Frequently Asked Questions

1. National Fighter Procurement Secretariat (NFPS)
2. Seven-Point Plan
3. Evaluation of Options
   • 3.1 Independent Review Panel
   • 3.2 Market Analysis
4. Independent Acquisition Process Review
5. Joint Strike Fighter Program
6. National Defence Annual Update
7. KPMG Independent Review on Costs (2012)
8. Independent Review on Costs (2013)
9. Opportunities for Canadian Industry

1. National Fighter Procurement Secretariat (NFPS)

Q1. What is the role of the National Fighter Procurement Secretariat?

The National Fighter Procurement Secretariat is responsible for the coordination and implementation of the Seven-Point Plan. The Secretariat was established in June 2012 and is tasked with ensuring due diligence, third party oversight, and open communications.

Q2. Why are Terms of Reference needed?

The Terms of Reference establish clear responsibilities for the National Fighter Procurement Secretariat and departments, in order to ensure the effective implementation of the Government's Seven-Point Plan.

Terms of Reference provide detail about "who, what and how": it sets out the improved governance and coordination structure, how due diligence will be strengthened, and how the work of the Secretariat will be transparent through more timely and effective communications.

Q3. Ministers and officials have said that the Secretariat will function in a similar manner to the National Shipbuilding Procurement Strategy. How so?

Attributes that led to the success of the National Shipbuilding Procurement Strategy will inform the work of the National Fighter Procurement Secretariat, such as:

• strong governance through an interdepartmental Deputy Minister decision-making committee;
• third party oversight; and
• public transparency through timely and effective communications.

Q4. The Ninth Report of the Standing Committee on Public Accounts made six recommendations regarding the replacement of Canada’s fighter jets.  Does the Government accept all of the Committee’s recommendations?

Yes, the Government accepts all of the Committee's recommendations. The Seven-Point Plan documents released on December 12, 2012 respond to all of the Committee's recommendations and provide the relevant information of interest to the Committee.

2. Seven-Point Plan

Q1. What are the objectives of the Seven-Point Plan?

The objective of Seven-Point Plan is to:

• ensure that the Royal Canadian Air Force acquires the fighter aircraft it needs to complete the missions asked of them by the Government; and,
• that Parliament and the Canadian public have confidence in the open and transparent acquisition process that will be used to replace the CF-18 fleet.

Q2. What has been done since the announcement of the Seven-Point Plan?

Backgrounder - Progress on Seven-Point Plan

Q3. What is the purpose of the Seven-Point Plan Status Report?

The Seven-Point Plan Status Report provides a snapshot of where the National Fighter Procurement Secretariat is in implementing the overarching Seven-Point Plan, including some of the key activities that are underway such as the evaluation of options.

Q4. When will the government make a final decision about replacement aircraft for the CF-18?

Once the work of the Seven-Point Plan has been completed, the National Fighter Procurement Secretariat's Deputy Minister-level Governance Committee will present their conclusions to ministers and a decision will be made.

3. Evaluation of Options

Q1. Why is this evaluation of options important?

The Evaluation of options is aimed at ensuring that the Royal Canadian Air Force has the right tools for the job. When the government announced the Seven-Point Plan, it initiated a new process to replace the CF-18s. The government will not make a decision until the Seven-Point Plan, including a thorough evaluation of options, is fully implemented.

Q2. Who is responsible for the evaluation of options?

The evaluation of options work is being led by the Royal Canadian Air Force, and informed by a broad range of subject matter experts drawn from across the Department of National Defence and the Canadian Armed Forces. A guiding committee that includes observers from the National Fighter Procurement Secretariat and central agencies is overseeing the work.

A Panel of independent reviewers, external to government is playing a challenge function by reviewing the methodology used and the analyses performed for each element of the evaluation options, as they are completed. The Panel will also review and assess the comprehensive report prepared by the Royal Canadian Air Force. The aim of the Panel is to ensure that the work performed is both rigorous and impartial, and that the results are comprehensive and understandable.

Q3. When will the evaluation of options be completed? Will the work be made public?

This work will be completed as expeditiously as possible and will culminate in a final report that captures the full analysis of the capabilities, costs and risks of each option against the missions outlined in the Canada First Defence Strategy.

