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CSC-Future Fighter Intersections

Procrustes, 10 March 2021

There is a potentially intriguing policy-making dynamic developing between the CSC and the Future Fighter (FF) projects.

First, the FF will cost less than the CSC at an expected contract price of $15-$19 billion, and DND expects to award this contract in 2022. The CSC will cost $56-60 billion according to DND, or $77.3 billion according to the PBO’s current estimate, provided the contract is awarded in 2021-22. Kevin McCoy, the outgoing President of Irving Shipbuilding, has stated recently that he expects production of the CSC to begin early in 2024. DND claims it hopes to award the CSC contract in the next 24-30 months. According to the PBO, this two-year delay beyond 2021-22 in a contract award will increase the cost of the CSC project to $82.1 billion. Therefore, on both contract award dates and total costs, the FF project is likely to be more appealing to cabinet. The government may resort to a favourite tactic when faced with costly and controversial defence projects – delay – and the FF has been delayed for a much longer time than the CSC. (Ottawa awarded a contract for $9 billion to buy 65 F-35 fifth-generation fighter jets in 2010!).

Second, while we don’t know how the FF and CSC projects rank in terms of the current government spending priorities, we could speculate that, with a federal election looming in 2021, the government might prefer to appease its key battleground provinces, Ontario and Quebec, with the promise of aerospace and electronics jobs over those in Nova Scotia where the Liberal Party already appears to have a lock on the electorate’s support. So, political advantage to the FF project.

Third, as the costs of the CSC continue to rise and intensify the focus of the media, the government may opt to steer attention away from the CSC project and simply decide to put the whole project on hold for a while. This would leave it the option to decide to hold a new competition for the CSC some time in the future. We should remember that the RCAF has pinned its hopes on the latest stealth fighter, the F-35, whereas public controversy over the rising life-cycle costs of the F-35, substantiated by independent studies including that by the Auditor General, led the Opposition Liberals in 2015 to campaign on the promise of cancelling the F-35 contract. The new Trudeau government followed through on this pledge, and then proceeded with an urgent stop-gap procurement of used F-18 fighters from Australia while a new FF competition was held. And here we are today.

DND and the Navy remain steadfast in their determination to procure the CSCs, but with the prospect of a new Minister of National Defence and a federal election in the offing, the chances for a halt and reset of the entire CSC project grow accordingly. It will certainly be difficult for the cabinet to try to sell two very expensive defence procurement projects simultaneously to the Canadian public, especially during a pandemic-stalled economy.

It will be interesting to watch how this government tries to balance the political and economic challenges of these two overlapping, and potentially competing, defence procurement projects.

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