Lockheed Martin F-35 Lightning II Canadian procurement

The Lockheed Martin F-35 Lightning II Canadian procurement is a defence procurement project of the Canadian government to purchase 65 Lockheed Martin F-35 Lightning II Joint Strike Fighters for the Royal Canadian Air Force (RCAF). The F-35 procurement has been a source of considerable controversy in public policy circles in Canada since the federal government announced its intention to purchase the aircraft in 2010. In April 2012, with the release of a highly critical Auditor General of Canada report on the failures of the government's F-35 program, the procurement was labelled a national "scandal" and "fiasco" by the media.

The F-35 was conceived by the United States Department of Defense as requiring participation from many countries, most of whom would contribute to the manufacture of the aircraft as well as procure it for their own armed forces. Canada, through the Department of National Defence (DND) and the departments of Public Works and Government Services Canada (PWGSC) and Industry Canada (IC), has been actively involved in the Joint Strike Fighter (JSF) project from its beginning in 1997. Canada's initial participation in the JSF project required a US$10 million investment from DND to be an "informed partner" during the evaluation process. Once Lockheed Martin was selected as the primary contractor for the JSF project, Canada elected to become a level-three participant (along with Norway, Denmark, Turkey, and Australia) in the JSF project. An additional US$100 million from DND over 10 years and another $50 million from IC were dedicated in 2002.

On 16 July 2010, Prime Minister Stephen Harper's Conservative government announced that it intended to procure 65 F-35s to replace the existing 80 McDonnell Douglas CF-18 Hornets for C$16 billion (with all ancillary costs included) with deliveries planned for 2016. The stated intention was to sign a sole-sourced, untendered contract with Lockheed Martin. This, combined with the government's refusal to provide detailed costing of the procurement, became one of the major causes of the finding of contempt of Parliament and the subsequent defeat of the Conservative government through a non-confidence vote on 25 March 2011. The F-35 purchase was a major issue in the Canadian 2011 federal election, which resulted in a Conservative majority government.

The Government of Canada has only stated an intention to purchase the F-35 and that a contract would not be signed until at least 2013; currently there would be no cancellation fees if the government chose not to proceed, although Canadian contractors might lose F-35-related contracts as a result. Should they purchase the F-35, RCAF pilots may receive flight training either from the USAF or from contractors to allow the RCAF to devote more aircraft to the operational fleet. The F-35 did not feature in the federal budget tabled in March 2012.

Level 3 industrial partner
Alan S. Williams of Queen's University, the former Assistant Deputy Minister of National Defence (Matériel) who signed the original industrial participation agreement, has indicated he believes that the Government of Canada's rationale for joining the JSF project was not due to an urgent need to replace the Canadian Forces' fleet of CF-18 Hornets; instead, it was driven primarily by economics. Through the Government of Canada's investment in the JSF project, Williams says that Canadian companies were allowed to compete for contracts within the JSF project, as there were fears that being shut out from industrial participation in such a large program would severely damage the Canadian aviation industry. Joining the JSF project also furthered Canadian Forces access to information regarding the F-35 as a possible contender when it eventually plans to replace the CF-18 Hornet fleet. Improved interoperability with major allies allowed the Canadian Forces to gain insight on leading edge practices in composites, manufacturing and logistics, and offered the ability to recoup some investment if the Government of Canada did decide to purchase the F-35.

As a result of the Government of Canada's investment in the JSF project, 144 contracts were awarded to Canadian companies, universities, and government facilities. Financially, the contracts are valued at US$490 million for the period 2002 to 2012, with an expected value of US$1.1 billion from current contracts in the period between 2013 and 2023, and a total potential estimated value of Canada's involvement in the JSF project from US$4.8 billion to US$6.8 billion.

History
On 16 July 2010, when the Government of Canada announced its intention to buy 65 F-35s to replace the Canadian Forces' existing 80 CF-18s in a untendered sole-sourced contract, the procurement was propelled into the national spotlight. The Liberals were the governing party when Canadian participation in the Joint Strike Fighter program over 10 year prior; however, the opposition Liberal Party Leader Michael Ignatieff immediately called for the House of Commons Standing Committee on National Defence to convene as soon as possible and examine the purchase of the aircraft, calling the announcement a "secretive, unaccountable decision to proceed with this contract." Ignatieff indicated that they would put the sole-sourced contract on hold should they form the next government. The July 2010 announcement led to quick media speculation that, with opposition parties uniting against the sole-source contract, the issue might bring down the minority Conservative government and force an election. Elements of the media criticized the aircraft as being too expensive, too short-ranged and too complex for Canada's needs and also questioned the suitability of a single-engined fighter to patrol Canada's vast airspace. Moreover, Leonard Johnson, a retired Canadian Forces Major-General and former Commandant of the National Defence College said, "It’s hard to see any useful military role for the F-35. The age of major inter-state war between developed nations has vanished, so why prepare for one?"

There has also been significant support for the procurement from active and retired Air Force personnel. Major-General Tom Lawson, Assistant Chief of the Air Staff, said that the F-35's stealth could help defend Canadian sovereignty as Russian bombers would be faced with an "undetectable threshold". Some members of the Liberal party, such as retired general Romeo Dallaire and former Quebec Liberal MP Jacques Saada, backed the F-35 purchase. Dallaire referred to the F-35 as an "excellent" fighter and suggested Canada should purchase more than the contracted 65, while Saada, the current head of Quebec's Aerospace Association (AQA), claimed the contract was the culmination of a "very serious" competitive bidding process in the 1990s - countering the claims of the two opposition parties.

Canadian Wikipedia controversy
On 28 July 2010, the National Post newspaper reported that IP addresses registered to the Canadian Department of National Defence Defence Research Establishment Ottawa had been used on 20 and 21 July to attempt to remove critical text of the F-35 purchase from the Wikipedia article on the aircraft. Repeated attempts to remove text and add insults against the opposition were made by three IP addresses at the establishment. Martin Champoux, DRDC Manager of Public Affairs indicated it was not part of a government campaign to eliminate criticism, stating, "It sounds to me like someone was freelancing. This is not behaviour we commonly condone"; and indicated that IT specialists were attempting to track down those responsible and that employees would be reminded about government regulations regarding computer use. On 31 July 2010, the Ottawa Citizen reported that the IP addresses responsible had been traced to CFB Cold Lake and on 25 August reported they had been further traced to 1 Canadian Air Division Headquarters, CFB Winnipeg. "Now it's up to chain of command to pursue that, identify the individual and determine whether disciplinary or administrative action is appropriate," stated Canadian Forces spokesman Captain (N) David Scanlon.

On 29 July 2010, opposition leader Michael Ignatieff stated that the Wikipedia incidents showed the government had "something to hide". He added, "Instead of making the case for Canadians ... saying, 'this is why we need this plane,' they're playing these games with Wikipedia. If you can't prove this case straight up and you have to resort to these tricks, then there's something wrong with the very proposition." New Democratic Party Leader Jack Layton publicly said on 29 July 2010, "Attempting to expunge the realities of debate. I mean what the heck is going on here? We all knew [Prime Minister Stephen] Harper operated a controlling operation, but we didn't think he was willing to go so far as to snatch the words out of people's mouths and pretend they never were spoken. I hope that DND are simply disavowing this practice and will put a stop to it ASAP."

August 2010
Chief of the air staff, Lieutenant-General André Deschamps, stated that stealth would be useful both for survivability in foreign missions and to maintain an element of surprise in defending Canada's airspace. Philippe Lagassé, a defence analyst at the University of Ottawa, disagreed that stealth was useful in the domestic interception role.

September 2010
The Montreal Gazette reported in September 2010 that the Canadian Forces had planned to hold a competition in 2010, with a contract awarded in 2012 and the new aircraft to be operational between 2018 and 2023 to replace the CF-18 fighters which must be retired no later than 2020, when the sole sourced contract was announced.

In September 2010 Prime Minister Harper started referring to the Canadian Forces aircraft as the "CF-35", however, DND officially called it the "F-35 Joint Strike Fighter" as recently as March 2011.

October 2010
On 6 October 2010, retired Assistant Deputy Minister of National Defence (Matériel) Alan Williams testified before the House of Commons Defence Committee regarding the F-35; an aircraft which the Canadian media had referring to as the Flying Credit Card - with no prefixed spending limit. Williams was the ADM who signed the original industrial participation contract for the F-35 project on behalf of the Government of Canada. In his testimony, Williams indicated that the lack of a proper competition for the contract would likely squander billions of dollars in both tax dollars and lost business opportunities, stating "Procurement demands not only the highest degree of integrity, but also the appearance of the highest degree of integrity. Undertaking sole-source deals leaves the procurement process more vulnerable to fraud, bribery and behind the scene deal making and leaves the federal government more susceptible to such charges." Williams labelled Minister of National Defence Peter MacKay’s logic in defending the F-35 file as being "flawed" and that it "insults our intelligence". Prime Minister Stephen Harper responded to Williams' testimony, furiously attacking his integrity and accused him of changing his mind. Williams in turn responded to the Prime Minister stating "That’s a lie" and "I’ve never ever changed my opinion about sole-sourcing. I have no idea to what he’s referring to. I take great offence to that."

On 14 October 2010, the Canadian Centre for Policy Alternatives issued a report examining the proposed F-35 purchase entitled Pilot Error - Why the F-35 Lightning II stealth fighter is wrong for Canada. CCPA research associate, Rideau Institute president, and co-founder Ceasefire Canada Steven Staples stated: "Canada does not need the F-35, either for North American/domestic roles or for expeditionary roles. The Canadian government should not proceed with the planned procurement of the F-35". Staples added that the proposed purchase "has put Lockheed Martin in an extremely strong bargaining position in future negotiations over maintenance costs." While the government has claimed the purchase will create Canadian aerospace jobs, Staples wrote: "such claims are dubious at best" and that the F-35 contract contains "none of the spelled out 'offsets' that are typically built into such procurement projects." Staples concluded that Canada should: curtail the expeditionary role for Canadian aircraft; stretch the life of Canada’s existing CF-18 fleet by restricting aircraft to North American/domestic air surveillance and control; investigate the acquisition of a fleet of unarmed long-endurance pilotless aircraft, to undertake surveillance/reconnaissance missions and eventually air control duties; and use money saved by these measures to contribute to security in more effective ways.

On 26 October 2010, Sheila Fraser, Auditor General of Canada, identified "troubling" systemic problems, rigged competitions and cost overruns in defence procurement programs and indicated that the F-35 purchase could cost far more than the budgeted numbers indicate. Following Fraser's report Liberal leader Michael Ignatieff stated that if elected a Liberal government would cancel the sole-sourced deal and hold a formal competition to replace the existing CF-18 fighters.