The final report will be approved by the Canadian Armed Forces and National Defence and provided to the Deputy Minister Governance Committee to inform the Committee's conclusions that will be presented to ministers upon the completion of the Seven-Point Plan.

The report will be made public, while respecting applicable disclosure agreements with other governments and industry.

Q4. What other jets are being considered?

The evaluation of options to replace the CF-18 will examine the capabilities of all fighter aircraft currently in productionor scheduled to be in production, against the core missions of the Canadian Armed Forces.

Q5. Will the Statement of Requirement be revised?

All options are on the table. The Statement of Operational Requirement has been set aside and is not being used as part of this new evaluation of options. Any effects on the Statement of Operational Requirement will be assessed once the government has had the opportunity to consider the options analysis work.

Q6. How long will the CF-18s be operational? How do we ensure there is no capability gap?

As part of the evaluation of options, National Defence is conducting a thorough examination of Canada's current fleet of CF-18s, including an assessment of its capability to contribute to operations for timeframes beyond 2020, and the cost of necessary upgrades to maintain safe and effective operations.

3.1. Independent Review Panel

Q1. What is the Independent Review Panel expected to do?

The Panel will assess the methodology used and the analyses performed, and provide guidance at key milestones in the work . The involvement of the Panel will ensure that the work performed is both rigorous and impartial, and that the results made public are comprehensive and understandable.

Q2. Will the Panel be preparing a report?

The Panel will not be preparing a distinct report. The Panel plays a critical challenge function by reviewing the methodology, analysis and comprehensive report prepared by the Royal Canadian Air Force.

Q3. Will the work of the Panel be made public?

A summary of discussion of the Panel meetings is prepared by the National Fighter Procurement Secretariat and posted regularly on the Web site.

Q4. Does this mean the Panel will be providing advice to the military?

Military advice remains the purview and responsibility of the Canadian Armed Forces: the Panel is meant to engage Committee Chairs and Task Leaders on each of the six work elements to review and assess the methodology used and the analyses performed. Panel members will also review the results of each of the six tasks in the work plan, as well as provide advice on the documentation and products being completed by the Committee.

Q5. How will the Panel ensure their independence?

Panel members have agreed that in the interests of independence, objectivity and fairness, they will share with National Fighter Procurement Secretariat any significant contact they may have with industry or other stakeholders in the course of their personal and professional activities outside the normal meetings and discussions where Secretariat representatives are present.

Q6. How will the confidentiality of the information shared with Panel members be assured?

Panel members are subject to confidentiality provisions and must keep confidential all information provided to them, including any information that is confidential or proprietary to third parties, and all information conceived, developed or produced by the Panel as part of the work when copyright or any other intellectual property rights in such information belongs to Canada.

The Panel’s work to review classified documents will take place only in facilities suitable for those discussions

3.2. Market Analysis

Q1. What is the purpose of the market analysis?

The market analysis aims to seek and obtain capability and pricing information directly from industry in support of the evaluation of all available fighter aircraft. Anchored in the principles of openness, due diligence and third party oversight, the purpose of the market analysis is to provide companies with a full and fair opportunity to present information on their fighter aircraft to support the Government of Canada in making its decision on a replacement aircraft for Canada's fleet of CF-18's.

With the information provided by companies, the Royal Canadian Air Force will assess each fighter aircraft against each of the missions outlined in the Canada First Defence Strategy. The market analysis will also take into consideration information available to the government, as well as knowledge and experience gained by the Royal Canadian Air Force during coalition operations and exercises with allies.

Q2. How does the market analysis differ from a competition?

A competition is a procurement approach. It would be premature to discuss a procurement approach at this point in time. Until the Seven-Point Plan is complete, the Government will not make a decision on the replacement for the CF-18 fighter jets.

A market analysis is generally a standard tool that is used to determine market price and availability. The market analysis is undertaken in advance of developing a procurement strategy and statement of operational requirements.

Q3. Who is conducting the market analysis?

The National Fighter Procurement Secretariat, in close collaboration with National Defence, Industry Canada and Public Works and Government Services Canada, is seeking and obtaining capability and pricing information directly from industry in support of the market assessment of fighter aircraft that are currently in production or scheduled to be in production.

Q4. What companies will the National Fighter Procurement Secretariat contact for the market analysis?

