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Ottawa hires firm to maintain old jets as PM stresses need for new ones

Prime Minister Stephen Harper sits in a CF-18 Hornet as Major Daniel Dionne explains the controls at the L-3 plant in Mirabel, Que., on Sept. 1, 2010.

Ryan Remiorz/The Canadian Press

The economic and diplomatic strings attached to Ottawa's multi-billion dollar deal to buy F-35 stealth fighters would make it extremely painful - if not impossible - for a future government to unravel or cut, senior Conservatives say.

Unlike the EH-101 helicopter deal axed in the mid-1990s by Jean Chrétien's Liberal government, the pending agreement to purchase 65 new interceptors for the air force is a more complex arrangement that carries important risks to Canadian industry and the country's standing among allies.

Prime Minister Stephen Harper said the Opposition Liberals understand the significance and the nuances of the plans almost as much as the government.

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"I don't understand why the Opposition is playing political games with this," Mr. Harper said at an aerospace announcement the Montreal are. "It was the Liberal government that in 2002 committed Canada to the development of this aircraft."

The announcement Wednesday saw the federal government pour $476-million into the country's current fleet of CF-18 jets to keep them flying until 2017.

When Mr. Chrétien cancelled the $4.8-billion replacement for the military's geriatric Sea Kings in 1994, he ripped up one contract with European Helicopter Industries Ltd, an Anglo-Italian consortium. It cost taxpayers $500-million in cancellation fees.

Tearing up - or putting on hold - the F-35 Lightning II plan would be far more costly.

It could endanger Canadian defence contractors, who've already won $375-million worth of work on the planes, anger allied nations already committed to buying the planes and waste hundreds of millions of dollars under existing agreements signed as far back as 1997.

The House of Commons defence committee will examine the deal this month and the Liberals have promised to review it as well, describing the arrangement as secretive and unaccountable.

The $9-billion purchase price, with the potential of an additional $7-billion in life-time maintenance, has all opposition parties, critics and even some defence analysts suffering from sticker shock.

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Mr. Harper focused his attack on the Liberals and dismissed the arguments as posturing. "Everybody knows the Liberal Party supports this," he said, his voice rising.

"Everybody understands the military will need this equipment at the end of the decade and everybody understands this is to the benefit of the Canadian aerospace sector, particularly the industry that is based here in the greater Montreal region. So the Opposition should stop playing political games with this and simply support this, which is a necessary purchase for all of us."

Critics argue handing the deal to Lockheed Martin, the world's No. 1 defence contractor with $39-billion (U.S.) in sales, amounts to the sole-sourcing of one of the largest procurements in the country's history.

But Jay Paxton, a spokesman for Defence Minister Peter MacKay, argued that a competition was already run - by the Americans.

In the late 1990s, Washington pitted Boeing and Lockheed Martin against each other to select which company would build the next generation of fighter aircraft.

Alan Williams, the former senior procurement official at the Defence Department, said Canadians should be "totally insulted" by that logic.

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"Don't say you've already conducted a competition and we don't need to do one; you haven't," said Mr. Williams, who championed Canada's entry into the F-35 program in the 1990s.

"The Americans selected an aircraft between two competitors, based upon their operational requirements to meet their needs. It had nothing at all to do with Canadians needs. It's insulting to ask the average Canadian to buy that argument."

Normally when countries want to buy aircraft, they approach the contractor, cut a deal and the plane is delivered. But the F-35 was conceived and developed collectively by a number of nations, who paid for the privilege of being part of the deal.

In Ottawa's case, that's amounted to $160-million (U.S.), which allows Canadian companies access to bid on contacts associated with the project. Think of it as the federal government paying the cover charge to get into a club.

Between now and 2051, the federal government is committed to spending an additional $551-million in order to remain part of the club.

If Canada drops out, it not only loses future access but it could be on the hook for some - or all - of its pending contributions, Mr. Paxton said.

"There would be costs associated with any withdrawal from the [memorandum of understanding]" he said Wednesday.

"Canada would have to complete payments on joint activities that the partnership has already contracted. The exact costs would be subject to negotiation with the other (Joint Strike Fighter) partners."

The federal government signed two agreements, in 1997 and 2006, in order to be part of the program, meaning both Liberal and Conservative governments have signed on.

The United States co-ordinates ordering the aircraft with Lockheed Martin every year and the withdrawal of one or more nations would drive up the price for those still in the club - something Conservatives warned would spark a backlash among allies.

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