Photographer: Mike Fuentes

Canada’s focus on F-18 replacements muddies F-35 purchase plan

November 29, 2016 Paul Murphy

Welcome to Bloomberg Government’s Analyst Picks, our daily briefing of top stories affecting the federal market. Bloomberg Government clients have access to Washington’s best government contracting data and analysis. Get introduced to one of our product experts

Canadian Defense Minister Harjit Sajjan announced Nov. 22 that the Canadian government will enter into discussions with Boeing Co. to procure F-18 Super Hornets to upgrade its fighter fleet.

Sajjan also announced Ottawa will launch a competition for the F-18’s replacement, further muddying former Conservative Prime Minister Stephen Harper’s decision in 2010 to buy 65 Lockheed Martin Corp. F-35s and begin deploying them by 2019.

According to Canadian Broadcast Corp.,

  • “The competition for a permanent fleet will be informed by the outcomes of the defence policy review next year,’’ Sajjan said.
  • Significantly, he added that the competition will produce “a new fleet that will be fully operational in the late 2020s,” which pushes the transition to new jets further into the future than the former Conservative government had planned. The previous government had planned to stop flying the current fleet by 2025.
  • “That means we must continue to fly the legacy F-18s throughout the 2020s, no matter what,” said Sajjan.

Analyst Take

This is a further blow to Lockheed, which according to Defense Industry Daily stood to benefit from the estimated $17- $46 billion planned Canadian purchase of F-35s. Following Harper’s controversial 2010 decision to sole source the F-35 purchase, government concerns over Lockheed’s delivery timetable and the total cost of the F-35s came to a head following the Liberal Party’s victory in the 2015 national elections.

The announcement of a new solicitation opens an opportunity to more competitors, including a European consortium that makes the Typhoon (BAE Systems Plc, Airbus Group SE, Leonard- Finmeccanica SpA) and Groupe Industriel Marcel Dassault SA, maker of the Rafale.

Weekly productivity tips and news, straight to your inbox.

U.S. increasing scrutiny of Chinese purchases of tech companies