Lockheed Martin ups the ante

So I see a report from the always well informed Murray Brewster on the CBC News website which says that “One of the companies vying to build the air force’s next generation of warplanes promises it can inject as much as $16.9 billion into the Canadian economy, even though its pitch to the Liberal government falls somewhat outside traditional boundaries.” He reports that “Lockheed Martin Canada is offering the F-35

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which has a controversial political history in this country, as a potential replacement for the military’s nearly 40-year-old fleet of CF-18 jet fighters.

Three bids in the often-delayed $19 billion competition were delivered Friday and the federal government expects to narrow the field to two by next spring, with the first fighters not scheduled for delivery until 2025,” Mr Brewster reports. He reminds us that “Under longstanding federal procurement policy, defence contractors are essentially expected to match the value of the contract and deliver an equal share of benefits to the Canadian economy … [it’simportant to understand that this is an “understanding,” it is an unwritten and essentially unenforceable “policy” that grew up, globally, back in the 1970s and ’80s and was always tinted with hints of scandal, some involving Lockheed Martin, but] …  The worldwide F-35 program is different in the sense that partnership in the program means Canadian companies are allowed to bid on fleetwide contracts and there is no dollar-for-dollar guarantee,” and the government is not allowed to ask Lockheed Martin for “guaranteed” industrial benefits, sometimes called regional industrial benefits or industrial offsets.

The Lockheed Martin pitch seemed to be 100% political. My guess is that the Canadian admirals and generals are, already, 99% onside with the F-35 Lightning II fighter …

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… the engineers are about 95% in favour of it and it probably has the support of the majority of the bean counters (including hard-nosed military logisticians) and contract lawyers, too. The final decision will be made by cabinet ministers who are totally uninterested in what Canada’s military might need. They, including Harjit Sajjan, can see this only through the lens of the next election campaign.

Sixteen point nine billion is a big number, especially when it’s in dollars, and it sounds like a real calculation, too, doesn’t it, not just something that the Lockheed Martin executive pulled out of thin air. In fact, Murray Brewster writes, “Steve Callaghan, Lockheed Martin’s vice-president of F-35 business development, said he is confident the company has delivered a solid pitch to the Canadian government despite the difference and the possible handicap it faces … [because it cannot offer industrial benefits, and, he said] … “We’re delighted to be part of this competition … [and] … We understand the rules. We understand the way the competition is structured and the requirements.”

Mr Brewster says that “The company conducted an analysis on the impact of its program in Canada and estimates over the lifetime of the F-35, it will pour $16.9 billion into the gross domestic product Screen Shot 2020-08-07 at 06.20.50and that there is the potential for more as sustainment contracts for the warplane eventually come on stream … [and] … Lorraine Ben, the chief executive officer of Lockheed Martin Canada … [my link added] … said the fighter jet program is important to the country’s economic recovery from the pandemic because it delivers high-skilled, high-paying jobs.

We’ll now wait and see how Boeing and Saab respond to this challenge.

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