On December 27, 2012, an introductory letter was sent to five companies indicating that the Government of Canada would be contacting them in early 2013 for more detailed and specific information. The companies are:

• The Boeing Company
• Dassault Aviation
• EADS Eurofighter
• Lockheed Martin
• Saab Group

Based on information available to the Government of Canada, these five companies have fighter aircrafts that are currently in production or scheduled to be in production.

Q5. How is the Secretariat gathering information about capability, pricing and industrial benefits from companies?

The Secretariat is engaging companies through questionnaires to obtain information on each available fighter aircraft and to provide companies with a full and fair opportunity to present information on their aircraft. A market analysis is a standard tool that is used to determine market price and availability. It is generally undertaken in advance of developing a procurement strategy.

The market analysis will be informed by three questionnaires:

1. Capability, production and supportability;
2. Price; and
3. Industrial benefits

The information provided will inform the Royal Canadian Air Force-led risk-based analysis of options to replace Canada's fleet of CF-18's.

Q6. What does the Government of Canada intend to do with the market analysis once it is received?

The information provided by the market analysis will inform the Government's decision for the replacement of the CF-18 fleet. The government will not make a decision until the Seven-Point Plan, including a thorough evaluation of options, is fully implemented.

Q7. The draft questionnaire on technical capabilities was sent out to companies on January 25, 2013 with a deadline to provide feedback on February 7, 2013. Did the Secretariat receive feedback from the five companies?

The Secretariat received feedback on the draft questionnaire from all five companies on February 7, 2013. The final questionnaire has taken into consideration the feedback received from the companies.

Q8. Why has the date for the receipt of responses on the final questionnaire on technical capabilities changed to May 22, 2013?

In order to be responsive to requests from companies, the National Fighter Procurement Secretariat has extended the date for submission of responses to the capability questionnaire to May 22, 2013.

Q9. How do you explain the changes between the draft and the final version of the first questionnaire?

The changes reflect a careful consideration of the feedback received from companies and provide additional opportunities to put forward information related to their aircraft. All fighters will be assessed in this process and none will be removed based on specific requirements.

Q10. The draft questionnaire on the price of available aircraft was sent to the companies on April 15, 2013. What is the deadline for the companies to complete the questionnaire?

The companies have been given two weeks to comment on the draft questionnaire on cost estimates for fighter aircraft. The feedback will be reviewed and a final questionnaire will be sent to the companies for completion at a later date.

Q11. Do the companies need to provide full life-cycle estimates?

Guided by Government of Canada policies and international best practices, KPMG designed a framework to inform the development of full life cycle cost estimates for the Next Generation Fighter Capability program.

The draft Price Questionnaire is consistent with KPMG's Next Generation Fighter Capability: Life-Cycle Cost Framework which recognizes the need to base cost estimates on the information available and the purpose for which it will be used.  Consistent with this approach, the questionnaire seeks cost information on the basis of the five broad categories required to develop life-cycle cost estimates, while respecting the high level costing information normally obtained during a market analysis.  This will provide rough order magnitude cost data which is representative and broadly comparable.  The information will allow the Government of Canada to assess all available aircraft with early indications of costs, as appropriate at this stage of the process.

4. Independent Acquisition Process Review

Q1. Why is this report being commissioned?

The Government put forward a Seven-Point Plan in response to the Auditor General's (AG) report of April 2012, to fulfil and exceed his recommendation.

The Terms of Reference stemming from the Plan indicate that a "validation of all the steps taken to date in the acquisition process will be conducted and independently verified."

The goal of this review is to independently review the steps in the acquisition process taken up to June 2012 and to:

• determine whether the shortcomings identified by the AG have been addressed;
• confirm whether the steps taken to date were in line with policies; and
• provide lessons learned.

On January 25, 2013, Samson & Associates was awarded the contract to conduct an independent review of the acquisition process for the replacement of the CF-18.

Q2. Will Samson & Associates question or duplicate the Auditor General's work?

No. The Government has accepted the findings and recommendation of the Auditor General; we are not questioning or duplicating his work.

However, Samson & Associates will need to review all documentation to date to determine if the shortcomings identified by the Auditor General have been addressed. The aim of the acquisition process independent review is to provide lessons learned and make recommendations for acquisitions of a similar nature.

Q3. What is the value of the contract awarded?