Retired Canadian Forces Lieutenant-General Angus Watt in October 2010 said of the F-35, "It’s the best of all the available choices. It provides the best value for money, the best platform to address the security needs of Canada through to 2050, which is probably how long we’ll have this airplane." He commented that competition for a replacement fighter would be fought over undermining the specifications rather than offering alternative fifth-generation fighters. "The F-35 gives us a jet at the beginning of its technological life span. If you buy a jet at the end of its life span, that means in five to ten years it’s going to be obsolete. That means you’re going to have to try to add technology and that’s really tough. The growth potential, the ability to evolve this jet over the next 30-40 years, far surpasses anything else on the market." In response to criticism that stealth was not needed, Watt responded: "Stealth is not some voodoo technology that lets you go in and willy-nilly take over Third World nations at will. It simply allows the pilot to survive. It isn’t necessary for every mission, but for some. For instance, reconnaissance. They can go quietly into territory, undetected, and come back safely. Or they can do a mission like the Kosovo bombing campaign, where there was a fairly sophisticated air defence system, and come back completely safely."

November 2010
In early November 2010 representatives of both Boeing and Dassault Aviation made formal complaints in front of a Canadian parliamentary committee saying that their products were not considered as Canada's new fighter. The companies claim that their F-18 Super Hornet and Rafale would satisfy all Canadian Forces requirements, but that DND officials did not even request detailed information on these aircraft. In December 2010 Eurofighter and Saab offered their own fourth generation fighter jets – the Typhoon and Gripen, respectively – for much less than the cost of the F-35, but the Government of Canada stated that the F-35's stealth was the best way to ensure that future Canadian Forces pilots could complete their missions and return safely.

A national poll conducted by Abacus Data between 29 October and 1 November 2010 indicated that the Canadian public was evenly split on support of the F-35 purchase with 35% in support and 37% opposed.

In a national public opinion poll conducted by EKOS Research Associates between 3–9 November 2010 a majority of Canadians, 54%, opposed the purchase of the F-35 by the Government of Canada. The largest result group were those who "strongly oppose" the purchase, at 34%. The same poll showed that overall support for the Conservative government had fallen below 30%.

December 2010
In a December 2010 press briefing, staff from the Canadian Forces' Directorate of Air Requirements stated that the F-35 was the only aircraft that matched their list of 14 mandatory and 56 less absolute requirements. They claimed that the list was not devised to ensure that only the F-35 met these requirements, but that the list could not be revealed to the public because the requirements are "highly classified," and "a question of national security."

By late 2010 Canada's political parties had outlined their positions on the proposed F-35 purchase. The Conservatives had declared it their top defence priority, the Liberals indicated that they would hold a competition to select a new fighter jet, the New Democratic Party was opposed to the purchase and the Bloc Québécois were in favour of it only as long as Quebec aerospace firms get a share of the work.

January 2011
In a January 2011 announcement, United States Secretary of Defense Robert Gates stated that the F-35B variant would be put on two years probation due to on-going delays, overruns and program development difficulties and that the F-35 Joint Strike Fighter project as a whole was suffering "ongoing development issues." This announcement created a significant reaction in Canada. Canadian Forces Major-General Tom Lawson, the Assistant Chief of the Air Staff stated, "I say without hesitation ... this is the only aircraft for the future." DND officials also issued assurances that Canadian F-35 deliveries would not be delayed due to the US announcement. However, Marc Garneau, opposition industry critic responded, "You can say that there's nothing new here that affects Canada. But all of the concerns that we've expressed in the past continue to exist. And I, from my point of view, feel that we're not out of the woods with the development of this aircraft...We should be only looking at an aircraft that is certified, developed, and for which we have a firm cost and a delivery. And that's obviously not the case today." NDP national defence critic Jack Harris said "It indicates that the program itself has significant flaws."

By mid-January the Government of Canada continued to aggressively defend the F-35 procurement, drawing parallels with the Liberal cancellation of the EH-101 helicopter project in 1993. Prime Minister Stephen Harper made campaign-style speeches at aerospace plants in an attempt to gain support for the purchase. The Liberal response included accusing Harper of hypocrisy, as the records indicate he was in favour of the EH-101 cancellation at the time. Liberal industry critic Marc Garneau explained his party's position on holding a competition to choose a new fighter, saying "We know we can get a better deal for Canadians, with guaranteed offsets." He also questioned the utility of a short-range, single engine fighter for the Canadian Forces, adding "all things being equal, two engines are better than one." General Walter Natynczyk, Chief of Defence Staff, entered the debate in January 2011 to counter a new Liberal Party advertising campaign questioning the purchase of the F-35. In an interview with the Globe and Mail Natynczyk stated, "From my perspective, the F-35 is the best aircraft with the best value for Canada...The cost per unit is the cheapest for any fourth- or fifth-generation aircraft".

In January 2011 the Government of Canada also enlisted the aid of two retired Canadian Forces Generals, Paul Manson and Angus Watt, to write a vigorous defence of the purchase for the media, entitled The truth about those jets. Their position, particularly about the lack of need for a competition, was refuted by former Assistant Deputy Minister of National Defence (Materiel) Alan Williams who said "For Canada to commit to purchase an aircraft without knowing for certain what it will cost nor how it will perform operationally makes no sense. If the F-35 is, in fact, the best aircraft for Canada it will win a competition. I cannot understand why its supporters are fearful of subjecting it to an open, fair and transparent competition." Other industry observers pointed out that while Manson had described himself as a "former Chief of Defence Staff" in his article, that he had neglected to mention his chairmanship of Lockheed Martin Canada, a wholly owned subsidiary of Lockheed Martin. Steven Staples, President of the Rideau Institute, said "While this fact in no way disqualifies the generals from sharing their opinion, it is an important truth about the F-35 debate that the stealth fighters' strongest backers are the military and the aerospace companies. In fact, it's getting awfully hard to tell them apart." In February 2011 opposition critic Marc Garneau criticized the government for incurring over C$200,000 in overtime and travel expenses to have military personnel and civil servants defend the political process of acquiring the F-35, calling the use of Canadian Forces officers to sell the aircraft to Canadians "unprecedented". Liberal MP Bryon Wilfert, who reviewed Defence Department public service overtime statistics, stated, "The lines are being blurred between government (workers) and the Conservative party. This is supposed to stand on its own as the best aircraft that we need, so why is it up to civil servants to sell it to the public?"

The Government of Canada is planning to purchase the F-35A model; this is the same model under development for the United States Air Force. However, unlike the F-35C model (under development for the United States Navy and United States Marine Corps), the F-35A cannot refuel from the Canadian Forces' existing tanker aircraft, which use the US Navy-style probe and drogue system. Additionally, the F-35A model cannot land on the short runways found at the Canadian Forces' forward operating air strips in the Arctic. However Defence Minister Peter MacKay has said that both issues will be dealt with under the current budget.

February 2011
The Prince Albert Daily Herald called the classified nature of the government's statement of operational requirements for the F/A-18 replacement "stealth-gate", noting that other requirements for military equipment have been made public.

March 2011
On 10 March 2011 the Parliamentary Budget Officer, Kevin Page presented a cost analysis of the F-35 program and concluding a total cost C$29.3B over 30 years, not the C$16B to C$18B claimed by the government, and a resulting per aircraft cost of C$450M each. Minister of National Defence Peter MacKay stated that cancelling the deal would "endanger the lives of Canadian pilots" and "endanger the sovereignty of this country", although he did not give specifics at to why that would be the case. In an editorial, The Globe and Mail said, "The PBO raises sharp questions. An accountable government, one that tried to convince on the basis of evidence, would answer them." The government questioned some of Page's assumptions, such as the 30 years lifespan instead of the planned 20. After reviewing the report, the opposition Bloc Québécois leader Gilles Duceppe was reportedly shocked by the cost and changed his mind on supporting the sole-sourced F-35 procurement and began to oppose it as unaffordable, favouring open competition instead. The Department of National Defence responded with details of a $16 billion cost estimate, over a 20 year lifespan only. On 23 March 2011, Kevin Page responded to the Assistant Deputy Minister of National Defence, claiming that Page made mathematical errors on both the individual F-35 cost and on long-term maintenance; Page indicated that the latest United States Department of Defense estimates are for US$151M per aircraft and that the United States Air Force would not pay more for the aircraft than its allies. As of November 2012, MPs remained deadlocked over a Tory attempt to strike Page's testimony.

Laurie Hawn, Parliamentary Secretary to the Minister of National Defence, stated that they expected a purchase price to be between $70 and 75 million each, based on conversations with other customers. He defended the 20 year budget figure and said "It really is the best airplane for the best price with the best benefit to Canadian industry to serve our military's needs for the next 40 years".

Canadian media commentators suggested that part of the reason for the symbolic deployment of six CF-18s to Operation Odyssey Dawn was to make the case that fighter jets will be required in the future and help make the case for the F-35. Prime Minister Stephen Harper and Conservative Party caucus members have suggested that the Libyan mission shows a need for the F-35, while others, such as Winslow Wheeler, an analyst with the Center for Defense Information in Washington, noted that the United States did not send stealth aircraft such s the F-22s to Libya, employing non-stealth fighters instead. Wheeler stated that the F-35 is the "culmination of such malevolent trends" in the United States and concluded it is "a poor choice...for the United States — and for Canada". Lockheed had previously replied to the same points by Wheeler by suggesting that the F-35 should be compared on a performance and cost basis against legacy aircraft that had combat equipment added, equivalent to capabilities built into the F-35 itself.

The Canadian version of the F-35 Joint Strike Fighter will differ from the USAF F-35A through the addition of a USN/USMC F-35B/C style refueling probe and a drag chute.

Polling conducted in March 2011 by Nanos Research showed that the majority of Canadians opposed purchasing the F-35. The poll showed that 68% of Canadians agreed with the statement "now is not a good time" to proceed with the purchase of the F-35. 56% of those identified as Conservatives oppose the purchase, as do 75% of undecided voters. Only 27% of those polled supported the purchase. This poll showed increased public opposition to the F-35 purchase over a similar poll conducted in November 2010.

Also in March 2011 retired Assistant Deputy Minister of National Defence (Matériel), Alan Williams, questioned the government's assertion that the F-35 procurement would only cost $75M per aircraft in an article entitled Let's be honest about the price tag on those planes. He stated, "In reviewing the government material tabled on March 17, 2010 before the Parliamentary and House Affairs Committee, it appears to me that the $75-million figure is not the "procurement cost" but rather the "unit recurring flyaway cost", which is merely part of the procurement cost...None of us can know for certain what the final cost to acquire the F-35 will be until we get a firm price quote. As production increases, the costs may drop. Nevertheless, all evidence to date indicates that we would pay over $120 million per aircraft, rather than $75 million, should we decide to acquire this aircraft." Echoing Williams' statements, Mike Sullivan, Director of Acquisition Management at the United States Government Accountability Office, said he doesn't know where the $75 million estimate comes from. In an interview with CBC's Power & Politics with Evan Solomon, he stated "That's not a number that I am familiar with at all" and indicated the price is presently "in the low 100 millions...Probably somewhere between $110-115 million".

