The Canadian government announced on Tuesday it is launching a competition to replace Canada’s CF-18 fighter jet fleet and will acquire 18 Australian jets in the interim.
Public Services and Procurement Canada (PSPC) said it will purchase 88 advanced fighter aircraft in “an open and transparent competition to permanently replace” the existing fleet of 76 older CF-18 Hornets officially starting on Tuesday.
The agency highlighted this will be “the most significant investment in the Royal Canadian Air Force in more than 30 years.”
The government is focused on procuring the right aircraft at the right price while ensuring Canadian aerospace and defense industries and manufacturers are consulted in the process, PSPC said.
While the agency said proposals will be measured by cost and technical requirements, it will also be based on industrial, technological, and economic benefits.
Therefore, bid evaluations will assess the bidders’ impact on the country’s economic interest. “When bids are assessed, any bidder responsible for harm to Canada’s economic interests will be at a distinct disadvantage.”
This provision appears to be a warning directed at Boeing [BA], which began a trade challenge against Canada’s Bombardier in the U.S. over allegations it sold a commercial airliner at an artificially low price. The U.S. Commerce Department initially proposed a 300 percent duty on all airliners of the model imported into the U.S., but is on hold pending a ruling on whether Bombardier hurt Boeing’s business.
The complaint angered the Canadian government, which, in turn, paused a plan to acquire new F-18 E/F Super Hornets while waiting for this full competition to take its course (Defense Daily, Dec. 8).
The PSPC now confirmed it will indeed pursue a purchase 18 supplemental older F-18 Hornets from Australia to use “until permanent replacement aircraft are in place and fully operational.”
“The Government of Canada will pursue the purchase of 18 supplemental jets from the Australian Government,” to ensure the Canadian Armed Forces has the equipment necessary to deliver its missions and obligations, the agency said in a statement. The Australian F-18s are the same model that Canada already uses.
At a press conference announcing the decisions, Navdeep Bains, Minister of Innovation, Science and Economic Development, said the government has clearly told Boeing, the U.S. administration, and government counterparts that it believes the challenge is without merit.
However, Bains said in the new competition anyone can apply, but “we’ve been very clear with this new policy. If there’s economic harm to Canada, if there’s an impact on Canadian jobs, if there’s an impact to some of the key sectors in the Canadian economy, you will be at a distinct disadvantage.”
Carla Qualtrough, Minister of Public Services and Procurement, noted at the event that the assessment of economic impact would only be done “at the time of the assessment of bids.” She said for the full fighter replacement process the government will release the Request for Proposals (RFP) in early 2019 so the assessment will be in late 2019-2020.
“So we’re hoping this policy incentivizes all suppliers to behave in such a way that they won’t be at a disadvantage at the time of assessment,” she said.
The Canadian Armed Forces wrote on Twitter that the two countries have flown the same generation of F-18 fighter jets for years and “that’s why the purchase of F-18 aircraft from Australia is the quickest and most seamless choice to a bigger fighter fleet.”
Gen. Jonathan Vance, Chief of the Defense Staff, welcomed the Australian decision at the press conference. “Make no mistake, these aircraft will work fine and those aircraft are very much needed,” he said.
“I am confident that this supplemental capability will allow the Royal Canadian Air Force to meet our domestic and international obligations until a replacement fighter is chosen and acquired,” Vance added.
The newly announced full procurement process will also include Canada’s Industrial and Technological Benefits Policy, which requires the winner to make investments in-country equal to the contract value.
The PSPC said the government is starting the process by establishing a list of suppliers, including foreign governments and aircraft manufacturers with a demonstrated ability to meet Canada’s need, with “all companies are welcome to participate in this process.”
Wide-ranging planning and stakeholder engagement will take place through 2018 and 2019, with a contract award expected in 2022. The first new aircraft is then expected to be delivered in 2025
The agency underscored the decision to buy 88 replacement aircraft is an increase of over a third compared to the original 65 planned before the new defense policy was enacted.
Harjit S. Sajjan, Minister of National Defense, said in a statement that this announcement is a key step in ensuring military personnel “have the equipment they need to fulfill this responsibility and meet our commitments to our partners and allies around the world.”
“This project represents a significant opportunity to support the long-term competitiveness of Canada’s aerospace and defense industries, which together contribute more than 240,000 jobs to the Canadian economy,” Navdeep Bains, Minister of Innovation, Science and Economic Development, added.
Qualtrough said the government is not yet discussing the cost of the interim aircraft because they do not want to put itself in a weaker negotiating position with Australia. However, it believes this option will be more seamless than other options because the government has an existing supplier chain, maintainer experience, and will not need to retrain pilots and mechanics when using the same aircraft.