Public Accounts Committee on Oct. 7th, 2025

[LGen Jamie Speiser-Blanchet]

There are.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

I'll continue asking you a question.

Are there any best practices that Canada can learn from with regard to the procurement of Canada's future fighter jet capability, such as from previous major procurement projects?

[Stefanie Beck]

There are probably a lot of people who would want to comment on this particular one.

I think one of the things that have been unusual but helpful in many ways is having this joint project office. The intent is to share the risk and the burden. In today's speak, it's the crowdsourcing of development, research and innovation, and it's getting the best from each country that will then be fed into the creation of this new aircraft—not just the operation of it but also the maintenance. You're getting the best of every best air force in all of the partners that belong to this particular organization. That means you're spreading the burden of the cost of the research and development.

In fact, the U.S. government has shouldered by far the largest portion of the costs. From an R and D perspective, we're getting a good return on investment. You can't do that everywhere, but it is one good outcome of this particular structure.

Heather, who has just come from the Treasury Board Secretariat, or Paula might have more to add.

[Heather Sheehy]

Deputy, I think you raised one of the best points on this particular procurement. This allows us to work with our partners. In this particular project, there are eight partner countries: the U.S., Canada, Australia, Denmark, Italy, the Netherlands, the U.K. and Norway.

In addition to that, there are 12 other countries that are actually participating and have indicated that they are going to be purchasing this equipment through foreign military sales.

I have to say that this allows us to be part of an international team. It allows us to have interoperability. It also allows us to have the economies of scale that the deputy was talking about.

[Paula Folkes]

I'll echo what my colleagues have stated.

I think the other piece that's a really great practice here is the fact that we are joining a user group of all of our NATO allies that are in the Five Eyes group, and we are able to share that information. We also have the Australia, Canada and U.K. reprogramming lab, which is extraordinary. It is a tripartite effort to develop the mission datasets that we'll use for the CF-35A.

As Heather pointed out, the economies of scale are really important. They allow us to get best-customer pricing. They also allow us to join bulk buys, which brings our pricing down. Looking at the fact that this particular aircraft would have over 3,000 units worldwide, around 2,000 of them within our continent, you see that it provides increased opportunities for our industry, which is already providing over three million dollars' worth of parts on existing aircraft. We haven't even received that in Canada yet. We anticipate that this could grow, and that would be good for our economy.

There is one thing that I think is challenging. I don't know that any of us in this room thought that in 2025 we would have so many regional wars and also see a war in Europe. That geopolitical situation was hard to forecast. I think we do need to do a better job of that and have our costing match more for worst-case scenarios instead of reasonable scenarios, because the world is changing. Much of the cost increase and many of the changes are actually because the threat is proliferating rapidly and is changing. We have to achieve overmatch, so that we can bring our women and men, like Lieutenant-General Speiser-Blanchet, home and continue to undertake the missions asked of us by our government.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Lemire, you have the floor for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

The former commander of the Royal Canadian Air Force, Mr. Yvan Blondin, said that Canada would benefit from operating a joint air force with other types of aircraft than F‑35s. There was the replacement of the CP‑140 Auroras by National Defence, which ultimately awarded the contract to Boeing, without a call for tenders and at Bombardier's expense.

I also learned recently that Saab, the manufacturer of the Gripen, had committed to building its fighter jets in Quebec. That would have created 6,000 jobs, half of them in Quebec. It would also have created the Gripen Centre in Montreal, and there would have been a transfer of intellectual property. The development of a Canadian fighter aircraft through the Gripen research centre would probably have been a source of great pride. That would have allowed us to develop a generation of aircraft adapted to our reality.

We're thinking about the possibilities regarding a sixth generation. We could have been at the heart of research development. Why was this project not pursued? We talk about interoperability, we talk about being with allies, and Sweden is a member of NATO. Why wasn't this followed up?

[Stefanie Beck]

We spoke earlier of the sixth generation. A number of companies and countries are looking into this possibility. We know there are three right now, and that includes not only European countries but Japan as well, for example. We're wondering how to proceed, because there are a number of options. We can do what we did during the pandemic, which is put our eggs in several baskets, for example for vaccines. Would it be worthwhile to do the same thing for the sixth generation? Should we be assessing who gives us the best options?