On 30 March 2011 the weekly Canadian foreign policy Embassy magazine reported that "While Lockheed says the F-35 A-variant will cost $70 to $75 million, the PBO said on Mar. 10 that this plane will likely cost between $148 and $163 million, twice the original Government of Canada estimate. The US GAO put out its annual report on the JSF program on 15 March 2011 and said there were significant per-plane cost increases as well, putting the cost of each A-variant at $127 million."

F-35 as an election issue
After all three opposition parties indicated that they would not support the governing Conservative Party of Canada's budget presented on 22 March 2011, Liberal Party of Canada leader Michael Ignatieff moved a motion of non-confidence in the government on 26 March 2011. The motion declared the government to be in contempt of Parliament over its withholding of costing information for prison construction and the F-35 procurement. All opposition parties supported the motion which triggered the 2011 federal election, making the F-35 procurement a central election issue.

On 28 March 2011 the Globe and Mail revealed that the Conservative Party of Canada candidate for the Ontario riding of Algoma-Manitoulin-Kapuskasing, Raymond Sturgeon, was until December 2010 a paid lobbyist working at CFN Consultants and lobbying the government on behalf of Lockheed Martin. Sturgeon stopped lobbying for the company a month before he won the nomination. The federal government's lobbyists’ registry indicates that Sturgeon was working on behalf of Lockheed Martin in a role described as: "(assisting) in marketing strategy for the sale of aircraft and aircraft components to the department of national defence." The riding was not won by Sturgeon, but was retained by NDP MP Carol Hughes.

On the second full day of campaigning, 28 March 2011, Liberal leader Michael Ignatieff outlined his primary objection to the F-35 procurement, indicating that its huge price tag would prevent the federal government from properly funding health care in the future. He reiterated that Canada needs a new fighter jet to replace the aging CF-18s, but that a Liberal government would choose one through an open competition. He indicated that the government has "absolutely got to deliver the right plane at the right price. We can’t fool around here, there’s only so much money to go around" and labelled the government's position on the contract as "deeply irresponsible". Opponents of a competition point to the lack of competitive stealth fighter aircraft on offer to compete against the F-35 while Liberals question the need for stealth in a future fighter.

A national poll conducted in the first two days of the election campaign by Forum Research indicated that more than 60% of Canadians oppose the purchase of the F-35.

On 30 March 2011 Carl Meyer writing in the weekly Canadian foreign policy publication, Embassy magazine, noted: "The F-35 is already promising to be a big issue in Campaign 2011 with the Liberals raising it several times on the hustings. As well, the Conservatives are trying to contain the fallout from the recent revelation that one of their candidates in the current election was a lobbyist until last December for Lockheed. Pollsters say the fighter jet tops the short list of foreign policy controversies that could end up defining the campaign if leaders begin pushing the issue as a ballot box question."

The proposed procurement proved to be an issue in some specific riding races in the election. In the Ottawa-area riding of Carleton-Mississippi Mills incumbent Conservative MP Gordon O'Connor, a retired Canadian Army general and former Minister of National Defence who was serving as the chief government whip, was challenged by retired Canadian Forces navigator Lieutenant Colonel Karen McCrimmon, running as a Liberal. McCrimmon stated that the F-35 is not suitable for Canada because it remains under development, has not been evaluated for cold-weather operations, cannot safely use small northern deployment runways and also is not compatible Canada’s existing in-flight refuelling tankers. She has also noted that its single engine makes it unsuitable for use in the Arctic where twin-engined reliability is required. For his part O’Connor defended the F-35 pointing out that it is suitable for Canada because it won an intense, four-year US military competition for their new fighter aircraft. O'Connor stated, "The aircraft is in the final stages of its development: it’s a world leader."

Party platforms
On 3 April 2011 the Liberal party released their policy document for the election campaign entitled ''Your Family. Your Future. Your Canada.'' Of the F-35 it stated:

On 4 April 2011, the Bloc Québécois released their policy document entitled Parlons Qc (English: Let's Talk Quebec). There was no mention of the F-35 or the subject of defence at all; the party had previously stated opposition to the purchase as a result of the Parliamentary Budget Officer's March 2011 report outlining the F-35's estimated costs.

On 7 April 2011, the Green Party of Canada released their policy document, entitled ''smart economy. strong communities. true democracy.'' The policy did not mention the F-35 by name but did state that a Green government would reorient the armed forces towards peacekeeping, and reduce military spending to the 2005 level; and stated that the party would: "Support the transition from a Department of Defence into a Department of Peace and Security".

On 8 April 2011, the Conservative Party of Canada released their policy platform document entitled Stephen Harper's Low-Tax Plan For Jobs and Economic Growth. Of the F-35, it stated:

Reacting to the Conservative policy direction on the F-35, NDP leader Jack Layton stated, "without question, Stephen Harper's high-risk procurement strategy on the fighter jets places in doubt whether he has the right priorities for Canadian Forces or that he can get the job done” and indicated that decision will lead to "unstable employment, lack of capital investment, high-quality, value-added jobs being shipped overseas." Layton indicated that the country has not had a defence white paper since 1994, and that a new white paper needed to set Canadian defence priorities before decisions on aircraft were made.

On 10 April 2011 the New Democratic Party released their policy platform entitled Giving your family a break - Practical first steps. On the F-35, it stated:

American versus Canadian pricing
On 5 April 2011 at a Parliament Hill press conference, Winslow Wheeler, of the Center for Defense Information in Washington discussed the F-35's pricing. Wheeler worked for 30 years in Washington for both Republican and Democratic senators and for the United States General Accounting Office. He said of the Harper government's figures that "nobody on this earth" will pay just $75M for their F-35s, indicating that Parliamentary Budget Officer Kevin Page's numbers were "by far and away" more accurate than the government estimates. On the aircraft's performance he stated, "This airplane is nothing to write home about...a gigantic performance disappointment...you're getting an underperforming airplane for a huge amount of money". Wheeler recommended Canada hold a competition to choose a aircraft instead of a sole-sourced purchase.

On 10 April 2011 Prime Minister Stephen Harper stated that the United States would have to pay more for the F-35 but that Canada would get the aircraft at a fixed price that would not be affected by any cost overrun. He said: "On the F-35s, I think we've been clear: there have been detailed briefings from the department of national defence on this, there's a memorandum of understanding that's posted. We are sheltered from research and development costs." In criticizing the Liberal plan to hold a competition to choose a new fighter, Harper said, "This is a good deal for the country, the fantasy is on the other side. That somehow they're going to come up with some airplane out of thin air and they don't even know what airplane, they're still going to buy planes they say but they don't know airplane and they don't have any agreement."

On 17 April 2011 the Ottawa Citizen and Calgary Herald newspapers reported that the government's C$14 billion project costing does not include the F-35's engines. The engines are listed as “government furnished equipment”, indicating they must be purchased separately. Representatives of the Conservative Party and at the Department of National Defence responded that the price of the engines was included the overall price.

Retired Canadian Forces Lieutenant-General Angus Watt responded to the engines controversy on April 19, 2011, indicating that the engines are not included in the purchase from Lockheed Martin, but are purchased separately from Pratt & Whitney and are included in the overall price quoted. He stated that the quote of C$75M per aircraft does not include some spares, weapons or infrastructure costs and thus is not comparable to quoted US costs which do include those items; and that if included would bring unit cost to about C$138M per aircraft, comparable to current US pricing. He concluded, "the airplane has not suddenly become more expensive. It is simply a matter of which costs you directly attribute to the airplane.

In late April 2011 the Department of National Defence issued a statement indicating that the F-35 unit purchase price would be higher than $75M each, due to development cost overruns. DND indicated that these increases would be absorbed in the overall project budget. Pentagon information revealed operating costs to also be much higher than the Government of Canada had previously indicated, even higher than the Parliamentary Budget Officer had forecast and will total more than C$24B over 30 years for 65 aircraft.

In response to the DND statement Prime Minister Stephen Harper was dismissive, stating that extra costs would be covered by contingency funds. To the press questions about his seeming contradiction of DND officials, Harper said, "many of the reports you're citing are comparing apples to oranges. Our experts have put out their detailed figures and everything we've seen is within those figures and their contingencies — the contingencies that have been allowed." Opposition politicians reacted to Harper's statement. Liberal Party Leader Michael Ignatieff stated "And the thing that is so mendacious about what the government is doing is that they say to the Canadian people we can get you the plane at the right price. Let me tell you folks. Not even President Obama knows what the planes are going to cost. This thing is out of control." Bloc Québécois Leader Gilles Duceppe said, "What we've said since the very beginning and when Mr. Harper is saying, he [doesn't] want to withdraw a contract, that means there's a contract. It's time until next Monday that he showed us that contract." NDP Leader Jack Layton said, "We've got issues of our own sovereignty, we've got the north, we've got questions of disasters that might take place and equipment that might be required, whether it's elsewhere in the world or right here in Canada. Let's have a full discussion of what the equipment needs are and what the priorities should be."

Leaders' debates
During the English-language leaders' debate held in Ottawa on 12 April 2011 the F-35 procurement was attacked by all opposition leaders and defended by Stephen Harper. In the debate Liberal leader Michael Ignatieff explained his reasoning for the election, which included the F-35. He said, "I think I explained why we're having an election, which is that we asked for the truth about his jets, jails and corporate tax breaks, and (Harper) didn't tell the House of Commons the truth so he was found in contempt. That's why we're having an election."

In remarks made after the debate Bloc Québécois leader Gilles Duceppe attacked the Conservative F-35 price estimates, saying, "Well, I would imagine if you have a contract, you know how much it costs. (Harper) says he doesn't know. He refused to answer that. So we're going from $75 million for a fighter aircraft that probably doesn't even have a motor, that has no attack or defence system in it. Did we buy kites? What did we buy?"

The French-language debate was held the next day, on 13 April 2011 and also prominently featured the F-35 purchase as an issue. Liberal leader Michael Ignatieff accused the Harper government of having "forgotten people" in the recovery from the Late 2000s recession and indicated that the Conservative government intends to spend billions on fighter jets, corporate tax cuts and new super-prisons, while ignoring regional economic development. Bloc Québécois leader Gilles Duceppe attacked the Prime Minister over the many reports that indicate Canada will pay far more for the F-35 than the government's figure of C$75M per aircraft and challenged Harper to reveal the actual cost of the aircraft.

Harper responded saying, "I'm the only leader on this platform, on this set, who is defending the role of our Canadian and Quebec aerospace sector in the purchasing of airplanes."

Ignatieff pointed out that even the US, the country that is building the F-35, doesn't know what they will cost. Ignatieff stated, "Even President Obama doesn’t know how much it will cost the United States. That's the first problem. And you have no real idea what the plane will cost you because they're still developing this plane. So we don’t know how much it will cost. And as a potential prime minister I can't accept a plane, the cost of which is increasing."

