources say the government is misleading the public; the deal is actually for 13 specialized armoured vehicles, and not transmission parts.

In addition, the upcoming issue of the Canadian Naval Review published by Dalhousie University will report that the Defence Department’s Strategic Investment Plan, previously released by the Liberal government, is now considered “a classified document” and cannot be issued to the public. In April, DND informed the Review of the government’s new policy. The investment document outlines a 15-year plan for equipment projects, their budgets and delivery schedules.

In other news, it’s now been nearly 10 days since I asked National Defence for a response to the Auditor General’s suggestion that a 36-year lifecycle costing for the F-35 already exists. As soon as I receive a response, I’ll post it in its entirety.

‘Haven’t made that choice’

By Aaron Wherry - Thursday, May 10, 2012 at 9:20 AM - 0 Comments

Despite various commitments to and demands for a full 36-year lifecycle cost estimate for the F-35, the Globe reports that the Harper government is still debating whether to provide one.

Auditor-General Michael Ferguson’s April 3 report noted the full life of the planes was actually 36 years and called on Ottawa to be more forthcoming about costs. The Conservatives in turn pledged to be more open but are still debating whether to provide cost estimates for the full 36-year lifespan of the F-35 Lightning II – or stick to 20 years. Government officials “haven’t made that choice,” a source familiar with deliberations said.

As noted previously, the Auditor General hasn’t just recommended that the government provide a 36-year estimate, he’s said it is his understanding “that National Defence does have the numbers for 36 years.”

Sent to the whole

By Aaron Wherry - Wednesday, May 9, 2012 at 11:07 AM - 0 Comments

At the conclusion of regular business this evening, the House of Commons will set aside the mace and move into a committee of the whole to question Peter MacKay and Julian Fantino. Each May, the leader of the opposition is entitled to request that the estimates for two departments be referred to committee of the whole. The responsible ministers are then required to submit themselves to an interrogation lasting up to four hours.

The discussion needn’t be restricted to the spending plans of the given department. Here, for instance, is the 2010 session with Peter MacKay, which opened with questions about the handling of Afghan detainees.

Waiting for answers

By Aaron Wherry - Wednesday, May 9, 2012 at 8:30 AM - 0 Comments

The Globe reports that Defence officials made a trip to Washington last week to research the latest cost estimates for the F-35.

The federal government is working to translate this U.S. data into figures that reflect Canada’s purchase plans and hopes to make these public before Parliament rises in June, sources say … The political pledge made in April was that the Conservatives would provide Canadians with an updated estimate for the per-plane costs of the jets within 60 days of receiving forecast information from the Joint Strike Fighter Program office in the United States.

Still to be explained is the auditor general’s suggestion of two weeks ago that the Department of National Defence “does have the numbers for 36 years” and, if that is the case, why those numbers haven’t been made public. I’ve asked the department to explain and will post the response in its entirety as soon as I receive it.

The quiet cuts

By Aaron Wherry - Thursday, May 3, 2012 at 12:51 PM - 0 Comments

Parks Canada will cut jobs and privatize some operations. Librarians will lose their jobs. Foreign aid for a dozen of the world’s poorest nations will be slashed. Defence staff who deal with suicide prevention and post-traumatic stress disorder will also be let go.

They have been told that the DND’s Deployment Health Section is being shut down, cutting four jobs, including those of suicide prevention specialists. The employees also monitor PTSD rates and traumatic brain injury.

Eight of the 18 jobs in DND’s epidemiology section also will be cut. Those include epidemiologists and researchers who analyze mental health issues such as depression, PTSD, and suicide. The unions say a trial program on injury prevention at Canadian Forces Base Valcartier also will be closed because of the budget cuts.

When will the lifecycle cost be explained?

By Aaron Wherry - Tuesday, May 1, 2012 at 1:11 PM - 0 Comments

The full lifecycle cost of the F-35 remains elusive.

DND’s deputy minister, Robert Fonberg, said his department is sticking with its estimated cost of $15-billion for the acquisition and the sustainment over 20 years of the F-35 jets. He insisted that long-term operating costs for the jets, which are still eight years away from delivery, will be “firmed up over time,” but will be similar to those for the existing fleet of CF-18s.

He added that his department was not yet in a position to determine the exact cost of the program over its planned 36-year lifespan, saying that using 20-year scenarios is a well-entrenched position at DND and avoids making risky, long-term predictions. “Life-cycle costing is not a simple issue,” Mr. Fonberg said.

