Auditor takes on defence brass over f-35 cost calculations – CDMA GSM Cell Phones

Auditor General Michael Ferguson responded directly to officialsfrom the Defence Department today, disputing their contention thatthey aren’t required to count the full costs of a project like theF-35 fighter jet procurement. In his Tuesday testimony to the public accounts committee, AuditorGeneral Michael Ferguson refuted the claims of defence departmentofficials that they did not need to disclose the full costs of themilitary’s F-35 fighter jet purchase. (Sean Kilpatrick/Canadian Press) “I am concerned with suggestions that accurate estimation and theinclusion of personnel, operating and maintenance costs are notimportant, since they would be incurred regardless of the aircraftselected to replace the CF-18,” Ferguson said in his openingremarks to the House of Commons public accounts committee Tuesday. Defence officials told the same committee May 1 that it is not their practice to include all life-cycle costs in project estimates. “While we believe in and support life-cycle costing, it is not arequirement established by the office of the auditor general,”Ferguson told MPs.

It is, however, required by the department’s own policies, as wellas by the Treasury Board, which sets spending standards in thefederal government. It was also specifically requested by Parliament in a 2010 motionfrom the House finance committee and in a ruling by then SpeakerPeter Milliken. Ferguson’s April 3 report, in which he found the department wasn’tupfront about the costs of the fighter jet that defence officialswanted, contained a chart showing internal estimates the departmentused but didn’t disclose to the public. Those figures, which showed the jets would be billions more thanthe government had said, were all defence estimates not auditorgeneral estimates, Ferguson noted. Secret analysis Ferguson wrote in his report that the Department of NationalDefence didn’t exercise due diligence in choosing the F-35 toreplace the CF-18, wasn’t forthcoming with Parliament about itstrue estimated cost and made key decisions without requiredapprovals or proper documentation.

His report also showed the department had internal estimates that65 F-35 jets would cost $25 billion over 20 years, but would onlyadmit to a cost of $14.7 billion. Defence Minister Peter MacKay andAssociate Defence Minister Julian Fantino avoided answeringquestions about the full cost, insisting the jets would be $9billion, despite months of formal and informal requests. Ferguson told MPs his team had access to all the information theyneeded to write the report, although they were surprised to seesome information that they expected to find within the departmentsonly existed in secret memos to cabinet. “There were types of analysis we felt should have been prepared andshould have existed just as part of normal departmental process andit shouldn’t have been something that they would have waited untilpreparing the memorandum to cabinet to include it,” Ferguson said. CDMA GSM Cell Phones

Something has to be done to make sure National Defence startsestimating full life-cycle costs, the auditor general suggested. “The fact that we are still talking about life-cycle costing and weare still talking about what’s appropriate in life-cycle costingmeans that there needs to be some serious consideration about justhow life-cycle costing is supposed to be applied,” Ferguson said. “It needs to be re-examined to determine the best way to apply it.” National Defence official says auditor wrong Earlier this month, Robert Fonberg, deputy minister of theDepartment of National Defence, told the committee that DNDtraditionally includes the purchase price and sustainment, ormaintenance, costs only, not operating costs. He said that’sbecause those are included in annual budgets for the wholedepartment, which are approved by Parliament. CDMA GSM Cell Phones

The same approach was used for the F-35s as the four previous airforce equipment procurements, he said. Fonberg also contradicted Ferguson, saying cabinet didn’t have thefull cost estimates in 2008 the way Ferguson said they would have. Ferguson says he stands by his report. New Democrat MP Malcolm Allen says National Defence has “reallygone rogue.” “And this defence minister has totally lost control of thatdepartment,” he said. 3G Mobile Phone Manufacturer

Allen said he wants to see Fonberg back at committee to explain hisremarks in light of Ferguson standing by his report, and suggestedthe top officials with National Defence could have to resign. “If the officials in the Defence Department are actually misleadingcommittee and misleading Parliament, then I guess they ve gotta begone. You can t have folks at that level misleading Parliament ormisleading the committee if indeed that s what they ve done,”Allen said. Tuesday’s meeting is Ferguson’s third appearance before MPsstudying the process to replace Canada’s CF-18 fighter jets withF-35 aircraft, more than a month after his report exposed internalestimates far higher than the ones disclosed publicly.

Ferguson was initially scheduled to appear for before the publicaccounts committee on May 8, but an unexpected medical treatmentleft him recovering at home. During his April 26 appearance, Ferguson told the committee that there was significant information missing from the government’s cost estimates for the fighter jets. Read Kady O’Malley’s liveblog. Mobile friendly feed here.

With files from Meagan Fitzpatrick.

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