Post-debate campaign and election results
Speaking in Vancouver on 17 April 2011, Liberal Leader Michael Ignatieff said of Harper and the question of whether engines are included or not, "This guy has gone down to the first car lot and bought the first car he saw. And now we don’t even know whether it has an engine, we’re not perfectly sure it’s got a steering wheel and the wheels might not be in the deal either...The deal here that every Canadian needs to understand about the F-35 is that it is an airplane in development . . . and the costs keeping going up." Ignatieff indicated that US defence department officials are "tearing their hair out at the cost overruns" in the F-35 program. He further stated, "Mr. Harper is going around trying to tell Canadians, ‘I know what this plane is going to cost.’ (U.S.) President (Barack) Obama doesn’t know what this plane is going to cost." Ignatieff agreed that the country's CF-18 fleet will need replacing but said: "but we have to get the right plane at the right price at the right time and that has to be mean a competitive bid."

On 2 May 2011 the election was held, resulting in a Conservative majority government. The New Democratic Party formed the official opposition, while the Liberal party was cut to 34 seats and the Bloc Québécois to four seats.

May 2011
After the election further details began to leak out, including further delays in the schedule, beyond the retirement of the CF-18s.

June 2011
On 15 June 2011, Assistant Deputy Minister for National Defence (Materiel) Dan Ross mistakenly testified to Parliament that development on the F-35A had already been completed.

October 2011
In October 2011 it was revealed that the F-35 model under consideration by the RCAF would not be able to communicate via the Canadian Forces satellite communications network used in the Canadian Arctic. This deficiency is expected to be addressed in the fourth production phase in 2019, or perhaps later. The RCAF was considering whether a stop-gap solution, such as an external communications pod could be fitted to the F-35

November 2011
In November 2011, The Canadian Press released several access-to-information request responses on the procurement. Department of National Defence documents indicate that 65 aircraft represent the absolute minimum number; this did not include any attrition aircraft. An Air Force Association of Canada source said that this was done to minimize the total purchase price. The reports also noted that delivery plans indicate that the F-35s would be delivered at the same time that the CF-18s are to retire, leaving no room for delays. Chief of Defence Staff General Walter Natynczyk confirmed on 3 November 2011 in addressing the House of Commons Standing Committee on National Defence that 65 is the "bare minimum number" needed.

Government officials confirmed that delays had been accounted for. Retired Canadian Forces Lieutenant-General George MacDonald, currently a consultant who has worked for Lockheed Martin said, "this delay eats most of that up. So the risk is still not great for Canada. But it's tighter. The schedule doesn't have the flexibility it used to have." In a speech in Fort Worth, Texas on 8 November 2011, Associate Minister of National Defence Julian Fantino stated, "We will purchase the F-35. We’re on record. We’re part of the crusade. We’re not backing down."

In November, it was announced that initial F-35s delivered won't be equipped with communication systems such as Link 16 or Blue Force Tracking, which allows aircraft to communicate with older aircraft and ground forces, helping to reduce friendly fire incidents. These functions aren't expected until an upgrade program in 2019 – three years after deliveries begin.

December 2011
In response to the most recent block of production F-35As being procured by the United States Air Force and the Royal Air Force at a unit price of US$141–145M each, Associate Defence Minister Julian Fantino said in an interview with L'Actualite that the final Canadian procurement might be fewer than 65 aircraft. Fantino said: "We are still talking about it, analyzing it. There is still time, before 2013, to decide the final number. Could it be fewer than 65? Maybe." On 3 November 2011 Chief of Defence Staff General Walter Natynczyk had stated to the House of Commons Standing Committee on National Defence, "Sixty-five is the minimal operational requirement for us. We need to have these aircraft, both for the sovereignty of Canada and to meet our international obligations as set by the government of Canada." Fantino refused to elaborate when asked about the interview in the House of Commons on 12 December 2011. The opposition used Fantino's remarks to show that the government's insistence that a lower price of US$75M per aircraft for Canada was wrong. The NDP's military procurement critic Matthew Kellway stated, "It's an acknowledgment that they can't get the plane for the number that they said they could. I think just about everybody else in the world has acknowledged that that's the case."

In December 2011, Defence Research and Development Canada predicted a 54% chance of losing aircraft to the point of having only 63 in service at the time last one is delivered.

February 2012
By February 2012 the mounting program delays and increasing costs resulted in the federal government reconsidering how many of the aircraft can be affordably purchased. The US government's latest budget documents included buying 29 F-35s in fiscal year 2013 for US$9.17B

On 9 February 2012 Associate Minister of Defence Julian Fantino in an angry outburst in the House of Commons said that a journal article criticizing the F-35 purchase was "critical of everything that is holy and decent about the government's efforts" to equip the Canadian Forces. The article in question was written by Dr. Michael Byers of the University of British Columbia and by the Salt Spring Forum's Research Associate, Stewart Webb. Their response to the Associate Minister of Defence Julian Fantino was published in Embassy (magazine) and said "Thanks to the introduction of faith-based procurement, the Harper government can now ignore the complexities and inefficiencies of design specifications, equipment testing, contract tendering, specified industrial regional benefits, etc. From now on, decisions on new equipment for the Canadian Forces will be divinely ordained, and channelled to Canadians through Mr. Fantino’s divine connections...Being responsive and adaptive researchers, we’ve put aside the books and journals on aircraft capabilities, geopolitics and military history, and have started re-reading the Bible. (Mr. Fantino must have an updated version of the Holy Book, for we couldn’t find the Gospels of Lockheed Martin or anything about fighter jets in the old editions.) Then it occurred to us that cows, and other things, are sometimes referred to as holy. Especially by people, like Mr. Fantino, who are prone to missteps."

In an interview with Evan Solomon on CBC's Power & Politics on 13 February 2012, Fantino was asked about the program and whether Canada will buy fewer aircraft. Fantino explained, "I think Canada, as with all other countries, has to be very much plugged in to the environment, the economics of the day if you will, but we remain committed to ensuring that we purchase or we acquire the best resources for our men and women, and also at the very same time address the absolute certainty that Canada, Canadian taxpayers will receive the best possible outcome." When Solomon asked how much Canada will pay per aircraft Fantino stated "I don't have that information for you at this point in time. These are things that are evolving." Fantino confirmed that Canada will host a meeting at the Canadian embassy in Washington in March 2012 where all the other F-35 partner nations can "deal with misinformation, miscommunication and a whole lot of other misunderstandings with respect to this aircraft."

On 14 February Defence Minister Peter MacKay was asked about the purchase and responded, "we are committed to giving the Canadian air force the best opportunity for mission success."

On 15 February Prime Minister Stephen Harper stated in the House of Commons on the F-35 purchase: "There’s a budget for that and the government has been clear, we will operate within that budget".

Opposition politicians reacted to the news. NDP MP Peter Julian pronounced the F-35 procurement a "fiasco" and a "$30-billion boondoggle." Julian added "It could well be more now because of the Pentagon stepping back from this plane. They botched this file from the beginning to the end and they need to come clean with Canadian taxpayers." NDP MP Brian Masse, suggested the Washington meeting was a result of the Harper government "panicking" and indicated that the government's assertion that the purchase is on track is a "fantasy." Interim Liberal Leader Bob Rae said: "the deal is now a different deal than the one that we thought we originally had so clearly there’s a problem. This is a government that is targeting Old Age Security because they say that’s unsustainable. But when it comes to a jet contract whose ultimate price we do not know, how many planes we do not know, its affordability we do not know, they say, 'Oh that, that is sacrosanct. So clearly they’ve made their priorities."

The news media and in particular editorial writers provided analysis and comment on the government's use of rote speeches and obscuring jargon around the issue. Toronto Star national affairs columnist Tim Harper indicated that it is now inevitable that the government will announce a "Plan B" on F-35 procurement. Harper said, "the price tag Ottawa has placed on the planes —$16 billion — was surely conjured by Aesop and its insistence on delivery dates had to be penned by the Brothers Grimm. The bargain bulk buying price that was quoted because the plane would be in “peak production” starting in 2016 is gone. The US estimate is almost double the cost per plane. There were ever only two guarantees associated with this untendered deal — cost overruns and production delays. There should now be a third guarantee. This government will drastically reduce the size of this deal — why 65? — or seek to extend the life of the CF-18s or both. They will announce it following a meeting it has convened in Washington with other purchasers or after a subsequent meeting of the bruised buyers in Australia. They may stick it in the federal budget in the name of austerity, or they may release the decision under cover of Friday evening darkness."

The National Post's John Ivison reported on 14 February 2012 that the Harper cabinet has recently discussed cutting the F-35 procurement and ordering armed UAVs instead, although the military dismisses claims that drones can replace the F-35. Ivison indicated that a likely outcome of a review of the Canadian Aerospace Industry by former industry minister David Emerson is the purchase of a combination of Boeing F-18E Super Hornets and UAVs, terming the F-35 "a political millstone".

On 15 February 2012 Fantino was quick to dismiss reports that UAVs would be purchased to cover a shortfall in the minimum number of F-35s that the RCAF needs to defend the country, calling it "speculation". Fantino however refused to state how many F-35s the government would buy, what the cost would be or when they would be delivered. Liberal Leader Bob Rae responded, "The prime minister said that the government is going to live within its $9.5 billion budget. (Chief of Defence Staff Gen. Walter) Natyncyzk said they need at least 65 planes, and that is a minimum number. Now Lockheed has said that the price is going to be far higher than the original $75 million. These are three things that just do not go together."

March 2012
A meeting of F-35 partners was held at the Canadian Embassy in Washington on 1–2 March 2012, hosted by Canadian Associate Minister of Defence Julian Fantino. In a released statement Fantino described the meeting as confirming that the F-35 is making good progress and that all partners remain committed to procurement of the aircraft. He qualified his remarks, though, saying, "While good progress continues to be made, we will always be vigilant with our stewardship of taxpayers' hard earned dollars." It was decided that these political meetings would be held on an annual basis, in addition to the biannual gatherings of the military customers.

By the middle of March the federal government's official tone and message about the F-35 procurement notably changed. On 13 March 2012 Fantino stated in front of the House of Commons Defence Committee, "We have not as yet discounted, the possibility, of course, of backing out of any of the program...None of the partners have. We are not. And we’ll just have to think it through further as time goes on, but we are confident that we will not leave Canada or our men and women in uniform in a lurch, but it’s hypothetical to go any further right now...One of the things that I know for certain is that Canada remains involved in the joint strike fighter program...The decision, the determinate decision, has not as yet been made as to whether or not we are going to actually purchase, buy, acquire, the F-35." Fantino confirmed that a team of senior defence department officials is examining alternatives to the F-35. The CBC's Laura Payton wrote in analysis, "Fantino's comments mark a change in tone from previous answers to questions about the possibility of rising costs and design problems with the Lockheed Martin fighter jets. He had previously left no possibility the government is exploring other options or considering pulling out of the agreement with allies like the United States, Norway, Italy and Australia."

Interim Liberal Leader Bob Rae responded to the news of the government's statements, saying "Inevitably, they'll have to find a new model, because the F-35 model doesn't work for Canada. What obviously happened in Washington was that Lockheed Martin made it crystal clear that this is not a $75-million buy. And even though the prime minister said months ago that Canada had a firm, firm contract at $75 million, what Mr. Fantino is saying today is completely different: There is no contract, it’s not a matter of when but if and when."

