Media Still Missing Real Story: Thanks to Peter MacKay’s Fudged Numbers, “Official” Cost of F-35s Now Exceeds $127,000 Per Flight-Hour
I have to say, it’s pretty depressing that not one of the many, many professional journalists in Canada is literate enough to read a government report. To their credit, some are trying. But they also had a whole press briefing slash lock-up slash sleazy play-time with the people they’re supposed to be holding accountable. It doesn’t seem to have helped them anyway.
Here’s the thing I tried to make clear in my long meander through the report, I tried to make clear that the real story here was that DND appeared to be fudging the usage numbers and life cycle expectations for the F-35. Somehow the media appears to have blissfully blown right by this fact. (I do hope readers can point me to an exception; they’ll get a gold star.)
Some did notice that the headline figure “$45 billion over 42 years” didn’t quite square with the fact that DND’s $45 billion estimate actually included 30 years of actual flight time. (The other 12 years are development and delivery time, and DND claims the clock is already running on that; more on that in the next post.) Andrew Coyne did a good job of trying, for instance. He still missed the main story. Even that was too much for some of his readers, who, judging by the comments section, fear that the whole thing has been cooked up by Liberal sympathizers to make Justin Trudeau look good.
Anyhow, here’s the real issue: in addition to playing dirty with the estimates, Minister Peter MacKay and the Department of National Defence have massively slashed the lifetime they plan to use the F-35s for, massively slashed the amount of flight-time they say the F-35s will see during that lifetime, and massively slashed the simulator budget. The only important thing they haven’t slashed is the number of planes we’re buying. It’s worth asking why, if we’re going to use them less often and for less time, we actually need 65 of them in the first place. How was this number picked? By a random number generator, perhaps?
We don’t know how long the F-35 will be used for. None of us really know. But the military does have a planned life cycle, subject to change. The actual cost estimate for the F-35 must be based on that life cycle, again subject to change. For instance, the cost of the F-35 will be different if we’re going to use it for 20 years than if we’re going to use it for 30 years, or 42 years. Or what have you. It’s like owning a car: the sticker price is just the first and biggest of many, many payments you’ll be making over the life of the vehicle. In this case, operating the F-35 costs more than buying it, so the longer you use it, the more it costs.
This was the second scandal over the Auditor General’s report a few months ago, which I noticed but which the professional media mostly missed. Aside from hiding $10 billion in operating costs, the real story the Auditor-General discovered was that while Defence Minister Peter MacKay was releasing public cost estimates drawn up on the assumption that the planes would only be used for 20 years, in reality DND planned to use the fleet for “at least” 36 years, at which time the planes would begin reaching the end of their planned life expectancy of 8000 flight-hours. That averages out to 18.5 flight-hours per month for each plane. Keep that number in the back of your mind, because we’re coming back to it.
At the time the media was mainly hung up on the missing operating costs figure, but there was also a major internal review the government ordered, parts of which were subsequently farmed out to KPMG (which has now been paid a substantial sum to conduct, among other things, an external review of an internal review by DND prompted by an external review by the Auditor General of an internal procurement process in DND which has in the meantime been transferred to Public Works, all of which is an efficient use of taxpayers’ money if ever there was one). That one was premised mainly on recalculating the cost over a more reasonable time frame.
Which is where we get the 42 year/32 year/20 year debacle that’s now playing itself out in the professional media. But hidden below that is another problem. This one is arguably even more important, because it relates directly to how DND got to the estimate of $45 billion for the F-35. As everyone who has ever owned a car knows, it’s not just how long you own the car that matters. What really matters is how much you use it. The same is true, obviously, of aircraft.
Now, DND says that the F-35 will be good for 8000 hours in the air. That doesn’t mean the F-35 will simply fall out of the sky at 1 minute past. It does mean that replacements will be urgently needed by then. (We’re still flying those pesky Sea King helicopters, after all, which Peter MacKay’s gross negligence has delayed the arrival of replacements for too, incidentally.) The Auditor-General pointed out this spring that at DND’s planned usage rates, the 8000-hour figure wouldn’t be reached for 36 years, and that DND’s planning documents showed they were hoping to use the F-35 for “at least” the full 36 years. The Auditor-General didn’t know how much the extra 16 years of flying operation would cost, but he said DND would be able to tell us. So far they haven’t.
Instead, what they’ve given us is an entirely new plan, based on an entirely different estimation of flight hours. It used to be that the planned usage of these plans was going to be somewhere in between 18.5 hours per month (the Auditor-General’s figure) and 20.2 hours per month (the actual usage of the CF-18 fighters currently in use, which DND says it was initially planning to use the F-35s for). Now, in order to hold the operating costs down to $45 billion, what they’ve done is shrink the actual usage down to 15 hours per month.
The official reason for doing so is hidden in the cursory notes at the bottom of the report: “to reflect the increased use of simulation.” That can’t be the whole truth, because the very next line, hilariously, adds that “the number of… simulators has been adjusted from 12 to eight to reflect current plans”! So we have will pilots getting less simulator training, flying planes for less time. But we’re getting the same number of planes! Why is that, again? Is there some planned future battle where Canada will need to field exactly 65 planes, no more and no less, or our side will lose?
Anyhow, it’s when you combine the new flight restrictions with the new lifetime adjustments that you get the criminal negligence of Minister MacKay’s new “plan.” At CF-18 level usage, which DND says it used for its original estimate, each plane would have seen an average of about 7300 hours’ use after 30 years. In other words, they’d be well on towards the end of their life by then. They’d keep using them for at least another 6 years at that point, and how long they lasted would depend on how well the 14 or so replacement airframes held up. (DND would buy about 14 F-35s, over and above the public figure of 65, in order to cover accidents, losses, and write-offs.)
That’s changed. Under the new figures, by the time the fleet turns 30, the average plane will only have been in the air for 5400 hours. It will have 30% of its expected lifetime still ahead of it. Of course it will be pretty long in the tooth since then. So either we’ll be replacing the F-35 before we reach the end of their useful life expectancy, at an even greater cost to the taxpayer, or we’ll be dragging these things with us into at least the 2060s, if not the 2070s. In short, the best-case scenario is that the F-35 will be the next Sea King.
There can be no apparent advantage to such a strategy except for the following: the new DND figures don’t actually reflect the planned reality any more than the last ones did. Either DND is already preparing for the possibility that they won’t get all 65 planes, or they’re lying about how much they plan to use them, or they’re dissembling about how long they plan to use them. Assuming Minister MacKay has not simply gone off the deep end, one of those three things must be true. You can decide for yourself which it is, and why, exactly, it’s going over so well in the Prime Minister’s Office that Peter MacKay still has a job.
All of which leads me to my headline. Last spring, DND’s figures implied that the F-35 would cost $25.1 billion over 20 years at 15,800 flight-hours per year for the whole fleet. That averages out to a cost of $79,400 per hour to buy, equip, and fly the F-35.
This winter’s figures are rather different. DND now says that the F-35 will cost $44.8 billion over 30 years at 11,700 flight-hours per year. By my math, that averages out to a cost of $127,600 per hour.
Every time an F-35 takes to the air, several Canadians have to work for an entire year to keep it up there.Tweet