Tender to replace aging fighter jets will be out this summer: Sajjan

A federal tender to replace Canada's aging fighter jets will be issued formally by mid-July, Defence Minister Harjit Sajjan said today.

Sajjan told a major defence industry trade show Wednesday that the government hopes to have bids from aerospace contractors to review by the winter of 2020.

The Liberal government had been on track to present a final tender to replace the air force's aging CF-18s by the end of May.

That deadline was pushed back recently as federal officials amended the process of evaluating industrial benefits in order to allow Lockheed Martin's F-35 to remain in the competition.

"This is proof that your feedback is heard and acted upon," Sajjan said in his prepared remarks today to the CANSEC trade show in Ottawa.

Second-hand jets being delivered

He also noted that second-hand F-18s — purchased from Australia to augment the existing fleet until brand new replacements arrive — have begun to arrive. Sajjan suggested that purchase can be counted among the department's procurement successes.

A senior government official, speaking on background Wednesday, said that once the bids are in, the plan will be to narrow down the contenders to two before deciding on a winner.

The official said the goal is to arrive at a final contract by 2022.

The first new jets won't be delivered until at least 2025.

There are four companies in the running: Lockheed Martin with the F-35, Boeing's Super Hornet, Airbus Military's Typhoon Eurofighter and Saab's latest version of its Gripen fighter.

Rivals unhappy with changes to process

The changes the federal government made to the evaluation process are troubling least two of Lockheed Martin's competitors attending the defence equipment trade show.

Under long-established military procurement policy, the federal government demands companies spend the equivalent of a contract's value in Canada as a way to bolster industry in this country.

The F-35 program is not structured that way. Canadian companies are allowed to bid on global supply chain contracts — but have no guarantee that they'll get them.

The recent revision ensures that Lockheed Martin will not be severely penalized for having a different system. That's raising the hackles of Boeing executives.

"I was surprised by the recommended changes," said Jim Barnes, the director of business development in Canada for Boeing Defence, Space & Security. "We believe we can put a really compelling offer on the table.

"You have a policy that's been in place for decades that has been very successful. The minister has mentioned this is a once-in-a-generation opportunity, so why would you deviate from a policy that has been so successful to accommodate a competitor?"

The Government of Canada has a requirement for new fighter jets and it "should put it out there and bidders will either say they can do or they can't," Barnes added.

The Liberal government agreed to the change in part due to pressure from the Trump administration, which fired off at least two warning letters that suggested Lockheed Martin might not even be able to submit a bid.

'Missing out on $30 billion'

Roger Schallom, Boeing's manager of international business development, said sticking with the existing benefits rules and with a company that can deliver direct offsets, rather than bidding opportunities, could mean a lot to the Canadian economy over the three-decade lifetime of the program.

"They're probably missing out on $30 billion, plus ... guaranteed work," he said.

A decision on whether Boeing will actually submit a bid will be made when a final draft of the tender is released, said Barnes.

The executive vice president of Saab Canada, Patrick Palmer, expressed similar concerns Wednesday.

"The recent changes may not give Canadians ... the best value at the end of the day," he said.

He repeated his company's pledge to build the Gripen fighters in Canada if his company is successful and indicated Saab already has sought out a so-called "build partner." He wouldn't say who that might be.

Airbus Military was asked for comment, but declined.

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