NDP defence critic David Christopherson stated that Fantino's remarks illustrated that the Conservative government previous dismissal of criticism of the program as unpatriotic has been "all bluster and the reason they suggest it's maybe unpatriotic is because they don't have solid answers to give. They're in serious trouble here. This program is not working, it's not flying. Literally, it's not flying."

Globe and Mail columnist Campbell Clark accused Fantino of carrying out a "classic tactical manoeuvre: the quarter-turn retreat." He stated, "According to the junior defence minister, the Harper government is committed to the F-35 Joint Strike Fighter, but not so much that it’s necessarily going to buy the things. Mr. Fantino’s definition of commitment would make a marriage counsellor blush."

On 15 March 2012 media reports were released about an upcoming Auditor General of Canada report that concludes that the Department of National Defence misled Parliament about the costs of the F-35 acquisition. National Post columnist John Ivison noted the Department's long history of intentionally underestimating costs in order to get the equipment they desire and predicted the report will contribute to the cancellation of the F-35 acquisition. Ivison stated, "the fall-out in Parliament may persuade the government the price of sticking with the F-35 program is no longer worth paying". Indications are that the Auditor General's highly critical report was behind the governments' sudden change in stance on the F-35 procurement. Senior government officials had warned the Harper government to leave room to exit the program, but were ignored as the F-35 procurement became a central feature of the 2011 election campaign.

In reacting to the news that officials at DND had misled the government in order to ensure purchase of the F-35, Liberal defence critic John McKay stated, "It does speak to the issue of the military's ability to snowball politicians. Having said that, this is a government that basically snookered themselves by wrapping themselves in the military's flag so they can no longer critique the military." Retired Defence Assistant Deputy Minister Matériel Alan Williams said, "this is the first case that I can recall of a clear and unambiguous hijacking of the process."

The news of the upcoming Auditor General's report caused media prediction that the government's reaction will be to put the procurement on hold, although aerospace and defence industry experts are expecting the sole-sourced procurement will be eventually cancelled in favour of an open competition.

On 26 March 2012 the Canadian Broadcasting Corporation program Power & Politics host Evan Solomon reported that he had seen the original statement of operational requirements for the new fighter aircraft, which was never made public, and that the F-35 failed to meet one requirement, that it provide "360-degree, out-of-cockpit visual situational awareness in a no-light environment". Questions were also asked about the statement of operational requirements, how it was written only weeks ahead of the defence minister's public announcement that Canada would buy the aircraft and years after Canada become involved in the program. Former assistant deputy defence minister Alan Williams stated that proper procedures were not followed. On the program he stated, "not only is it not normal, but it's a complete hijacking and rigging of the process. In 2006, the military and civilians recommended the F-35 to the minister and four years later, they developed their requirements, obviously rigged or wired to ensure that the only jet to meet the requirements would be the one that they recommended four years earlier." The requirement in question seemed to be written to require the promised Helmet mounted display and AN/AAQ-37 electro-optical Distributed Aperture System (DAS) of the F-35, which are now failing to perform to this spec.

Access to information documents obtained by the Ottawa Citizen showed that DND officials met more with Lockheed Martin representatives than all other competitors combined and the meetings with competitors were "pro-forma" to simply show that they had met. University of Calgary Director of the Centre for Military and Strategic Studies, David Bercuson, stated "there never really was a competition" at all.

The accusations of rigging the purchase were taken up by opposition MPs in the House of Commons on 27 March 2012. NDP MP Matthew Kellway indicated that the government had tabled a response to an order paper stating that F-35 currently meets all of the military's stated requirements. Kellway asked, "Which document is the truth? The one for public consumption or the one kept secret?". Fantino's answer was "We will remain committed to the Joint Strike Fighter program. A budget has been identified, a contract has not been signed for a replacement aircraft and we will make sure that the air force and the men and women there have the necessary tools to do their job and that's the bottom line."

Prime Minister Stephen Harper was asked questions by the press during a trip to South Korea. He responded that "we haven't yet signed a contract, as you know, we retain that flexibility but we are committed to continuing our aerospace sector's participation in the development of the F-35."

Interim Liberal Leader Bob Rae said that it appears that the government is considering buying a different aircraft as an alternative to the F-35 and this should be made public. Rae said, "There's obviously been a shift in position in the last several weeks."

The new NDP leader Thomas Mulcair said the documents reported by the CBC indicate that the government created a "bogus bidding process" to hide that it had already chosen the F-35 before the mandatory requirements had even been written. Mulcair stated, "They tried to rig the process by defining something that only one plane could meet. It's a very old strategy in government procurement, but even there we're now finding out the F-35 doesn't meet the bogus requirements that they were setting out in their rigged bid. They're bringing us down a corridor that can only result in one thing, the purchase of that one [plane] because their next argument is going to be 15 years later we can't start changing our mind."

On 28 March 2012, as the controversy, grew Prime Minister Harper gave assurances that even if the government decides not to buy any F-35s that Canada would remain an F-35 industrial participant to guarantee that work on the aircraft would continue to come to Canadian companies. By March 2012 66 Canadian companies had won C$435M in F-35 contracts against a federal government investment of C$278M.

April 2012
On 3 April 2012 the Auditor General of Canada heavily criticized the government's F-35 procurement in his spring report. The report stated that the government did not run a fair competition, that costs were seriously understated and that decisions were made without required approvals or documentation. The report said, "when National Defence decided to recommend the acquisition of the F-35, it was too involved with the aircraft and the JSF Program to run a fair competition. It applied the rules for standard procurement projects but prepared key documents and took key steps out of proper sequence. As a result, the process was inefficient and not managed well. Key decisions were made without required approvals or supporting documentation...National Defence did not exercise the diligence that would be expected in managing a $25-billion commitment. It is important that a purchase of this size be managed rigorously and transparently."

As a result of the report the government announced it would strip DND of responsibility for the project and give it to a new special secretariat of deputy ministers that will be part of the Public Works and Government Services Canada. The Treasury Board will also be involved and will review all DND documents to improve accuracy and oversight. Associate Defence Minister Julian Fantino confirmed that the government will also study alternatives to the F-35 procurement. Treasury Board will commission an independent review of the program, including its all assumptions made, along with the potential costs. The review will be made public, when complete. In the meantime all F-35 program funding will be frozen. "Funding will remain frozen and Canada will not purchase new aircraft until further due diligence, oversight and transparency is applied to the process of replacing the Canadian Forces' aging CF-18 fleet," stated Rona Ambrose, the minister responsible for Public Works and Government Services Canada.

On 4 April 2012 the media started labeling the F-35 procurement program the "F-35 scandal" and "the F-35 fiasco".

The opposition responded quickly to the Auditor General's report. Marc Garneau, the Liberal Party's Industry, Science, and Technology critic, said "The government will do an enormous amount of spin today and say that they were misled by [Defence Department] officials, it wasn't their fault, and now they're going to take action. There is no question that the generals ... wanted the F-35 and drove everything towards that. But that doesn't excuse the minister of national defence and the prime minister for buying it, hook, line and sinker, without then doing their own due diligence."

The fallout from the Auditor General's report was felt in question period. Interim Liberal leader Bob Rae argued that the Prime Minister is responsible and that resignations are expected. Rae stated, "Any company that made a mistake of this kind, that misled its shareholders, that misled the public, that put out a misleading prospectus, that published false figures and false documents to the tune of billions of dollars, any company that did those things would fire the CEO and replace the board of directors." Rae indicated that the Liberal Party research showed trouble in 2010. He said, "The numbers did not add up. The numbers were not real numbers. We knew it, we said it. What was Mr. Harper's answer then? He called us liars. He said we were unpatriotic. He cannot now pretend that he was just the piano player in the brothel who didn't have a clue as to what was really going on upstairs." Rae called on Harper to resign for deliberately misleading Parliament and lying to Canadians and concluded that the scandal shows "Stephen Harper is not fit to be the Prime Minister of Canada".

Matthew Kellway, NDP military procurement critic said "They still have a lot of explaining to do for the auditor general’s report and we will keep asking them for explanations for, for example, the $10 billion that suddenly was left out of the department's estimates for the F-35. All I can say is that it’s hard to [say], in light of all the information in the media, all the information coming out of various accountability offices in the United States, that they weren’t aware. But I think we’re left with basically a binary alternative here. Either they were aware and they deliberately misled Canadians or they weren’t aware and we have a negligence and competence issue with this government."

The media reaction to the affair focused on the wider implications for the government. Ottawa Citizen columnist Michael Den Tandt wrote, "Here's what a sober-minded, fiscally responsible and cautious prime minister would do, given the outrageous chronicle of incompetence, stupidity and duplicity revealed by Auditor General Michael Ferguson's report on the F-35 fighter program: He would demand and receive the resignation of Chief of the Defence Staff Walter Natynczyk. He would demand and receive the resignation of Defence Minister Peter MacKay." CBC News reporter Brian Stewart stated that the events indicate infighting between DND and the government, dominated by a culture of secrecy and intimidation. The Globe and Mail's John Ibbitson indicated that the Harper government had "bungled the biggest and most important contract on its watch". He added that for a "Prime Minister who practically branded criticism of the F-35 acquisition as treasonous must now deeply regret, and will have to eat, his words." Andrew Coyne of the National Post said "a fiasco from top to bottom, combining lapses of professional ethics, ministerial responsibility and democratic accountability into one spectacular illustration of how completely our system of government has gone to hell." Coyne concluded that not only had Parliament lost control of public spending some time in the past, but that the government now had as well.

DND officials have indicated that the blame for the program failures lie with the Defence Minister Peter MacKay and Associate Minister Julian Fantino, saying that the two have given contradictory messages about competitions, costs and made claims about the F-35 that did not hold up under public scrutiny.

Conservative MP Chris Alexander, parliamentary secretary to Defence Minister Peter MacKay, blamed the media for the scandal, saying "In the media, there has been a consistent effort to mislead people, to imply that money has been spent. It hasn't yet."

On 5 April 2012 Auditor General Michael Ferguson appeared before the House of Commons Defence Committee. He stated that based in his investigation that the government would have known that the F-35 program estimate was C$25B at the time that the Defence Department told Parliament it was C$14.7B, in the weeks leading up to the May 2011 federal election. Ferguson would not say whether he believed the government intentionally misled Parliament or not. In question period Prime Minister Stephen Harper and other government ministers refused to answer any opposition questions regarding when they knew that the DND had estimated the program cost would be C$25 billion.

Interim Liberal leader Bob Rae responded to this revelation, saying, "if they did, then we have a real problem because then that means that they were effectively misleading Parliament for many, many, many months. Misleading the people of Canada throughout the last election." Rae also raised a question of privilege in the House of Commons over the government's statement that they accept the Auditor General's recommendations, but not his conclusions. Rae asserted that if the government accepts Ferguson's report, then it accepts the fact that it misled Parliament. Government House leader Peter Van Loan disagreed with Rae's position on the question of privilege, saying, "the position of the government is not the position taken by the officials in those departments."

