PACP Committee Report

Mr. David Christopherson

Chair

Standing Committee on Public Accounts

House of Commons

Ottawa, Ontario

K1A 0A6

Dear Mr. Christopherson:

On behalf of the Government of Canada, I am pleased to respond to the Ninth Report of the Standing Committee on Public Accounts entitled Chapter 2, Replacing Canada’s Fighter Jets, of the Spring 2012 Report of the Auditor General of Canada. 

I would like to thank the Committee for its work and recommendations, which the government has taken into consideration as it delivers on its Seven-Point Plan to fulfill and exceed the Auditor General’s single recommendation.

Your report asks for greater clarity on the costs for the F-35, more specifically regarding the acquisition, operating, sustainment costs and life cycle costing, and that these updated cost estimates be independently verified.  The Committee report also requests more information on risk mitigation associated with replacing Canada’s fighter aircraft, and updated information on the industrial benefits associated with participation in the Joint Strike Fighter program that reflect the Auditor General’s comments. 

The six documents reporting on the implementation of our Seven-Point Plan, tabled in Parliament and released on the National Fighter Procurement Secretariat’s (the Secretariat) web site on December 12, 2012, respond to all six of the Committee’s recommendations.

A life cycle cost framework commissioned by the Treasury Board Secretariat was developed by KPMG and published: the Next Generation Fighter Capability Life Cycle Cost Framework (http://www.tbs-sct.gc.ca/reports-rapports/ngfc-cng/lccf-cccv/lccf-cccvtb-eng.asp). This framework is based on international best practices and Government of Canada policy requirements, and informed DND’s work to estimate the life cycle costs of the F-35 for the Annual Update. 

The National Defence Annual Update (http://www.forces.gc.ca/site/reports-rapports/ngfc-cng/index-eng.asp) responds to the Committee’s recommendation to provide the estimated acquisition, operating and sustainment costs of the F-35. KPMG provided an independent review of DND’s cost estimates; this report, the Next Generation Fighter Capability Independent Review of Life Cycle Cost, is available at: http://www.tbs-sct.gc.ca/reports-rapports/ngfc-cng/irlc-eiccv/irlc-eiccvtb-eng.asp

DND's Annual Update provides information on risk mitigation related to the Next Generation Fighter Program.  In addition, the evaluation of options and risk-based assessment of available aircraft will offer further information on risk mitigation in replacing Canada’s existing CF-18 fleet. The Terms of Reference that guide the options analysis is at: http://www.tpsgc-pwgsc.gc.ca/app-acq/stamgp-lamsmp/torcc-torcf-eng.html

Finally, Industry Canada's report on Canadian Industrial Participation provides an update on industrial opportunities in the Joint Strike Fighter Program, including an update of industrial participation in Canada and an explanation of how opportunities are identified and can change over time. The report can be found at: http://www.ic.gc.ca/eic/site/ad-ad.nsf/eng/ad03962.html

The Government is committed to completing the work regarding the replacement of Canada’s fighter jets, which includes an evaluation of options of all available fighter aircraft. This work is being conducted through strong governance, third party oversight and open and transparent communications. I would like to assure the Committee that until this work is complete, no decision on the replacement for the CF-18 fighter jets will be made.

Our government is making every effort to ensure the men and women of the Canadian Forces have the equipment they need to respond to the missions asked of them at home and abroad, while ensuring value for taxpayers.  I look forward to sharing further information with the Committee, Parliamentarians and Canadians as work progresses on the Seven-Point Plan.

Yours sincerely,

Rona Ambrose