OTTAWA — Buying a full fleet of 88 F-35 fighter jets will cost $8.7 billion more than planned, and the Department of National Defence is years behind in preparations to receive the first of them, the federal auditor general said Tuesday in a new report.

The American-made planes are one of Canada’s most drawn-out defence procurements, a symbol of dysfunction that Prime Minister Mark Carney has promised to solve as he prepares to give the Defence Department billions of dollars more to replace and upgrade other planes, land vehicles and ships. The Liberal government was already reconsidering (again) buying them amid uncertainty about their economic and security implications. 

Karen Hogan presented her report on the planes, along with others on subjects such as the government’s dealings with GC Strategies, the company that helped develop the ArriveCan app, and the federal plan to prepare Canada for climate change.

Here’s what you need to know.

Pricey planes got pricier: The estimated cost just to buy Lockheed Martin’s F-35s has increased to $27.7 billion from $19 billion, the audit found, thanks to inflation, currency fluctuations and increased global demand for munitions.

In a statement, Defence Minister David McGuinty didn’t challenge the findings, though he noted that both figures include allowances for contingencies—unexpected expenses—that are meant to “better mitigate potential economic risks and uncertainty in the future.”

His department is reviewing the F-35 purchase, with a decision due this summer on whether to carry on with the long-delayed acquisition of those jets or consider reopening the competition.

The budget has gone way up, McGuinty said, due to international tensions and the aftermath of the COVID-19 pandemic.

Besides the cost of the F-35s themselves, Hogan’s team found the jets require a further $5.5 billion in expenses if the air force is to fly them; $4 billion of that is for upgrades to their main bases at Bagotville, Que., and Cold Lake, Alta., and $1.5 billion for missiles to arm the jets.

Those base upgrades, meanwhile, won’t be complete until 2031—three years behind schedule. DND began planning for the work before the Canadian government committed to the F-35s as its next generation of fighters, and it turned out not to have planned well. Once it picked the jets, the auditors found, the design of the facilities “had to be substantially modified because it did not meet the requirements of the aircraft.”

The military is putting together an interim plan to receive the first planes at Cold Lake in 2028, before the base is fully ready, but it’s in its early stages and nobody knows yet what it will cost.

National Defence is also worried about having enough pilots to fly the F-35s and the facilities to maintain them, the audit said. And though the air force is supposed to use both new F-35s and old CF-18s for a time, the department’s engineering personnel have warned they can’t support both, the audit found.

ArriveCan may be a canary in the coal mine: The lack of oversight and disregard for the rules that saw a two-man firm rake in millions to help develop the government’s infamous ArriveCan app was not an isolated incident. 

At the request of Parliament, the auditor probed 106 contracts awarded to GC Strategies in the last 10 years by 31 different government organizations (including a Crown corporation and an agent of Parliament, both unnamed in the report). The contracts added up to about $92 million, $64 million of which was actually paid. 

“We found issues in almost every contract that we looked at,” Hogan said at a press conference. In some cases, the contractor was paid without anyone confirming the work had even been done.

The auditor went digging for a common thread, such as an individual public servant who might have moved through departments facilitating the deals. “We did not see that. What we saw here was public servants at all levels … just not following the basic procurement rules that are meant to show transparency with due diligence and value for money,” she said.

In a rare move, Hogan issued no recommendations to fix issues she uncovered with the GC Strategies contracts. Instead, she urged public servants to stop disregarding the existing rules. In fact, Hogan said, they should consider paring down the rules to make them easier to follow. 

The auditor said she was particularly troubled by the lack of oversight, given the government’s increased reliance on contractors. Ottawa spent $1.3 billion on “informatics services” in 2015-16. By 2023-24, that figure had more than doubled, to $2.8 billion.  

The government has banned GC Strategies from federal contracts for the next seven years, citing “a thorough assessment of the supplier’s conduct by the Office of Supplier Integrity and Compliance.”

Climate change non-adaptation: Canada’s national adaptation strategy for climate change, released in 2023, is no good, according to environment commissioner Jerry DeMarco. (His audits on environmental subjects are filed through the auditor general.) The plan took over two years to put together, but failed to prioritize what should be done first to prepare Canada for a hotter planet. Many of its components lack targets, such as those for tackling the risk of Lyme disease spread by ticks that survive warmer winters, or the health menace of wildfire smoke.

In all, the strategy did not create a workable plan, even for the federal government’s own actions, let alone anybody else’s, DeMarco found.

Other audit findings:

• The federal government has been slow to get rid of its unused office space, and only managed to reduce its footprint from six million rentable square metres in 2019-20 to 5.9 million in 2023-24. The government doesn’t just need to offload the extra space for cost reasons; it’s part of Ottawa’s plan to build more affordable housing on the land. 
• Departments and agencies responsible for protecting the habitats of species at risk are working with inadequate information and do too little to gather more.
• Management plans led by the Department of Fisheries and Oceans for five key ocean regions are “broad and abstract and did not lead to concrete actions,” DeMarco found.
• The departments that manage registrations of First Nations people under the Indian Act—entitling them to benefits including housing, education and health care—work too slowly, Hogan found, with complex cases taking nearly 16 months instead of the targeted six.