NDP Leader Thomas Mulcair, in a speech to the Economic Club of Canada, also on 5 April 2012 said, "we have clear and convincing evidence that the government intentionally provided false information to Parliament and that’s serious. This is a basic question of respect of our institutions."

NDP military procurement critic Matthew Kellway said, "what's just been uncovered and revealed is political fraud at the core of this government. This isn't a matter of negligence. This is a matter of knowing the cost estimates and failing to tell Canadians what those cost estimates were and, in fact, approving information going out that was knowingly false."

Press reaction to the Auditor General's statements was swift. Michael Den Tandt of the Ottawa Citizen wrote that if the Auditor General's report is "true then [Harper's government] will have no defenders, anywhere. Cabinet-level resignations yes, as a starting point. But it’s bigger than that. The government itself will be discredited. There is no moving on from a lie this big." CBC political commentator Rex Murphy called Defence Minister Peter MacKay "a seat warmer with status" and indicated he must resign. Peter Wothington, writing in the Toronto Sun said "the monkey business over Canada committing (sort of) to the hugely expensive F-35s without competitive bids as 'the only acceptable plane,' stinks to high heaven. If it’s the 'only acceptable plane,' what’s to fear from competitive bids?"

On 8 April on the CTV program Question Period Defence Minister Peter MacKay indicated that the change in public figures of C$10B was "a different interpretation in the all-up costs" and refused to resign stating, "this money has not been spent. No money is missing". MacKay also warned that while Canada could stop the purchase without losing any money at this point, that cancelling the existing memorandum of understanding would mean losing Canada’s serial numbers on the production line and that that would result in delaying replacement of the CF-18. The opposition rejected MacKay's explanation. NDP MP Jack Harris said "They can't paper this over. This is going to haunt them". Liberal MP Ralph Goodale agreed with Harris stating, "There's no way Mr. MacKay can explain this away. And quite frankly this buck doesn't stop with Mr. MacKay. This issue is for the prime minister. It is the prime minister who knew every minute detail of this file." In arguing that operating costs should not be included MacKay cited the Auditor General's report that he stated showed that Parliamentary Budget Officer Kevin Page had also left the aircraft's operating costs out. MacKay was mistaken and actually cited the Department of National Defence's own accounting in the Auditor General's report, by mistake and not Page's. The Defence Department had actually removed the operating costs for its lower estimate, while Page included them in his own $14-billion number. Liberal Defence critic Marc Garneau labelled MacKay incompetent, saying, "It’s very disturbing...I had to go to the question of, 'is he trying to pull a quick one on us again, hoping the general public is not going to see this?' Or is he not too bright? It went through my mind, I have to admit."

On 9 April 2012 Chief of Defence Staff General Walter Natynczyk endorsed the F-35 purchase during a ceremony at Vimy Ridge. Natynczyk also claimed that he has always told the truth about the costs of the F-35 to the government. Winslow Wheeler, of the Centre for Defence Information indicated that the money issue is just a small part of the story and that the press has been ignoring that the aircraft will not perform the missions asked of it and focused on its lack of stealth capabilities, inability to defend itself and inability to fill the fighter role. Retired Assistant Deputy Minister of National Defence (Matériel) Alan Williams raised the issue that the departmental cost estimates were set at 20 years instead of the aircraft's planned lifespan of 36 years, thus reducing the costs for replacement aircraft and mid-life upgrades. Williams said "That's a known distortion. If you have as your intent to be as open as possible, you don't do that.

Also on 9 April 2012 Allan Williams accused the government of secretly intending to buy 79 F-35s instead of the planned 65 and splitting the purchase to hide the costs.

In a pointed editorial on 10 April 2012 the Ottawa Citizen agreed that the costing of the purchase can plausibly be made to include or exclude a myriad of factors, but concluded "the government must still explain its benefits to Canadians. What jobs will it create in Canada? What are the risks that the price of the F-35 will be more than Canada can afford? What is our plan if that happens? All these points must be addressed with factual analysis, not assertions. The F-35 controversy proves, not for the first time, that full and honest disclosure is preferable to editing the facts down to what government thinks people need to know. The downside of managing the truth is that, when you finally tell it, people just won’t believe you."

By mid April Defence Minister MacKay had taken the approach that the Auditor General and his department merely disagreed as to what should be included in the aircraft's life cycle costs. The National Post's Andrew Coyne pointed out that DND had agreed with the Auditor General in 2010, after a similar disagreement about the Sikorsky CH-148 Cyclone costing, that all life cycle costs be included in future reports. Coyne explained "once that claim is knocked down — that this was all just a dispute over accounting — there is no escape. The government knowingly misrepresented the true costs of the F-35 in its public statements. It knew how it was supposed to account for these, under Treasury Board rules, under the Auditor-General’s recommendation, and by its own publicly stated agreement with both. And it knew how it was doing so in its own internal documents, going back to 2010. It simply chose to tell a different story to Parliament and the public." Like many journalists Coyne saw this as a much bigger issue than an aircraft purchase. "This isn’t about the planes, in other words, or costs, or accounting. This is about accountability. This is about whether departments are answerable to their ministers, and whether ministers are answerable to Parliament — or whether billions of public dollars can be appropriated without the informed consent of either Parliament or the public. It is about whether ministers speak for their departments, or can disown them when it suits them. And it is about whether we, as citizens, are prepared to pay attention, and hold people in power to account when they lie to us. Which is to say, it is about whether we live in a functioning Parliamentary democracy, or want to."

On 14 April 2012 opposition members of the House of Commons public accounts committee made commenced action to recall the committee during the Easter break to have it examine the Auditor General's report. The government indicated that it had nothing to hide and as a result it welcomed the public review. But on 18 April 2012 the Conservatives used their majority on the committee to prevent the calling of witnesses that might embarrass the government, resulting in opposition accusations of a cover-up. Liberal MP Gerry Byrne said, "This exposes that they have no intentions of actually operating in a transparent and accountable way. They'll hold meetings in secret. They won't allow officials to appear before us. They will do everything to prevent the truth from being heard." NDP MP Malcolm Allen said, "this is about trying to control the message. Which members of the executive of this government knew what and when? From my perspective, we're not headed down a good road. What would be more humiliating and more embarrassing to them is the testimony from the witnesses that I proposed. They will do anything and everything to cover this up."

On 25 April 2012 retired air force Colonel Paul Maillet, an aeronautical engineer and former CF-18 fleet manager at National Defence Headquarters spoke out against purchasing the F-35, indicating it was unsuitable for Canadian service. Maillet criticized the F-35 as unsuitable for use in Canada's arctic saying, "how do you get a single-engine, low-range, low-payload, low-manoeuvrability aircraft that is being optimized for close air support...to operate effectively in the North?" He also noted that it will obsolete soon after its introduction due to advances made in UAV technology. Maillet suggested that the F-18E/F Super Hornet or even extending the life of the CF-18s and buying UAVs would be a better choice for Canada. Maillet has run unsuccessfully for the Green Party of Canada in previous federal elections and the Conservative government responded to his comments dismissively. Jay Paxton, spokesman for Defence Minister Peter MacKay, said, "the goal of this failed candidate is to promote a political party without a care for the future of our nation."

On 26 April 2012 an access to information request was made public that revealed that Deputy Defence Minister Robert Fonberg had briefed Fantino about serious problems with the cost and schedule for the F-35 at the same time that Fantino was publicly saying that these items were not an issue. Fonberg wrote in a 30 September 2011 briefing note for Fantino's trip to Fort Worth in November 2011, "the purpose of this trip is to demonstrate the government’s commitment to the JSF program, while impressing upon key interlocutors Canadian concerns with cost, production schedules and the need for transparent communication to JSF partner nations." During the subsequent visit Fantino said in an address to Fort Worth business leaders, "We will purchase the F-35. We're on record. We’re part of the crusade. We're not backing down."

On Saturday 28 April 2012 Parliamentary Budget Officer Kevin Page was interviewed on the CBC Radio program The House. Page indicated that the government appeared to be maintaining two sets of books on the F-35 project, one for internal use with higher estimates and one for public consumption with lower numbers. Page also indicated that with soaring prices for the aircraft the government would only be able to purchase 40-45 of the aircraft, not the minimum 65 required. The US Government Accountability Office (GAO) has stated that F-35 currently will cost US$137 each.

May 2012
In early May 2012 the newly created interdepartmental secretariat charged with overseeing the fighter acquisition project indicated that the Department of National Defence should, on its own volition start from scratch on the program with a complete assessment of alternatives. An unnamed senior official said, "If the military were smart, they would do it themselves, unsolicited. There seems to be an overwhelming public appetite to ask why [the government is] asking for this capability, and to be involved in a consideration of whether we should continue."

On 2 May 2012 the Public Works Minister, Rona Ambrose confirmed that the name of the secretariat had been changed to eliminate the impression of bias in selecting a new fighter. It was previously called the "F-35 Secretariat". The new name is the "National Fighter Procurement Secretariat". Ambrose explained, "I think it's self-evident that the change in policy is that the government is, as we've indicated, hitting restart with this process."

In May 2012 former Assistant Deputy Minister of Defence Alan Williams released a book on the F-35 procurement entitled Canada, Democracy and The F-35. Williams explained how the procurement process was run backwards, picking the aircraft first and then creating requirements to justify the choice. Williams also accused the government of repeatedly telling lies about the F-35 and its program. Williams contends that the most often used government statements about the aircraft are all false, including that "there was a competition in 2001, so there is no need to conduct another one. Canada needs the F-35 because of the industrial and regional benefits. The government was just continuing along the lines established by the previous Liberal government. The F-35 is the best aircraft at the best price. The F-35 will cost the U.S. $75 million."

On 14 May 2012 an annual planning report for the F-35 program was presented to the House of Commons by Treasury Board President Tony Clement which clearly indicated that the government was still not considering any alternatives to the F-35 and expected delivery of the first example in 2017, a year later than previously forecast. This was despite the fact that both the Defence Minister and Associate Defence Minister had asserted that no decision to procure the aircraft had been made.

On 15 May 2012 in response to confusing and contradictory information provided by officials at the Defence Department in response to parliamentary committee hearings into the F-35 affair, opposition parliamentary committee members declared that they had lost confidence in the department. NDP MP Malcolm Allen stated. "There's no faith in this department anymore. None whatsoever...This is a department that's really gone rogue. [Defence Minister Peter MacKay] has totally lost control of that department. If the officials in the Defence Department are actually misleading the committee and misleading Parliament then I guess they ought to be gone. You can't have folks at that level misleading the committee and misleading Parliament, if that's indeed what they've done."

Douglas Bland, a defence expert from Queen's University analysed the situation and indicated that the government has cut its support to the military as Canadians turn against the government on military issues. "The hissing sound you hear is the air going out of the pro-military balloon at the Conservative Party headquarters. They've had enough," Bland stated.