On January 25, 2013, Public Works and Government Services Canada on behalf of the National Fighter Procurement Secretariat awarded a contract with an estimated value of $ 161,950.

Q4. What is the deadline for the contractor to provide its report to the Government?

The results of the acquisition process review are expected to be delivered in spring 2013.

Q5. Will the Acquisition Process Review Report be made public?

Yes. The scope of work specifically calls on Samson & Associates to "prepare and present a final report, the latter suitable for public release."

Q6. What does the Government of Canada intend to do with the Acquisition Process Review once it is received?

The information provided by Samson & Associates will provide lessons learned and make recommendations for acquisitions of a similar nature. This work is part of the Seven-Point Plan that will inform the Government's decision on how to move forward with the replacement of the CF-18 fleet.

Q7. What is the difference between the independent review conducted by KPMG and the Acquisition Process Review?

KPMG was contracted to develop a life-cycle framework guided by Government of Canada policies and international best practices, to inform the development of full life cycle cost estimates for the Next Generation Fighter Capability: Life-Cycle Cost Framework program. KPMG further independently verified the costs estimates in National Defence's Annual update.

Samson & Associates will look back at the acquisition process for the F-35 and independently review the steps taken up to June 2012. This review will provide lessons learned and propose recommendations for improvements to current practices and policies to increase the level of due diligence for acquisitions of a similar nature.

Q8. Why was the Request for Proposal re-issued?

There were no compliant bids received in response to the first Request for Proposal (RFP) for the Acquisition Process Review which was issued on October 25, 2012. The RFP was re-issued on December 14, 2012.

5. Joint Strike Fighter Program

Q1. Has the Government spent any money towards the purchase of F-35 fighters?

No. Canada became a partner in the Joint Strike Fighter Program through a Memorandum of Understanding (MoU) signed along with eight other countries. Under the terms of the MoU, the Government of Canada makes a financial contribution to benefit by participating in the Program, however it does not commit Canada to buy the F-35. The funding for the purchase of a replacement for the CF-18s remains frozen.

Q2. Why is Canada continuing its participation in the Joint Strike Fighter Program?

Canada remains in the Program to benefit from economic opportunities resulting from its partnership. Until the Seven-Point Plan is complete, including an evaluation of options, the Government will not make a decision on the replacement for the CF-18.

Under the terms of the Memorandum of Understanding, the Government of Canada makes a financial contribution to maintain its involvement and benefits of participating in the Program.

It does not commit Canada to buy the F-35. The Government of Canada is making a payment for the 2013 United States fiscal year (October 1, 2012 to September 30, 2013), which amounts to US$36.6 million.

Q3. How much has Canada contributed to the Joint Strike Fighter Program to date?

Canada has been a participant in the Joint Strike Fighter Program since 1997 and has expended US$267.7 million to date to participate in the Program. This figure can be explained as follows:

• Concept demonstration phase (1997 to 2001)—Canada has contributed US$10.6 million;
• System development and demonstration phase (2001 to 2018)—Canada has contributed US$94.4 million to date;
• Production, sustainment, and follow-on development phase (2006 to 2051)—Canada has contributed US$162.7 million to date.

In addition, Canada has invested US$53.7 million in companies in Canada through Industry Canada's Strategic Aerospace and Defence Initiative and the former Technology Partnership Canada program.

Q4. Why is Canada spending on the Joint Strike Fighter Program if the F-35 funding is frozen?

The $9 billion acquisition envelope for a replacement for the CF-18 remains frozen. Canada remains in the Program to benefit from economic opportunities resulting from its partnership in the Joint Strike Fighter Program while it undertakes an evaluation of options.

Q5. How does Canada’s continued involvement with the Joint Strike Fighter Program relate to the evaluation of options to replace the CF-18 fighter jets?

All available options to replace the CF-18 fighter jets are being considered. An Independent Review Panel and the National Fighter Procurement Secretariat are ensuring that all of the work supporting the evaluation of options being done by the Royal Canadian Air Force is both rigorous and impartial. Although the funding for the purchase of a replacement for the CF-18 fleet is frozen, Canada remains in the Program to benefit from economic opportunities resulting from its partnership while it undertakes an evaluation of options.

6. National Defence Annual Update

Q1. Why is the new cost higher than the cost previously provided?

