Auditor General Finds Cost to Buy F-35 Jets Has Risen to at Least $33.2B

An F-35 fighter jet taxies out for a training mission at Hill Air Force Base in Ogden, Utah, on March 15, 2017. George Frey/Getty Images

Canada’s plan to replace its aging fleet of fighter jets with F-35s will cost much more than initially projected, according to the auditor general.

Auditor General Karen Hogan released several new reports on June 10, including one examining the federal government’s Future Fighter Capability Project.

The agreement to buy 88 F-35 fighter jets from the United States had been finalized in 2022, with the Department of National Defence (DND) projecting the cost at $19 billion.

The auditor general said that by 2024, the estimated cost had risen to $27.7 billion, due to issues like rising inflation, fluctuations in exchange rates, and heightened demand for munitions globally.

The report said DND’s initial estimate were based on “outdated data” and that DND was only 50 percent confident in its 2022 estimate, with costs expected to be greater.

The projection of $27.7 billion does not include an additional sum of at least $5.5 billion to reach full operational capability, the auditor general said, to be used to upgrade infrastructure and purchase advanced weapons.

The F-35, a fifth-generation stealth fighter jet, is built by U.S. defence company Lockheed Martin. Canada is purchasing the F-35A version, which can be used on conventional airfields, and which will bear the designation CF-35A.

The advanced aircraft will replace the aging fleet of CF-18 Hornets, which were first introduced in the early 1980s. The aircraft had a life expectancy of 20 years and went through modernization in the early 2000s to extend their service up to 2020.

The initial choice of the F-35 had met with some controversy. Canada had been a partner in the Joint Strike Fighter (JSF) program to develop a fifth-generation fighter with the United States since 1997. The Stephen Harper government announced in 2010 it would acquire the F-35 without running a competition process.

“By that time, practically speaking, Canada was too involved with the aircraft and the JSF Program to run a fair competition,” wrote the auditor general in a 2012 report on the program.

Other countries part of the program include Australia, Denmark, Italy, the Netherlands, Norway, and the United Kingdom.

The purchase of the jets became a political issue in Canada, with the Liberal Party campaigning in the 2019 election on the promise of running a transparent competition to replace the CF-18s. The party said Canada needed an aircraft to defend North America and not for “stealth first-strike capability.”

“We will reduce the procurement budget for replacing the CF-18s, and will instead purchase one of the many, lower-priced options that better match Canada’s defence needs,” said the party’s platform.

In the end, the F-35 won the competition and the Liberal government announced its plan to purchase 88 F-35s for $19 billion in March 2022.

Tensions With US

The F-35 purchase again became politicized in recent months amid “51st state” comments and tariffs from U.S. President Donald Trump aimed at Canada.

Shortly after becoming prime minister in mid-March, Mark Carney said he asked then Minister of Defence Bill Blair to conduct a review of the F-35 contract to determine whether that aircraft or an alternative “is doing the best job to defend our country, getting the best value for money.”

This action didn’t go unnoticed by Washington, with U.S. Ambassador to Canada Pete Hoekstra telling CTV News in late May that pulling out of the F-35 contract could put continental defence cooperation in jeopardy.

“If Canadians are flying one airplane, we’re flying another airplane, it’s no longer interchangeable,” Hoekstra said. “And so, that might even threaten NORAD without talking about new alliances that promise even more security and safety to our people.”

Asked by reporters about Hoekstra’s comments, Carney said on May 21 that the contract review is ongoing.

“There’s many factors that come into that interoperability so that would relate to the NORAD element there,” he said. “Value for money, broader Canadian industrial impacts, all of those are factors that are under consideration.”

Obstacles

Canada is expected to receive its first delivery of F-35s between 2026 and 2032, the auditor general’s report says, but the first eight aircraft will be sent to an airbase in the United States where pilot training will begin. The rest of the delivery is planned to start in 2028.

Defence Minister David McGuinty told reporters on June 10 that Canada has already acquired 16 F-35s and will take possession by year-end at the latest. He said pilots would start training but didn’t specify whether this would be in Canada.

The planned delivery had already hit some snags, with the auditor general reporting that construction of the fighter squadron facilities in Bagotville, Que., and Cold Lake, Alta., is more than three years behind schedule. In response, DND developed an interim plan to be able to operate and maintain the new aircraft in 2028. The Joint Strike Fighter Program Office assessed the plan and determined some “significant issues remained unresolved,” including the lack of plan to keep the pilots’ knowledge and skills current.

The issue of pilots is also noted by the auditor general, which found that a shortage remains one of the biggest obstacles.

Lack of personnel has been plaguing the Canadian Armed Forces as a whole, with DND’s year-end report for 2024 saying that 72.9 percent of military occupations have critical shortfalls.

McGuinty reacted to the auditor general’s report by saying his government takes the findings “seriously.”

He said Ottawa has taken measures to address the findings, including reviewing cost estimates on an annual basis, updating a risk management plan, and increasing transparency with the public.

McGuinty said issues like “external economic conditions” driven by COVID-19 have raised the costs of the project. “In combination with increased global tensions and related impacts on the availability and demand for materials, we would not have been able to deliver the full scope of this project under our previous budget,” he said in a statement on June 10.

The auditor general’s report comes a day after Carney announced his plan to reach the NATO defence spending target of 2 percent of GDP. The prime minister said he will spend an additional $9 billion on defence, including by raising the salaries of soldiers and developing new military capabilities.

Regarding longstanding military procurement issues in Canada, Carney said the establishment of a new office overseen by a secretary of state would help streamline defence acquisitions.