On 24 May 2012 Lockheed Martin issued a statement that if Canada does not buy the F-35 then Canadian companies will not get future contracts. Lockheed Martin Vice President Steve O'Bryan said, "right now we will honour all existing contracts that we have. After that, all F-35 work will be directed into countries that are buying the airplane." O'Bryan also indicated that Canada was indeed buying the F-35, despite the government indicating that the purchase was being reconsidered and assessed. "What we have is the official statement out of the government and we're working with the government. They're committed to the F-35, they've selected it, and we haven't had any change in that official position," O'Bryan stated.

On 17 May 2012, the Conservative majority in the public accounts committee, led by Conservative MP Andrew Saxton, moved to stop calling witnesses and have the panel start preparing its report on the auditor general's findings of the F-35 procurement process. A member of the committee, Liberal MP Gerry Byrne, spoke out, saying "The government wants to shut this down, and for good reason. They are very afraid of what is going to come out." Byrne faces possible punishment from the committee for relating an in camera meeting, which is prohibited under parliamentary rules.

June 2012
In June 2012 documents were made public showing that the defence department knew in 2011 that the F-35 deliveries would not be completed until after the CF-18s were required to be retired. The released e-mails contradicted the Conservative government's assertions that a stop gap measure would not be needed. Life extensions for the CF-18 fleet had been previously rejected as too expensive. Also associate defence minister Julian Fantino revealed that the mandatory requirements for the replacement aircraft included "stealth, secure data link communications, visual operation in no-light conditions and automatic data and sensors information sharing", all areas in which the F-35 is supposed to excel in.

August 2012
In August 2012, a tender for an independent auditor had not been filled, reportedly due to the tender not permitting sub-contracting. An amended tender was re-issued on 8 August 2012; Amber Irwin, a spokeswoman for Public Works Minister Rona Ambrose, explained, "This request for proposals (RFP) issued today will ensure that this independent review is done properly and supersedes the previous one issued. The requirements of the RFP have been broadened to ensure qualified bidders can fulfil the task required by the government...The National Fighter Procurement Secretariat is committed to getting this done right and in a timely manner." New Democratic Party procurement critic Matthew Kellway labelled the delays as "absurd", and said, "this is a process that is out of control. The government has gone to great lengths and jumped over a lot of hurdles, likely at tremendous cost to Canadians, to avoid releasing numbers that are being produced by the Joint Strike Fighter Program office."

Because the government did not allow opposition members of the House Defence Committee to call certain witnesses through the termination of debate, members of the New Democratic Party decided to hold their own hearings on Parliament Hill on 21 August 2012. New Democrat defence critic Jack Harris explained why the hearing was held, "we will be referring to the testimony that was given here today. We will [sic] using that to reinforce the arguments that this government is not doing the right thing". The meeting heard from retired US defence auditor Winslow Wheeler, former Canadian Associate Deputy Minister of Defence Alan Williams, University of Ottawa defence procurement expert Philippe Lagasse and defence writer Scott Taylor. All four were critical of the procurement process and the F-35 as a choice. Wheeler stated "The F-35 is only 25 per cent through its flight test program. That's only the preliminary flight tests. That's the laboratory testing. The more combat-realistic testing starts in 2017 and won't be finished until 2019. Anybody, including my country, who buys this airplane before then, is a fool because you don't know what you're getting in terms of performance. And you don't know what you're getting in terms of cost."

In August, Steve O’Bryan, Lockheed Martin Vice-President, controversially stated that the company was planning delivery of 65 F-35s to the Royal Canadian Air Force. The parliamentary secretary to Minister of National Defence Peter MacKay, Chris Alexander, stated that the government had never announced it would buy the F-35 and accused opposition parties of starting rumours to cause confusion; despite repeated announcements by Prime Minister Stephen Harper, MacKay and other senior government officials stating the purchase of the aircraft in 2010. Philippe Lagasse, a defence expert at the University of Ottawa, explained, "Governments do this all the time, and it’s totally understandable that they would try to change the conversation. The problem is there’s so much public evidence, that really you’re inviting mockery."

September 2012
In early September 2012, KPMG was selected to audit the independent cost review of Canada's F-35 acquisition at a cost of C$643,535. Also that month the National Defence revealed that its CF-18 pilots have been shutting down one of the two engines almost once a month for the past twenty years, raising additional questions about the safe operations of a single engine fighter.

On 28 September 2012 the Canadian Broadcasting Corporation aired an investigative report on The Fifth Estate that provided evidence that the Department of National Defence had never seriously considered any alternatives and had taken US evaluations of competitive aircraft at face value. The former Canadian chief of the air staff, Lieutenant-General Steve Lucas, commented that he had not been a competition as it conflicted with Canada's participation in the F-35 program. Ottawa defence analyst Steven Staples also indicated that the 2010 announcement of Canada's F-35 purchase was intended to give Lockheed Martin some good news when development had been experiencing troubles. Former Pentagon aircraft designer Pierre Sprey expressed the expectation that unit prices would continue to rise and reach in excess of US$200M.

October 2012
The Public Works and Government Services Canada issued a RFP for a firm to review the purchase decision on 26 October 2012. The chosen company will receive a contract in December 2012 to review factors under the existing seven-point action plan. The contractor will "determine whether the shortcomings the Auditor General identified in the acquisition process have been addressed; confirm whether the steps taken in the acquisition process for the period up to June 2012 were in accordance with government policies, procedures and regulations; and provide lessons learned and propose recommendations for changes, if any, to current practices and policies for acquisitions of a similar nature".

Despite the apparent copying of the F-35 design in the Chinese Shenyang J-31, NDP MP Matthew Kellway said that since Canada would never oppose China, there was no need for Canada to have advanced jet fighters.

November 2012
On 21 November 2012, the public accounts committee presented its final report on the F-35. The report cited the Department of National Defence for poor procurement handling, with further explanation or blame; and called for future transparency and accountability. Opposition politicians called the report, crafted by a Conservative-majority committee, a whitewash. NDP MP Malcolm Allen said, "When you compare the final [committee] report to the auditor general’s report, it’s nothing but one great big whitewash. We were hoping to see that Canadians would really find out the whole truth of what actually transpired and this government would then take responsibility for its actions on this file." The Canadian Press found that the most pointed comments of Page and Ferguson were deleted or softened in the final report. The National Post noted, "There have been allegations the Harper government remains committed to buying the F-35 despite its insistence that other possible replacements for the country’s CF-18 fighters are being considered. Those concerns were bolstered over the weekend when Defence Minister Peter MacKay refused to say whether the government is actually looking at other options."

In late November, it was decided to put aside the statement of requirements to conduct an options analysis, including dialogue with nations purchasing the F-35. General Thomas J. Lawson, Canada's Chief of the Defence Staff, has admitted the partial stealth features offered by competing "4.5th generation" fighters would also be sufficient to meet Canada's needs.

December 2012
In December 2012 it was revealed that the Prime Minister and the cabinet had been kept up to date on all of the problems, schedule slippages and cost overruns of the project as they happened, even as Harper had been painting a rosy picture of the program leading up to the election.

On December 6, the Ottawa Citizen ran a front page headline, Federal government cancels F-35 fighter purchase and indicated that the soon-to-be-released KPMG would put the program costs at over $40B, that the federal Cabinet operations committee had decided to cancel the purchase and hold a competition. The Prime Minister's Office immediately responded saying that the F-35 purchase had not been cancelled and labelled the news story "inaccurate on a number of fronts". The National Post reported that they had seen portions of the KPMG report and that it put the full program cost at $45,802,000,000 over 42 years, double the amount the government had previously publicized. The National Post also reported that the US government was alarmed by the Ottawa Citizen announcement of cancellation. Another factor noted in news sources and in questions from parliament was the lack of guaranteed purchases of Canadian products as part of the deal, as is common for most military aircraft purchases. Canada will incur costs whether it stays in the F-35 program or not as the government will be required to invest more in the F-35 development in May 2013 or will attract penalties if it withdraws from industrial participation.

The Ottawa Citizen also reported that the timing of the KPMG report and the attention that the government knew it would attract was critical with regard to the 2012 US elections. A Citizen source stated, "The PM (Stephen Harper) didn’t want it to become a (U.S.) election issue and therefore hurt Canada-U.S. relations."

Interim Liberal Leader Bob Rae called for the Minister of National Defence's resignation, saying, "I don't see how the minister of defence can possibly continue in his job...He's basically been a sales spokesperson for Lockheed Martin, the manufacturers of the F-35, since he took office. He's denigrated and attacked every person in opposition, in the Liberal Party or elsewhere, who has ever raised concerns or questions about this...The government has consistently misled Canadians about the true cost of this aircraft. They've misled Canadians about their degree of oversight and their readiness to deal with the situation". Liberal defence critic John McKay also called for the Defence Minister to resign, stating, "He’s already been half fired by the prime minister. He’s not responsible for procurement any longer. I don’t know why the prime minister just doesn’t put this guy out of his misery. A spokesman for Prime Minister Stephen Harper responded to calls for MacKay's resignation on Twitter, "Not going to happen".

NDP defence critic Jack Harris stated "The whole process is in a shambles, quite frankly. This is not good enough. We've got enough misleading information out there in front of the public.... They didn't do their due diligence, they didn't have an open, fair and transparent process. They've demonstrated their incompetence in a $40-billion-plus contract." The media also criticized government handing of the program; Postmedia News's Andrew Coyne said, "It is difficult to imagine how a worse mess could have been made of the F-35 procurement, but I’m willing to bet this government will try. When I say mess, I don’t mean to suggest charming ineptitude, but culpable incompetence, mixed with deliberate misrepresentation. What started with a catastrophic failure of oversight, progressed through many months of dishonesty, secrecy, and stonewalling, culminating in what can only be called electoral fraud — followed by still more dishonesty about everything that had gone before...If ever proof were needed of the weakness of our democratic institutions — and of the urgent necessity of reform — this is it. Democratic accountability, we should now be able to see, isn’t some abstract, academic issue, divorced from the bread-and-butter concerns of the public. It’s about as bread-and-butter as it gets. It’s about their money."

The government has appointed an independent panel to consider the problem of a new fighter aircraft for Canada over a period of three months. The panel consists of: Philippe Lagassé, assistant professor of public and international affairs at the University of Ottawa and critic of the F-35 procurement; James Mitchell of consulting firm Sussex Circle, a retired senior civil servant with cabinet and the Treasury Board ; Keith Coulter, former head of the Communications Security Establishment, former fighter pilot who commanded a CF-18 squadron and former member of the Snowbirds; Rod Monette, former federal comptroller-general and DND chartered accountant. The government has also quietly informed aerospace industry principals that they should expect a full competition to follow the analysis of options. Retired air force Lieutenant General Charles Bouchard was originally asked to be on the panel, but declined, indicating he was too busy.

