By Ken Pole | August 14, 2012 Estimated reading time 3 minutes, 20 seconds.
The government is pressing on with plans for an independent audit of Department of National Defence (DND) cost projections for what it now calls its Next Generation Fighter Capability (NGFC) Project. It also says that, except for a decision to let prime contractors farm out elements of the review of the former Joint Strike Fighter (JSF) project, and some fine-tuning of the timeline, there are no significant differences between two Requests for Proposal (RFP) issued a month apart.
The new RFP from Public Works & Government Services Canada (PWGSC) calls for “a review of . . . acquisition and sustainment project assumptions with respect to the estimated costs for [the] next generation fighter jet.” All elements of the Treasury Board Secretariat original are retained; they include examining potential costs of eventual “disposal” or “decommissioning” of a fleet of 65 Lockheed Martin F-35 Lightning II JSFs.
That first phase of the audit would encompass, where possible, cost projection yardsticks from the other countries involved in the JSF project: the United States, Britain, Australia, Denmark, Italy, the Netherlands, Norway and Turkey. The successful bidder, which would be required to file weekly progress reports, also could be mandated to develop a “generic framework of life-cycle costing for other military procurements.”
Some of the 16 pre-qualified prospective prime contractors had complained that the initial RFP precluded them from using sub-contractors. That is now permissible as long as they meet the same security criteria as the primes. Due to the revision, the deadline for responding was changed to Aug. 21 from July 16. The contract is valued at more than $200,000.
The principal “independent verification of the 2012 annual update” now is due by Nov. 27, which would enable the government to submit a promised report to Parliament in the fall session. The “generic framework” for other procurements, if the government opted for it, would be due Dec 17.
The audit is in response to Auditor General Michael Ferguson’s criticism last April that DND had “understated” life-cycle costs in the estimates it used to justify its July 2010 decision to sole-source a contract with Lockheed Martin for the F-35s, as replacements for the current McDonnell Douglas/Boeing CF-18 Hornets.
A key point for Ferguson was the government’s insistence that the Royal Canadian Air Force would be getting aircraft for $75 million each. The government’s figures show that the up-front $9-billion acquisition budget for 65 aircraft works out to $138.5 million each once weapons and RCAF base upgrades are included. An additional $16 billion is required for the first 20 years of in-service support.
DND disagreed with Ferguson’s allegation that it had not exercised due diligence, describing its estimates as “appropriate” for the 2001-2011 period covered by Ferguson’s audit. But it did promise to “refine” its life-cycle cost estimates.
