Ottawa formally asks companies to make their pitches to replace CF-18 jets

The federal government formally submitted requests for proposals (RFP) today to procure fighter jets to replace the decades-old CF-18s.

Four companies are in the running to supply Canada with roughly 80 new jets: Saab of Sweden, Airbus Defence and Space out of Britain, and the American firms Boeing and Lockheed Martin.

Those companies have until spring of 2020 to submit their initial proposals to the $19-billion competition. A decision on the winning bid is not expected until 2022 — the military procurement process can take years — with delivery of the first jets expected by 2025.

That means the first phase of delivery is slated to occur more than 15 years after the former Conservative government began the process of buying new jets to replace the CF-18s, which were first flown by the Canadian Armed Forces (CAF) in 1983.

"The procurement of a fleet of 88 future fighter aircraft is an essential step forward that our government committed to. This investment will mean that the Royal Canadian Air Force has what it needs to protect Canadians. It is essential that we get the right equipment that will serve our women and men in uniform for decades to come," Defence Minister Harjit Sajjan said in a statement.

Speaking to CBC News Tuesday, procurement officials from the Department of National Defence (DND), Innovation, Science and Economic Development Canada (ISED) and Public Services and Procurement Canada (PSPC) said the project has now reached a "major milestone" after months of intensive engagement with eligible suppliers, which resulted in thousands of tweaks to Canada's initial draft for eligible bids.

André Fillion, the assistant deputy minister of defence and marine procurement, said the 2025 delivery date will give Canada the capacity to meet its commitments to the North Atlantic Treaty Organization (NATO) and North American Aerospace Defense Command (NORAD).

Fillion said Tuesday the military is prepared to keep the existing CF-18s flying for at least another 10 years — until 2032 — as it awaits the new jets. It also previously agreed to purchase 18 used Australian F-18 jets for $500 million to ensure operational readiness.

Mitch Davies, a senior assistant deputy minister at ISED, said Canada has addressed concerns initially voiced by one bidder, Lockheed Martin, which said it would be unfairly disadvantaged in the procurement process because of how the industrial technical benefits (ITBs) portion of the deal had been structured.

The ITB policy requires that companies awarded defence procurement contracts undertake business activity in Canada equal to the value of the contract — but Lockheed Martin had argued it already funnels work to domestic aerospace companies as part of the F-35 fighter jet development program.

The company argued the ITB policy runs contrary to the F-35 participation agreement — which Canada signed — and accused Canada of trying to leverage a better deal than its allies. F-35 partner nations are prohibited from imposing requirements for industrial benefits as the work is determined on a best value basis.

Liberals, Tories trade blame over defence delays

"We have now structured the ITB so that all bidders are now in a position to make a compliant ITB offer that suits their circumstances," Davies said Tuesday — adding that Lockheed Martin could still be docked "points" used to measure the quality of a bid if it cannot commit to certain contractual commitments to make things in Canada as part of its pitch to build the jets.

Public Services Minister Carla Qualtrough said all of the bids will be assessed using the same evaluation criteria; proposals will be judged on a formula based on the elements of technical merit (60 per cent), cost (20 per cent) and economic benefits (20 per cent). It's on that last set of criteria — economic benefits — that Lockheed Martin could lose up to half its assigned points, the officials said.

But Qualtrough said tweaks to the procurement process will both guarantee spin-off benefits for the Canadian economy — the national shipbuilding strategy has produced millions in economic activity for dozens of companies across the country, for example — while also giving Lockheed Martin flexibility.

The points-based system means a company doesn't necessarily have to sign a binding contract committing itself to a certain amount of economic benefits, but it will get more points if it does.

"While we still wanted suppliers to commit to economic benefits to Canadians — worth the total value of whatever their bid is — we wanted to make sure that everybody could stay in the competition because it's in our interest as Canadians to have a fair, open, robust competition," Qualtrough said in an interview with CBC News Network's Power & Politics. "We don't want to get people inadvertently out of this before they have a chance to put their best bid forward."

The opposition Conservatives said the current government has caused unnecessary delays to procuring the new jets.

Prime Minister Justin Trudeau promised during the 2015 election campaign that a Liberal government would not buy the F-35 stealth fighter-bomber, vowing instead to launch "an open and transparent competition" for a C-18 replacement without a Lockheed Martin model on the list.

The Liberals said Canada needed to focus on protecting North America and not the "stealth first-strike capability" offered by the F-35. They later reversed course and allowed Lockheed Martin to make a bid following threats of legal action by the U.S. government.

Justin Trudeau's record when it comes to military procurement is one of failure and delays.- Conservative MP James Bezan

"Justin Trudeau's record when it comes to military procurement is one of failure and delays," Conservative MP James Bezan, the party's defence critic, said in a statement.

"It is inexcusable that Justin Trudeau spent the past four years dithering on the fighter jet file. Instead of rolling up his sleeves and procuring a new jet for our Royal Canadian Air Force, he decided to delay the selection of a new jet and purchased old used jets the same vintage as our current fleet," Bezan added, referring to the Australian planes.

Qualtrough said the Conservatives themselves botched the procurement file while in office, committing to Lockheed Martin through a sole-sourced contract before even completing a defence policy review.

"We cut that. We shut that down as soon as we came into office," she said, adding that a more careful planning process revealed the armed forces actually needed roughly twenty more jets than the Conservatives initially had been prepared to buy.

"I'm not going to say the prime minister made a mistake," Qualtrough said when asked about Trudeau's clear promise to leave the F-35 out of the bidding process. "I understand where he was coming from. He was frustrated there was sole-sourced competitions, that the Conservatives hadn't done anything in 10 years, they didn't have a plan. It wasn't costed. We just promised to do things differently, and we landed on this."

Lockheed Martin said Tuesday it looks forward to participating in the competition, calling the F-35 the "the most capable, best-value fighter, with significant, long-term industrial opportunities."

"As the competitive process continues, we are excited to share more about the F-35's ability to strengthen defence, enhance ally partnerships and drive economic growth in Canada," a spokesperson for the company said.

Simon Jacques, the president of Airbus Defence & Space Canada, said his company was carefully reviewing the request for proposals.

The Airbus-backed Eurofighter Typhoon is being used already by the Royal Air Force in the United Kingdom and by other NATO allies.

"We are proud of our history as a longstanding partner to Canada, serving the country's aerospace priorities for over three decades. We welcome the new opportunities to support the Canadian Armed Forces, to provide skilled aerospace jobs across our country and to help safeguard Canadian sovereignty," Jacques said.

A spokesperson for Boeing said it believes "the Super Hornet is the best choice for Canada's defence and aerospace industry."