The government released the KPMG report on 12 December 2012 and it projected the acquisition's life time cost at C$45.8 billion over 42 years. It also showed that the estimated cost to purchase the jet and provide needed upgrades and infrastructure was included the government's $9 billion figure given previously, although it did not include operating costs. However even that price tag assumes that the F-35 program survives the United States fiscal cliff situation without incident, which is considered unlikely. Also, in order to keep the purchase under $9 billion, the new estimate eliminated the requirement to be compatible with Canada's refueling aircraft and expenditures on infrastructure and even ammunition were reduced.

The industrial offsets report, also released on 12 December 2012, showed that the best estimate of potential benefits to Canadian industry would be C$9.8 billion, far below the C$45.8 billion the government was forecast to spend. The report also said that the government would be expected to pay $92M per aircraft, not the $75M that Prime Minister Harper had said was guaranteed.

Public Works Minister Rona Ambrose stated that the government was accepting the Auditor General's report. Defence Minister Peter MacKay said the program had been "reset". Officials confirmed that sole sourced F-35 procurement is off the table and that all fighters currently in production or scheduled to soon be in production will be given consideration as replacements for the current CF-18 fleet, although a competition was specifically noted as not being announced. The Eurofighter Typhoon and the Boeing Super Hornet were specifically named as being considered, while the Dassault Rafale and Saab Gripen may also be considered. Other aircraft manufacturers have indicated they will not provide data to the Canadian government unless a full competition is held. NDP MP Jack Harris responded, stating, "This is a charade. This is not a new process. The reset button does not create anything more than another version of a sole-source contract. They’re not going to put it out to a fair and transparent public tendering process". Harris termed the government's "market analysis” a "shopping expedition". Government officials also confirmed that cost analysis is underway to extend the life of the CF-18 fleet.

Defence Minister Peter MacKay was asked if he regretted his previous harsh language used against critics who turned out to be right in their assessments, MacKay described himself as being "passionate" regarding military procurement priorities.

The Ottawa Citizen published an editorial by Andrew Coyne on 12 December 2012 entitled Tories refuse, even now, to come clean on F-35 costs, detailing how the government continued to try to reduce the damaging effects of the costs KPMG revealed. Coyne said, "just to be clear, they’re still spinning us. Even now. Even after all that has gone before, even with the release of its own specially commissioned independent review by the accounting firm of KPMG, the Conservative government still can’t bring itself to tell us the whole truth about the costs of the F-35." He strongly criticized the government's approach, "...even if one were inclined to excuse the initial deception, what is really inexcusable is the government’s subsequent refusal to back down, even when it was called on it, but rather to carry on spinning — as it did after the Parliamentary Budget Officer’s report, as it did after the auditor general’s report, as it is doing even today."

In a scathing editorial published by CBC News on 13 December 2012, Brian Stewart termed the F-35 project a "global wrecking ball" due to its run-away costs and lack of affordability. He faulted the decision to manufacture the aircraft before flight testing was completed for greatly driving up costs and indicated that the huge cost, including a per aircraft cost of US$167M, would have "strategic consequences" as nations cancel or cut back orders, thus driving up unit costs further. Stewart stated, "America's problems here put Ottawa in a most uncomfortable position as it finds itself wrestling with a fighter option it can't afford with an aerospace giant in decline and likely unable to extend as many economic side benefits as were initially promised...But given the enormous stakes involved, we can expect immense pressure from the U.S., our closest ally, to not reject this plane before the eyes of the world." He concluded that the F-35 acquisition is a "dank swamp [that will] will only grow more terrifying for ministers to contemplate with each passing month".

On 13 December 2012, interim Liberal leader Bob Rae stated: "I think Canadians need to understand how big a screw-up this has been...I think this is a huge spin operation. One of the things that came out yesterday is the government said the life of the CF-18s is longer than previously thought. Maybe they think they can kick this process over past the next election." Rae also noted: "We haven't had a question period for the last six months where [Defence Minister] Peter MacKay has answered a single question about the affair." Former National Defence procurement chief Alan Williams said that the government's focus on stealth is misplaced and what is really needed is an assessment of Canada's actual needs. Opposition critics and even inside sources accused the government of refusing to go to a full competition, suggesting the requirements might be manipulated so that only the F-35 could qualify.

Experts debated what the "reset" of the process to choose a new fighter would accomplish. Rob Huebert, from the Centre for Military and Strategic Studies, University of Calgary, indicated that the F-35 would be chosen anyway, saying, "what's the alternative?...You're not going to buy the Russian or Chinese aircraft — that just ties you in to a back lane that you just don't want to go into." Huebert said that the Eurofighter Typhoon is solely an "interceptor", the Saab Gripen is "a bit of a [Cold War] relic", and the Super Hornet a "total colossal waste of money", noted that Australia is only buying them as a stopgap measure until the F-35 becomes available. Ugarhan Berkok from the Royal Military College of Canada disagreed with Huebert, saying that "multi-function is probably the order of the day"; he indicated that the Typhoon, Rafale, Gripen and Super Hornet all offer that capability. Ottawa Citizen columnist Micheal Den Tandt called for a complete cabinet shuffle to remove Peter MacKay as Defence Minister and "a reset of the government itself".

January 2013
In January 2013, Dassault Aviation received an information demand from Canada about the Rafale fighter. Each of the four companies received the same 15 page survey asking for suggestions, but not detailed pricing information.

Critics of the F-35 and one of the companies offering an alternative fighter called the Public Works activity a mere ‘market’ analysis of the fighters that would not probe deeply into Canada's actual needs.

On 21 January 2013, having left his government position, retired Assistant Deputy Minister (Materiel) Dan Ross blamed the failure of the F-35 procurement on Harper's culture of secrecy and lack of accountability. On the outcome of the new procurement process, Ross predicted, "At the end of the day, the Royal Canadian Air Force will fly F-35s, if we have an Air Force that flies fighters."

A poll of Canadians conducted by Forum Research in January 2013 found that even though two thirds believed that they had been mislead by Harper, almost half thought the F-35 deal would go through anyway. NDP MP Matthew Kellway responded to the poll, saying, "I think the vast majority of Canadians have seen enough to understand that misleading Canadians is pathological for this government. They suggest that flipping through brochures of other fighter jets—again—is a serious reset of the procurement process. That is arrogant and cynical, it assumes Canadians are gullible and these numbers [in this poll] show that that is clearly a miscalculation."

On 25 January 2013, the Canadian National Fighter Procurement Secretariat issued a draft questionnaire to Boeing, Dassault Aviation, EADS, Lockheed Martin, and Saab Group to obtain detailed information on the capabilities of their available fighter aircraft. The draft questionnaire seeks detailed information on technical capabilities of fighter aircraft in production or scheduled to be in production. Public Works indicated that these other fighters might only be used as a stop gap solution until the F-35 was ready.

February 2013
In February 2013 retired Air Force Colonel Paul Maillet, who had previously worked on fighter procurement, reacted to an announcement of a reduction in the budget for weapons in the F-35 program estimates. He noted that since the aircraft will still require bombs and missiles, these would be moved it into other funding projects, a violation of normal cost accounting procedures. Maillet suggested that if adequate stocks of weapons were not purchased, then the F-35 would be relegated to a surveillance role.

In late February Boeing started an aggressive campaign to convince Canada to buy the Boeing Super Hornet instead of the F-35, promoting it on the basis that the overall cost of ownership would be half that of the F-35, even though the Super Hornet has two engines.

March 2013
The conservative government opened the door for plans to extend the useful lives of the existing CF-18 fleet.

By the early part of March observers were noting that the F-35 and its procurement had become an object of national ridicule. Due to the aircraft's lack of IFR capability and inability to be operated in cold weather as well as issues with helmet design, cockpit design, radar and other factors, Maclean's columnist Aaron Wherry referred to it as "a joke" and compared it to the Senate of Canada for ineffectiveness. NDP defence critic Matthew Kellway said in the House of Commons, "Mr. Speaker, the Conservatives committed to buying the F-35 multiple times. They told us it is on the right track multiple times. According to the Pentagon, the F-35 needs a heated hanger in Florida, it cannot fly at night, and the pilots stay out of the clouds.”

April 2013
In April 2013 Lockheed Martin announced that the per unit price for the aircraft had risen and was now expected to be US$85M per aircraft. The company also commenced a Canada-wide promotional effort, including a travelling simulator, to convince Canadians that the F-35 should still be purchased. Unusually, the advertising campaign including purchasing large ads on OC Transpo buses in Ottawa.

May 2013
In May 2013, SAAB declined to participate in the Canadian government's market analysis for alternatives to the F-35.

June 2013
On 3 June 2013, Saab unexpectedly pulled the JAS 39 Gripen out of the competition. Following discussions with Canada at the current stage of the evaluation process, Saab decided not to take part as "conditions were not ripe to act." The Gripen may be re-entered later if conditions change.

In late June 2013 e-mails surfaced that indicated that Canadian diplomats and military personnel had been instructed to downplay the negative impacts of the Auditor General's report a year earlier. They were told to inform allied nations that the criticism of the Auditor General's F-35 purchase was only "bureaucratic" in nature and not a substantive issue, as part of federal government damage-control efforts.

August 2013
With a decision on the fighter contract likely to be delayed until after the next Canadian national election, the prospect of over $200 million investment in a new software center that would employ up to 20 Canadian military officials was also on hold.

In late August an independent audit by the accounting firm of Raymond Chabot Grant Thornton forecast a unit price of $95.2M per aircraft for the Canadian acquisition in 2017.

September 2013
By September 2013 the estimated potential lifetime costs of the fleet had grown to $71 billion.

In September 2013, Boeing provided Canada with cost and capability data for its Advanced F/A-18 Super Hornet, suggesting that a fleet of 65 aircraft would cost $1.7 billion less than a fleet of F-35s. The Advanced Super Hornet builds upon the existing Super Hornet, which is an improvement of the current CF-18 Hornet. The U.S. Navy buys Super Hornets for $52 million per aircraft, while the advanced version would add $6–$10 million per aircraft, depending on options selected.

Also in September, Lockheed Martin announced that if Canada does not decide to buy the F-35 then Canadian industry would lose $10.5 billion in potential future F-35-related aerospace contracts. Company Executive Vice-President Orlando Carvalho indicated that Lockheed Martin will honour existing contracts with Canadian companies but that future contracts would go to companies from countries actually buying the aircraft. As part of its ongoing efforts to convince Canada to buy the F-35 Lockheed Martin appointed retired RCAF Lieutenant General Charles Bouchard as head of company activities in the country.

October 2013
William D. Hartung, the Director of the Arms and Security Project at the Center for International Policy and the author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex warned Canadians about Lockheed Martin's motivations in selling the F-35 to Canada. He stated, "Lockheed Martin may make bold promises of Canadian job creation with products like the F-35, but the fact remains, their priority will be keeping their main customer – the U.S. Department of Defense – happy by providing American jobs – even if they are supported by Canadian weapons purchases." Hartung suggested Canada should be supporting the Arms Trade Treaty which was voted favourably, but not adopted by Canada, noting, "the government would be well advised to aim at controlling the arms industry, rather than investing in defence firms".