Lifecycle costing is what the Department of National Defence agreed to pursue two years ago in response to a previous report of the auditor general. Lifecycle costing is what Treasury Board guidelines seem to require. “All documents that outline … lifecycle costs” is what the House of Commons demanded in November 2010. And an estimate of what the F-35 will cost over a lifespan of 36 years is what the auditor general suggested last week that the Department of National Defence already had.

Here, from that hearing last week and for the record, is the auditor general’s exchange with Chris Alexander, parliamentary secretary to the Minister of Defence.

Chris Alexander: On life cycle, you described the reasons for selecting 36 years as opposed to the DND previous standard of 20 years. Has the Auditor General’s office in previous audits used this longer life-cycle framework, or was this the first time?

Michael Ferguson: Thank you, Mr. Chair. The 36 years is not our number, not our estimate of the life cycle. It was in fact National Defence’s estimate of the life cycle. Therefore, by definition to apply life cycle costing we felt that it should include the whole 36 years, since that is the estimated life cycle.

Chris Alexander: So in fact National Defence had two life cycle projections—one for 20 years and one for 36 years?

Michael Ferguson: Thank you, Mr. Chair. My understanding is that National Defence does have the numbers for 36 years, but the numbers that have been brought forward for decision-making purposes, and used for example in response to the parliamentary budget office numbers, were based on 20 of those 36 years.

What did the cabinet know and why was the F-35 allowed to proceed?

By Aaron Wherry - Tuesday, May 1, 2012 at 8:00 AM - 0 Comments

While a number of department officials—including the deputy minister of defence and the assistant deputy minister for materiel—are set to appear before the Public Accounts Committee this morning, Peter MacKay told a Senate committee yesterday that the federal cabinet approved the decision to release a $15-billion projection for the F-35. And John Ivison reports that the “F-35 Secretariat,” created in the wake of the the auditor general’s report, has been renamed.

And on those notes, Philippe Lagasse has more questions.

So, the other question: why did Cabinet allow DND/CF to avoid due diligence and go ahead with a questionable sole-sourced procurement? Cause, it’s worth repeating that the lack of due diligence was at the heart of the AG’s report…and it promises to be a recurring problem.

Interesting to hear that it will no longer be the ‘F-35 Secretariat’. But will DND/CF be told to write a new, more flexible SOR?

And who has the expertise necessary to keep an eye on the CF if theyre told to re-write the statement of requirements?

Will DND begin to exercise a more robust challenge function?

The quiet cuts

By Aaron Wherry - Monday, April 30, 2012 at 10:56 AM - 0 Comments

The Federal Tobacco Control Strategy is being cut, trade consulates will be closed, a coalition of organizations that deal with homelessness in Montreal won’t receive funding, neither will six groups studying women’s health, seafood inspection is being moved, regional development auditors are being eliminated, economists at Statistics Canada will have to compete for their jobs and StatsCan will start surveying less. David Pugliese wonders why Defence Research and Development Canada is being cut.

Kevin Page puts the short-term situation in perspective.

Ottawa’s ongoing planned restraint and 6.9 per cent cut in departmental spending will reduce its share of the economy from 7.3 per cent in 2010-11 to 5.5 per cent in 2016-17. That will have a direct impact on the economy, Page’s report stresses. It projects the spending restraints and cutbacks will reduce economic output by 0.3 per cent this year, climbing to 0.88 per cent in 2014.

Canada’s economy, subsequently, will grow by only 1.6 per cent in 2013, eight tenths of a point less than forecast by the Bank of Canada and the private sector consensus. On the jobs front, restraint will result in about 18,000 fewer jobs this year than had there been no restraint, climbing to 108,000 fewer jobs in 2015. Most of the losses are due to Ottawa’s actions — including a reduction of 43,000 stemming directly from March’s spending reductions — although provincial restraint is also a factor. Unemployment, currently at 7.2 per cent, will climb to 7.9 per cent in 2013, the report predicts.

‘You do get the sense there were different books being kept’

By Aaron Wherry - Monday, April 30, 2012 at 9:25 AM - 0 Comments

Kevin Pages throws a quote on the F-35 fire.

Page told host Evan Solomon what bothered his office was that one set of books was available inside DND, while another “for communication purposes” was presented publicly, in which he said the government was “low-balling” the numbers. ”You do get the sense there were different books being kept,” he told Solomon.

