Cost of Canada's new US-made fighter jet fleet set to rise, watchdog says
OTTAWA, June 10 (Reuters) - Canada's planned purchase of 88 Lockheed Martin (LMT.N), opens new tab F-35 fighters will cost at least 45% more than initially estimated and the project is also threatened by a pilot shortage, the country's top watchdog reported on Tuesday.
Canada, seeking to replace its antiquated fleet of CF-18 jets, announced the C$19-billion ($13.89 billion) deal in January 2023.
But Auditor General Karen Hogan said the final bill would be at least C$27.7 billion and could go as high as C$33.2 billion, citing factors such as foreign-exchange fluctuations and rising facilities costs.
The report is another blow to a 15-year, trouble-plagued attempt by successive administrations to replace the CF-18 jets, some of which have been flying for more than 40 years.
Hogan, who reports to parliament, said the Defence Ministry approach "had weaknesses, lack(ed) proactive measures to minimize the impact of potential threats, and the project did not have robust contingency plans."
A shortage of pilots that the Auditor General's Office identified in 2018 is still a significant risk, she said. The construction of special facilities for the jets is three years behind schedule.
Prime Minister Mark Carney ordered a review in March of the contract, in part because he said Canada relied too much on the United States for security. Delivery of the jets is scheduled to occur between 2026 and 2032.
In response, Defence Minister David McGuinty said Ottawa had put in place a plan to identify all potential risks associated with the deal.
"We will continue to work closely with our partners to actively manage costs throughout the duration of this project," he said in a statement.
Canada announced plans to buy the U.S.-made F-35 in 2010 but a switch in governments, rule changes for aircraft procurement, as well as challenges from the pandemic triggered major delays.
($1 = 1.3680 Canadian dollars)
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