Toutes les options disponibles pour remplacer les chasseurs CF-18 sont prises en considération. Un panel d'examinateurs indépendants et le Secrétariat national d'approvisionnement en chasseurs veillent à ce que tous les travaux exécutés par l'Aviation royale canadienne (ARC) à l'appui de l'évaluation des options soient rigoureux et impartiaux. Bien que le financement de l'achat d'un avion de remplacement du CF-18 soit gelé, le Canada demeure dans le cadre du Programme afin de bénéficier de possibilités économiques découlant de son partenariat tandis qu'il entreprend une évaluation des options.

National Defence has applied the Life-Cycle Cost Framework principles provided by KPMG which directly responds to the Auditor General's recommendation to provide “full life cycle costs.” In so doing, costs are now projected over a 42-year span – from development through to disposal – rather than previous projections over 20 years of sustainment and operations. The majority of the increased cost is the result of extending the time period from 20 years to 42 years.

Q2. Why does National Defence treat attrition as a separate cost?

National Defence includes in the Annual Update the cost for attrition aircraft for information, but not as part of its F-35 costing. National Defence has noted that the $9B acquisition funding cannot be increased and that any decision on attrition aircraft is contingent on a future government decision. If acquisition costs exceeded contingency, the number of aircraft to be acquired would be reduced.

Q3. Did National Defence apply KPMG's recommended amount of contingency?

As an aggregate, National Defence's total amount of contingency of $2.6B falls at the mid-point of KPMG's recommended range of $1.1B - $4.5B. However, National Defence's estimated amount of contingency for acquisition is $602M, which is lower than the range of acquisition contingency recommended by KPMG. National Defence's sustainment contingency is $2B, which is at the top end of KPMG's range.

Q4. Based on your updated costing information, what is the average Unit Recurring Flyaway (URF) price for the F-35A Conventional Takeoff and Landing variant during the 2017-2023 timeframe?

The up-to-date costing information provided by the Joint Strike Fighter Program Office, based on the U.S. Department of Defense Selected Acquisition Report (SAR 11), indicates the current URF for the F-35A is US$87.4M. Canadian F-35 cost estimates are based on the notional delivery of aircraft between 2017 and 2023, however no decisions on a replacement to the CF-18 will be made until the Seven-Point Plan is complete.

Q5. How and when does National Defence receive U.S. Joint Strike Fighter Program costing information?

As agreed in the Production, Sustainment and Follow-on Development Memorandum of Understanding, cost estimates for the acquisition and sustainment of the F-35 are provided to partners on an annual basis through bilateral communications by the Joint Strike Fighter Program Office. The information provided is based on the same source of information that is used by the U.S. Department of Defense and presented to Congress.

National Defence received the latest Program costing information at a meeting in Washington, D.C. in spring 2012. National Defence's next update on the cost estimates of the F-35 will include cost information from the Selected Acquisition Report 2012 (SAR 2012), which Canada will receive next spring.

Q6. If the government decides to buy the F-35, will Canada keep its current schedule to purchase the aircraft?

No decision on the replacement of the CF-18 will be made until the Seven-Point Plan is complete. This includes decisions around the buy profile.

7. KPMG Independent Review on Costs (2012)

Q1. What period of time do other partner nations use to estimate the costs for the F-35?

Among Joint Strike Fighter partners, there is no standard method of reporting cost estimates for the F-35. Each country has its own methods and reporting requirements, so it would be difficult to compare.

However, in general, KPMG's independent report indicates that Australia, Norway and the Netherlands all use a 30-year life-cycle for their cost estimates.

Q2. Are you going to use KPMG's Life-Cycle Cost Framework for other military acquisitions?

KPMG is currently developing a Next Generation Fighter Capability: Life-Cycle Cost Framework that could be used to inform other similar military acquisitions. Under the terms of the contract, they will provide a further report to the Treasury Board Secretariat in December 2012. The government will consider this input in the context of similar future acquisitions.

Q3. What were KPMG's findings on National Defence's application of KPMG's Life-Cycle Cost Framework?

KPMG reviewed the estimates in National Defence's Annual Update and found that they were consistent with the principles of the framework.

Q4. What length of time did KPMG recommend National Defence use when providing cost estimates?

