National Fighter Procurement Secretariat Overview

1. National FighterProcurementSecretariatOverview October 2012

2. Canada’s fighter aircraft are aging • The Royal Canadian Air Force acquired its fleet of 138 CF-18’s between 1982 and 1988, with an original life expectancy until 2003. There are 77 aircraft left • Through modernization programs, the life expectancy of the CF-18’s has been extended to 2017-2020. Further life extensions are being considered • The CF-18 has been the backbone of Canada’s air defences, a fundamental part of Canada’s contribution to the defence of North America and support to international missions • The 2008 Canada FirstDefence Strategy identified the need for next-generation fighters to carry out core missions of RCAF • In 2010, the Government of Canada announced its intention to procure 65 F-35s to replace its CF-18s

3. The Government of Canada launched a 7-point Action Plan • The Auditor General Spring 2012 report on replacing Canada’s fighter jets was critical of how Canada’s acquisition of F-35’s has been managed to date • The Government agreed with the AGs recommendation and conclusions and put in place a Seven-Point Action Plan on April 3, 2012 • The Action Plan aims to ensure Canada acquires the fighter aircraft it needs to complete its core missions and to ensure public confidence in an open and transparent acquisition process • The Action Plan must be completed before the Government will proceed with the purchase of any replacement aircraft for the CF-18 Seven-Point Action Plan Funding envelope for the acquisition of F-35 frozen Immediately establish Secretariat within PWGSC DND will provide annual updates to Parliament DND will evaluate options to sustain a Canadian Forces fighter capability TBS will commission independent review of costs TBS will ensure full compliance with procurement policies prior to approving project Industry Canada will update Parliament on F-35 industrial participation benefits

4. Canada’s participation in the Joint Strike Fighter Program • Since 1997 Canada has been a participant in the Joint Strike Fighter program along with the U.S., the U.K., the Netherlands, Italy, Turkey, Denmark, Norway and Australia • Though the funding for the acquisition of the F-35’s is frozen, Canada remains a partner in the Joint Strike Fighter program through a Memorandum of Understanding with eight partner countries • The MoU does not commit Canada to buy the F-35s. In order to keep the F-35 option open, Canada will maintain its involvement in the project as it implements the seven-point action plan • Canada’s participation in the Joint Strike Fighter program also brings significant economic benefits for Canadian industry

5. National Fighter Procurement Secretariat established • The National Fighter Procurement Secretariat is responsible for the coordination and implementation of the Seven-Point Action Plan • The Secretariat is guided by three core principles: 1. Due diligence through strong governance 2. Third party oversight 3. Open and transparent communications “I am pleased to announce that the Secretariat is operational and will play the lead coordinating role as the Government moves to replace Canada’s aging CF-18 fleet.” ~ Minister Ambrose, June 13, 2012

6. 1. Due diligence through strong governance • Implementation of the Action Plan will be vetted through a Deputy Minister (DM)-level Governance Committee (DMGC) that will: • act as a non-partisan decision-making body • include direct central agency participation and oversight • include the participation of two independent members from outside the public service • bring all of the relevant Departments together around one table • DMGC is supported by an Interdepartmental ADM-level Steering Committee (ISC) which will work through issues raised at DMGC before bringing them back for final decision Seven-Point Action Plan DMGC ensures due diligence and presents conclusions to Ministers Report back to Canadians on CF-18 replacement

7. 2. Third party oversight • The use of non-governmental independent third parties will enhance openness, impartiality and transparency of the Action Plan • DMGC’s two independent members provide unbiased support and advice: • L. Denis Desautels, former Auditor General of Canada (1991–2001) and a recipient of the Order of Canada; and • Dr. Kenneth Norrie, an economic historian and currently a professor of economics at McMaster University • An independent review of the F-35 costs has been commissioned by TBS • results on the cost of the F-35will be made public in late Fall 2012 • An analysis of options to sustain a fighter aircraft capability is underway • An independent review of the acquisition process to date is taking place • results will be available in Spring 2013

8. 3. Open and transparent communications • Parliament and the Canadian public need to have confidence in the open and transparent acquisition process that will be used to replace the CF-18 fleet • As a result, the Secretariat is committed to coordinating timely, open and transparent communications through: • regular reporting to Parliament • ongoing briefings with stakeholders • a dedicated website to post and share information • regular updates on the status of implementing the action plan

9. Better outcomes for Canadians The Secretariat’s goal is to ensure that: • all options to sustain Canada’s fighter capability have been thoroughly assessed • the costs of the F-35 have been independently verified • all the steps taken in the acquisition process have been independently reviewed • the Canadian public, industry and our international partners are kept apprised of progress in implementing the Action Plan • the Action Plan will be completed before any decisions to replace the CF-18 are made • Parliament and the Canadian public have confidence in the open and transparent acquisition process to replace the CF-18 fleet 9