Meanwhile, another major defence procurement is being restarted.

In case you misunderstood him the first time

By Aaron Wherry - Thursday, April 26, 2012 at 1:33 PM - 0 Comments

The Auditor General appeared before the Public Accounts Committee to explain his findings on the F-35 procurement.

“There were some significant things that were missing from the life-cycle costing in this, for example attrition, for example upgrades, and the fact that these aircraft were going to last for 36 years, not just 20 years,” Mr. Ferguson told MPs. “When we raised the issue of life-cycle costing and the fact that it was not complete, I don’t believe that we were nitpicking in any way. We were saying that there were significant elements that were missing,” he said.

From the “who-knew-what-and-when?” file, there is also this.

Ferguson said it was National Defence that estimated the full life-cycle of the F-35s to be 36 years. ”And therefore by definition, to apply lifecycle costing, we felt it should include the whole 36 years since that is the estimated lifecycle,” he said. Ferguson also said the department has an estimate for what it will cost to use the planes for the full 36-year lifespan. ”But numbers brought forward for decision-making purposes and used, for example, in response to the Parliamentary Budget Office numbers were based on 20 of those 36 years,” he said.

After some disagreement over who specifically to invite, the committee has extended invitations to the deputy ministers at public works, defence and industry and the secretary at the treasury board to appear next Tuesday. Those officials can bring along any other officials they wish to be included.

The Commons: A simple misunderstanding

By Aaron Wherry - Tuesday, April 24, 2012 at 5:29 PM - 0 Comments

The Scene. Thomas Mulcair had a simple question. And lest the House fail to appreciate the simplicity, he said so explicitly.

“Mr. Speaker,” the opposition leader prefaced, “I want to ask a very simple question of the Prime Minister.”

Specifically and simply, Mr. Mulcair wanted to know whether Mr. Harper thought it acceptable for a minister to knowingly mislead Parliament in the exercise of its functions.

Mr. Harper seemed to seek a word of clarity from Peter Van Loan before rising. “Mr. Speaker,” he said, “I am not certain of the subject of that question, but obviously I expect that ministers tell the truth at all times.”

That much established for the record, Mr. Mulcair moved to his second question. Continue…

The F-35 math gets fuzzier

By Aaron Wherry - Tuesday, April 24, 2012 at 9:30 AM - 0 Comments

The projected training budget may not be sufficient for the F-35.

About $1.3 billion was set aside for training, simulators and other infrastructure under the Harper government’s proposed $9-billion capital purchase of the radar-evading jets. But documents obtained under the Access to Information Act show air force planners have been concerned about the dollar projection.

That’s because it was calculated for the standard Defence Department estimate of 20 years’ of flying, rather than the lifetime of the aircraft, which is estimated at 36 years … The documents suggest taxpayers might have to shell out more training dollars after the 20-year window ends, and they indicate the investment plan comes up “approximately $2 billion short” of the requirement.

The auditor general projected that over the 36-year lifecycle, an additional 14 F-35s would be required to deal with normal attrition.

National Defence did inform the government of the need to consider the requirement for attrition aircraft at a later date. The cost of replacement aircraft is not included in the life-cycle estimate for this project and will be treated as a separate project in the future.

But in a comment to the Hill Times, Julian Fantino’s office sticks to the $9 billion budget for acquisition. Continue…

Spring break is over

By Aaron Wherry - Thursday, April 19, 2012 at 11:00 AM - 0 Comments

The House doesn’t reconvene until Monday, but the public accounts committee will meet this afternoon to, presumably, launch its study of the F-35 procurement. The committee won’t hear from witnesses today, but might settle on a list of witnesses it wishes to hear from. The Liberals have identified ten individuals they’d like to hear from:

Michael Ferguson, Auditor General of Canada
Kevin Page, Parliamentary Budget Officer
Dan Ross, Assistant Deputy Minister (Materiel)
LGen J.P.A. Deschamps, Chief of the Air Staff
Michael J. Slack, F-35 Project Manager, Director of Continental Materiel Cooperation
Col D.C. Burt, Director, New Generation Fighter Capability
Tom Ring, Assistant Deputy Minister, Acquisitions Branch
Johanne Provencher, Director General, Defence and Major Projects Directorate
Richard Dicerni, Deputy Minister, Industry
Craig Morris, Deputy Director, F-35 Industrial Participation

For your study, Amy Minsky has assembled some of the paper trail. You can review all of our coverage here.

