F-35 costs soar nearly 50% amid delays, AG reports

Global News

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The cost of Canada's incoming fleet of advanced stealth fighters has exploded by nearly 50 per cent in just a few years, auditor general Karen Hogan said Tuesday in a new report.
The fighter jet audit is one of eight tabled in the House of Commons by Hogan and environment commissioner Jerry DeMarco which flagged problematic procurement contracts, a backlog in applications for First Nations status and a lag in reducing federal office space.
An investigation by the auditor general of Canada finds costs associated with the F-35 advanced fighter jet program are running $8.7 billion higher than the original estimates.
And it warns the program is being plagued by delays and crucial shortfalls — including a lack of qualified pilots.
The report lands in the middle of an active review ordered by Prime Minister Mark Carney to examine possible alternatives to the F-35. He ordered the review in response to U.S. President Donald Trump's trade war with Canada.
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National Defence said in 2022 the base price for the F-35s would be $19 billion — just two years later, that number has climbed to $27.7 billion. That does not include estimates for infrastructure upgrades or weapons.
The report found the department's 2022 estimates relied on outdated data from 2019 – despite the availability of better estimates showing 'that costs of the aircraft had already increased substantially.'
The audit finds issues associated with the global pandemic – such as runaway inflation, rising facilities and munitions costs and volatile foreign exchange rates – pushed the price tag sky high.
Auditor general Karen Hogan also warns that the program faces 'significant risks that could jeopardize the timely introduction of the new fleet.'
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She said the department successfully identified the risks but has not planned appropriately to mitigate them.
Construction of two new fighter squadron facilities — in Cold Lake, Alta., and Bagotville, Que. — is running three years behind schedule. The report says the facilities will not be ready until at least 2031 because the department needs to 'redo important elements' of their design.
The department started planning the new facilities in 2020 before the government had settled on the F-35, but the aircraft comes with significant infrastructure security requirements.
'Costs to develop an interim solution to support the new jets will further increase infrastructure expenses,' the report warns.
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It says the department produced a contingency plan to operate the aircraft from temporary facilities but the plan fell short because it was incomplete and offered 'no proposed actions nor a cost estimate.'
Canada is also still short of qualified pilots to fly the advanced aircraft — despite being warned about this back in 2018.
The report says the F-35 program lacks measures to minimize potential risks and the department failed to produce robust contingency plans. It notes that the department identified cost overruns from inflation and currency fluctuations as potential risks to monitor, but plans to track those risks were never approved by officials.
The Liberal government announced in 2017 it planned to purchase 88 new fighter jets and signed a contract with Lockheed Martin for the F-35s in 2023.
The modern jets are needed to replace Canada's aging CF-18 fleet, which is nearing the end of its service life.
The fighter jets are expected to be delivered between 2026 and 2032. Over the next two years, the initial eight will be sent to a U.S. air force base in Arizona, where Canadian pilots will be trained to fly them. The rest will be delivered to Canada starting in 2028.
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Ottawa says final talks underway with Lockheed Martin to procure F-35 fighter jets
The report says the Joint Strike Fighter Program Office conducted various assessments that uncovered 'significant issues,' such as 'insufficient departmental engineering personnel to service support equipment for both the CF-18 Hornet and CF-35A during the transition.'
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The audit says that at the end of the last fiscal year in March, National Defence earmarked $935 million for the U.S. government for the first four jets and related items needed to produce another eight aircraft. It says about $197 million has already been paid out.
On top of that, National Defence spent another $516 million on the project, including $270 million in infrastructure costs.