KPMG did not recommend a specific time frame. Rather, KPMG recommends costing the full life cycle of the program, from development through to disposal.
Applying the principles outlined in the Framework, National Defence has provided cost estimates for the Next Generation Fighter Capability: Life-Cycle Cost Framework Program over 42 years (2010 to 2052) from development through to disposal. KPMG found that the use of this period of time is consistent with the principles of the Framework.

Q5. Did KPMG review the cost estimates provided by the Joint Project Office?

Costing information provided by the Joint Project Office was not subject to the review exercise under the terms of KPMG's contract. The National Fighter Procurement Secretariat Terms of Reference note “acquisition and sustainment assumptions received from the US Joint Strike Fighter program office will not be included in this review.”

Q6. What did KPMG find?

In its review of the estimate prepared by National Defence, KPMG did not identify any significant quantifiable differences resulting from the National Defence application of the Life-Cycle Cost Framework.

KPMG did provide observations and recommendations: KPMG Framework and Independent Review of Cost Estimates for the F-35

Q7. Does the Government accept KPMG's recommendations that are provided in its Independent Review of Life-Cycle Cost?

The Government of Canada accepts all of KPMG's recommendations.

Q8. What did KPMG provide?

Following a competitive process, KPMG - a leading international firm - was awarded the contract to independently review National Defence's cost estimates for the Next Generation Fighter Capability: Life-Cycle Cost Framework Program.

Guided by Government policies and international best practices, KPMG designed a best-practices guide (the Next Generation Fighter Capability: Life-Cycle Cost Framework) to inform the development of full life-cycle cost estimates for the Next Generation Fighter Capability: Life-Cycle Cost Framework program. The Framework outlines the people, processes and products required to develop a full life cycle cost estimate.

KPMG subsequently analysed, verfied and reported key findings on National Defence's application of the Framework to the NGFC program. This portion of the independent review involved an assessment of the scope, assumptions and calculations underlying National Defence's estimate. Finally, KPMG verified National Defence's first Annual Update on the cost of the NGFC program.

Q9. What is the value of the KPMG contract?

On September 7, 2012, PWGSC awarded the contract at estimated cost of $643,535. This corresponded to the price KPMG bid to complete the work required by the contract. It did not cover any separate optional services.

The Request for Proposal asked bidders to provide a financial bid in two parts:

• A price to conduct the work of the contract; and
• An additional price for the optional deliverable which consists of work on the generic framework of life-cycle costing for other military procurements.

On September 26, 2012, through a formal contract amendment, the Government exercised its option to buy the above additional services at the agreed-upon price bid by KPMG in its original financial bid. It is common practice for PWGSC to issue Request for Proposals that include both a mandatory piece of work as well as optional services, to be called-upon at the Crown's discretion.

The total value of the KPMG contract amounts to $705,854.50

Q10. Why was this report commissioned?

All aspects of the Seven-Point Plan must be completed before the Government will proceed with the purchase of any replacement aircraft for the CF-18. The Seven Point Plan includes an independent review of National Defence's acquisition and sustainment project assumptions and potential costs for the F-35.

Q11. What does the Government of Canada intend to do with the information received from KPMG?

The information provided by the independent review is one of many Seven-Point Plan items that the government will consider when moving forward with the replacement of the CF-18 fleet.

8. Independent Review on Costs (2013)

Q1. Why is this independent review of costs being commissioned?

On March 11, 2013, Raymond Chabot Grant Thornton was awarded a contract to conduct a review of the application of National Defence’s life-cycle cost estimates for the F-35.

The purpose of this new independent review is to ensure the Next Generation Fighter Capability: Life-Cycle Cost Framework is appropriately applied by National Defence and that the cost estimates in the upcoming 2013 Annual Update to Parliament on the Next Generation Fighter Capability: Life-Cycle Cost Framework are sound. Through this independent review, the National Fighter Procurement Secretariat is meeting its commitment to ensure due diligence, as outlined in the Terms of Reference.

Q2. What does the Government of Canada intend to do with the information contained in the independent review of costs once it is received?

An independent review of cost estimates for the F-35 is a commitment within the Seven-Point Plan. The information provided by the contractor will inform the government's decision on how to move forward with the replacement of the CF-18 fleet and will be made public.

Q3. Who bid on the contract for the independent review of costs?