One thing is certain: You have to join the various programs sooner rather than later. As the Auditor General said, as soon as you sign on to a program, you know a lot more about the costs and opportunities for Canadian businesses. Being there from the start changes everything.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Why didn't a company's willingness to invest so much, particularly in Quebec's economy, carry any weight in the decision?

[Stefanie Beck]

Maybe Paula could add to this, but in the evaluation of the different bids, they would always take into account the economic benefits, and that would have been part of the assessment at the time.

I don't know what Saab was proposing at the time, but that would have been part of the assessment.

[Paula Folkes]

It was recently announced that L3Harris in Mirabel is a strategic partner for Canada in the maintenance of our F‑35 fighter jets. Basically, our goal is to establish a regional repository. More than 2,000 fighter jets could be repaired in Quebec, at Mirabel. This is an incredible opportunity.

I understand that it may be attractive to think about building 88 fighter jets, but basically 75% of the life-cycle cost is in fighter aircraft maintenance. Construction and capital are one thing, but there are other opportunities for Canada, such as maintenance and perhaps a depot for engine repair.

[The Chair, Conservative, John Williamson]

Thank you very much.

Up next is Mr. Kuruc for five minutes.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you very much.

The Auditor General found major overruns within the DND's control. What was within the DND's control that led to these overruns?

[Karen Hogan]

Do you want me to answer that first?

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Sure.

[Karen Hogan]

I could try, and then I think DND could speak to the rest.

For us, one of the first things was the fact that the original estimate was based on outdated information. As I mentioned, there were cost estimates for the aircraft themselves that were more up to date and could have been used that came out of the joint strike fighter program office. They could have started with that.

There are elements that, in our view, were missing from the full costing of the project. As I mentioned earlier, DND manages its projects slightly differently. Some of the power grid upgrades and infrastructure needs that were put into another project should, I think, have been thought about here.

Then there were the delays. Any time you delay something, costs have the potential to increase. In this case, needing temporary infrastructure for maintenance and for training was driving up the costs that weren't planned at the beginning.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you. That's sufficient.

Ms. Beck, what kinds of cost overruns...? There was mention of temporary facilities. We have temporary facilities because.... In the report, we're three years behind on two major facilities. What kind of cost to the taxpayer is this?

[Stefanie Beck]

Those amounts would be included in the $27.7 billion, that particular package of costing. I know the term is “temporary”, but think of them more as transitional, because it's not a piece of infrastructure or equipment that we will throw away at the end. On the contrary, they can be used for other purposes, so it's not wasted money.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you for your clarification on that.

Would you agree that, to mitigate some of the costs in the foreign exchange that we talked about...? My colleagues on the other side were trying to figure out where these costs are coming from and may be taking the heat off what I would say is mismanagement. Would simply building things on time save the taxpayer a lot of money?

[Stefanie Beck]

Pete might want to add something, but we have done our own internal research, and the costs of inflation on defence equipment are even higher than regular inflation. The cost of infrastructure, especially the infrastructure we're building in the north, is even higher than it would be in the south of Canada, and of course a lot of our infrastructure is being built in the north.

For each extra month and year that it takes, there is definitely a greater cost. Sometimes there's a trade-off, in that there is better technology available if we're building it later—you get version six instead of four—but it's hard to judge whether we would have spent the equivalent amount of money in doing the upgrades.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you for that answer.

I would also like to ask, to flip back to the fifth-generation technology, who else is building fifth-generation planes? It's the U.S. and...?

[Stefanie Beck]

China and Russia—and we're not buying those.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

Thank you for clarifying that.

I guess the only pathway forward for us, and you've both recommended it, is the F-35. Thank you for that. Can you and the expert, the general, speak on the sixth-generation technology? How far away is that?

[Stefanie Beck]

I think the general is better to speak on the expert part, but the research and development is under way, as I was saying, amongst many countries. The earliest is the mid-2030s. It's more likely that what you would get is almost a prototype in the mid-2030s, and then it would evolve after that. Again, if you get in early, you get to shape it.

However, the general knows more about the difference between five and six.

[Ned Kuruc, Conservative, Hamilton East—Stoney Creek, ON]

It would be amazing if you could chime in on that.