Canadian Industrial Participation in the F-35 Joint Strike Fighter Program Report by Industry Canada

Canada has been a partner in the F-35 Joint Strike Fighter (JSF) Program since 1997. The Program is unique, as is its approach to industrial participation. All JSF Partner countries agreed to forego offset programs, with work instead awarded on a “best value” basis, meaning that companies must offer competitive technologies at competitive prices to win F-35 work.

Canada’s participation in the Program provides companies in Canada the opportunity to compete for design/development, production and sustainment contracts on the F-35 aircraft and associated systems, taking advantage of current and emerging value chains. As of June/July 2012, 72 companies in Canada have secured US$438 million in contracts.

The Government of Canada currently uses an estimate of the future value of opportunities that is based on information provided by the prime contractors of the Program (Lockheed Martin and Pratt & Whitney). Based upon the number of aircraft expected to be produced, these prime contractors provide the value of identified opportunities for which companies in Canada will be able to compete.

The key factors that could influence the value of industrial opportunities include the anticipated size and composition of the global F-35 fleet and the addition of opportunities, especially in the area of sustainment, as more planes are produced. To support consistency going forward, Industry Canada will be reporting all figures in USD, as provided by the prime contractors, to eliminate fluctuations in the figures due to exchange rate variations.

According to the most recent data provided to Industry Canada, the value of identified opportunities can be up to US$9.3 billion. When added to the value of the contracts already secured by companies in Canada of US$438 million, the total value could be US$9.8 billion.

The December 2009 industrial participation reports from the prime contractors identified US$10.5 billion in opportunities, which was converted to C$12 billion using the Bank of Canada's 2009 exchange rate. While the identified opportunities can vary based on the projected sales of the F-35 JSF to partner countries, as well as how successful companies in Canada are in securing work packages, fluctuations in exchange rates account for about two thirds of the decline in industrial participation opportunities since 2009. The remaining third of the decline results from opportunities that companies in Canada were unsuccessful in acquiring, those that did not materialize due to program decisions, and net adjustments in future values of identified opportunities.

To date, companies in Canada have been key suppliers for the development and production of major aircraft structures, components, software, and systems for the Joint Strike Fighter Program. Over the duration of the Program, additional opportunities for companies in Canada may arise that have not already been identified, particularly for work related to the sustainment of the aircraft.

Industry Canada’s report on the Canadian Industrial Participation in the F-35 Joint Strike Fighter Program can be found on the National Fighter Procurement Secretariat’s Web site.