Firms pre-qualified under Stream 6 of the Professional Audit Support Services (PASS) Supply Arrangement were invited to bid on this solicitation.

Q4. What is the PASS supply arrangement? Was it used to procure the services for this contract?

PASS is a mandatory supply arrangement used by Public Works and Government Services Canada to procure audit and financial management services. Through PASS, federal departments and agencies can invite bids directly from a pool of experienced suppliers already pre-qualified in specialized work streams. Opportunities to qualify for PASS are advertised quarterly on MERX.

The National Fighter Procurement Secretariat is using PASS to obtain the services of a firm to conduct an independent review of National Defence’s life-cycle cost estimates for the F-35. The Secretariat will use Stream 6—Financial Accounting Services—of PASS, as this mechanism best meets the requirements of this contract.

Q5. What is the value of the contract awarded?

Public Works and Government Services Canada, on behalf of the National Fighter Procurement Secretariat, awarded a contract with an estimated value of $56,217.50. The cost was determined based on market value, as a result of the bids received.

Q6. Why has the government included two additional one-year periods in the Request for Proposal for this contract?

The government has included two optional periods of work in the Request for Proposal in the event annual updates on the Next Generation Fighter Capability: Life-Cycle Cost Framework program will be produced in 2014 and 2015. The contract does not commit Public Works and Government Services Canada to exercise either of these two optional periods, which may be exercised solely at the discretion of Public Works and Government Services Canada.

Q7. When will the contractor provide its report to the Government?

The report on the independent review of costs will be delivered to the government to meet the Seven-Point Plan commitment to table it within 60 days from receipt of the annual costing forecasts from the Joint Strike Fighter program office.

Q8. Will the firm’s findings be made public?

Yes. The final report will be made public in the spring of 2013 on the National Fighter Procurement Secretariat’s website.

Q9. How does this independent review differ from the independent review conducted by KPMG?

KPMG was contracted to develop a life-cycle framework guided by Government of Canada policies and international best practices, to inform the development of full life-cycle cost estimates for the Next Generation Fighter Capability: Life-Cycle Cost Framework program. KPMG further independently verified the costs estimates in the 2012 Next Generation Fighter Capability Annual Update.

The purpose of this new independent review is to ensure that the Next Generation Fighter Capability: Life-Cycle Cost Framework developed by KPMG in 2012 is appropriately applied by National Defence and that the cost estimates in the 2013 annual update are sound.

9. Opportunities for Canadian Industry

Q1. Are industrial participation values contingent upon Canada procuring the F-35?

Yes. The 2006 Memoranda of Understanding between the Government of Canada and the prime contractors (Lockheed Martin and Pratt & Whitney) state that continued access to industrial opportunities is contingent upon the Government of Canada remaining a partner in the Program and procuring the Joint Strike Fighter (F-35) aircraft.

Q2. How is Canadian industry benefiting from the Program? How many companies are involved?

Since Canada joined the F-35 Program in 1997, 72 Canadian companies have received US$438M in contracts.

New skills and technologies gained through the F-35 Program have helped position Canadian industry to take advantage of other advanced aerospace and defence projects. For instance, GasTOPS of Ottawa, Ontario developed debris sensors for the F-35's engine. As a result, their sensors were chosen by Pratt & Whitney for inclusion on the new geared turbofan engines that will power the Bombardier CSeries and Airbus' A320neo.

Q3. What are the potential long-term benefits for Canadian companies?

If Canada decides to purchase the F-35, Canadian companies who currently have contracts will have the opportunity to increase their level of participation as the Program moves into production. There are additional opportunities that have not yet been awarded to Canadian companies, but that are identified in the industrial participation plans. Further opportunities will be available in areas such as sustainment, maintenance, repair, training and simulation.

Q4. Is the work guaranteed? Are prime contractors obligated to put work in Canada?

As of June 2012, 72 companies in Canada have received US$438M in contracts. Given the competitive edge of Canada's aerospace industry, it has the strength to compete and benefit significantly from participation in the Joint Strike Fighter Program, including winning some of the $9.3B in additional identified opportunities, but we know that there are no guarantees, and that these are contingent on the acquisition of the F-35.

Q5. Why does Industry Canada not present a range of industrial participation values?

The report on industrial participation makes it clear that there are no guarantees that Canadian industry will win all of the potential contracts.