What does ministerial accountability mean anymore?

By Aaron Wherry - Wednesday, April 18, 2012 at 8:30 AM - 0 Comments

A very relevant discussion from The National last night.

Here is the 2011 edition of Accountable Government, a guide for ministers and ministers of state, as signed by Prime Minister Stephen Harper. A few excerpts from Mr. Harper’s preface. Continue…

The F-35 is not like a minivan

By Aaron Wherry - Monday, April 16, 2012 at 1:23 PM - 0 Comments

Tabatha Southey finds ten ways that Peter MacKay’s minivan analogy fails to explain the government’s accounting.

If the people who hired me to buy them a minivan were working with a finite budget and asked me to follow the written procedure they use in these situations. Supposing they said to me, “Please determine for us as best as possible the true cost of minivan ownership. Not the price, but the cost. Do it the way you promised you would, after that kerfuffle with those Cyclone and Chinook helicopters you picked up for us a few years back.” I would do that. Because I wouldn’t want to be fired, which is eventually (okay, after only four hours) what happened at the Pita Pocket.

Nonetheless, here is another attempt to explain military procurement as analogous to the purchase of a new family vehicle, this time to lecture the auditor general about what he should have been looking at.

Expanding on comments we noted last week, Liberal MP Marc Garneau questions the entirety of the F-35 process.

To this day, Canadians have not been shown a clearly stated set of requirements for the CF-18 replacement. Instead, they have been told that Canada needs the only “fifth-generation” aircraft available — a requirement which, as the Auditor-General points out, is not an operational one. The government has failed to tell us what mission capabilities it expects from the CF-18 replacement. It has failed to hold on open competition in order to select the best aircraft possible based on performance, cost, availability and industrial benefits. Finally, it has failed to accept any accountability whatsoever.

The CBC has colour-coded charts (including an estimate that the 30-year cost of the F-35 could be $33.19 billion).

‘But in terms of our numbers, I’ve been very clear’

By Aaron Wherry - Monday, April 16, 2012 at 8:30 AM - 0 Comments

Asked about the price of the F-35, the Prime Minister invokes one of his favourite adjectives.

“Other numbers cited, obviously have to do not just with the acquisition of the F-35 but operations of the F-35,” he said. ”There’s more than one number, there’s more than one cost depending on what you’re counting. These things have all been well known for some time. But in terms of our numbers, I’ve been very clear.”

So far as “what you’re counting,” see here, here, here, here and here to understand why the clarity of the Harper government’s accounting is now being questioned.

Colin Horgan keeps the focus on the lifecycle cost (that which the House of Commons demanded more than a year ago).

The PBO wrote in its report that a “rough” cost for the overhaul and upgrade for a single plane was “estimated at US$ 30.38 million +/- US$ 5 million per aircraft,” bringing the total overhaul costs over 30 years to that $3.9 billion. Going off the PBO’s analysis, calculating the costs of the program over 20 years rather than 30 would eliminate having to account for the second predicted overhaul of the fleet (which, according to the graph, would take a few years to complete).

With a 20-year projection, at least half the overhaul costs (those made at, or after, the 20-year mark) are discounted, along with whatever further costs incurred afterward up to (as the AG suggested) 36 years. So, the overall price comes down.

Unpacking Peter MacKay

By Aaron Wherry - Friday, April 13, 2012 at 10:48 AM - 0 Comments

Colin Horgan reviews how the public costing of the F-35 failed to meet the government’s own guidelines. Andrew Coyne explains how the Defence Minister’s explanations don’t match the Department of National Defence’s previous promises. And Laura Payton goes to the videotape.

At 9:50, MacKay refers to “signing the contract now” to bid on $12 billion in future contracts. As the government has recently made clear, and contrary to what Prime Minister Stephen Harper had said before, there is no contract.

Around 10:00, Evan asks what the in-service costs will be. MacKay says it’s difficult to nail down those costs, when we now know DND had internal estimates.

The editors of this magazine question the entire proposed purchase. Marc Garneau regrets making it personal. And the Liberals have launched a petition.

Checking Peter MacKay’s math

By Aaron Wherry - Wednesday, April 11, 2012 at 11:26 AM - 0 Comments

Terry Milewski quibbles.

Jacques Bourbeau sees the same problems. Continue…