Gold prices near 3-week lows as stronger dollar, trade progress weigh
Investing.com -- Canada’s purchase of 88 Lockheed Martin (NYSE:LMT) F-35 fighter jets will cost approximately C$27.7 billion ($20.2 billion), nearly 50% more than initially estimated, according to a government audit released Tuesday.
Canadian Auditor General Karen Hogan’s report, tabled in the House of Commons, revealed significant cost increases and potential risks that could delay the introduction of the new fleet, which is intended to replace Canada’s aging CF-18 fighter jets.
The governments of Canada and the United States finalized an arrangement in December 2022 to acquire the multi-role CF-35A fighter jets along with associated equipment, weapons, and services as part of the Future Fighter Capability Project.
When the government finalized the arrangement, the estimated costs were C$19 billion. The audit found this figure was based on outdated information. By 2024, costs had jumped to C$27.7 billion and did not include other elements needed to achieve full operational capability.
Essential infrastructure upgrades and advanced weapons would add at least another C$5.5 billion to the total cost, according to the report.
The audit also identified that construction of two new fighter squadron facilities to accommodate the CF-35As was more than three years behind schedule. Costs for an interim solution to support the new jets will further increase infrastructure expenses.
Another major concern highlighted in the report is a potential shortage of qualified pilots to fly the advanced aircraft. This personnel issue was previously identified in a 2018 report from the Auditor General and remains unresolved more than six years later.
"Maintaining a strong fighter-jet capability contributes to the safety and security of Canadians," Hogan said. "This is a large, multi-year project that requires active and ongoing management of risks and costs to ensure that the CF-35 fleet can be brought into service on time."
The project’s primary objective is to maintain Canada’s fighter-jet capability for national defense and to fulfill international defense commitments, such as the 2% of GDP requirement for NATO countries, which Canada currently lags behind, prompting Prime Minister Mark Carney to announce a significant boost in defense spending Monday.