Thursday, May 17, 2007

Costs soaring on new tanks and Afghanistan


That didn't take long. Last month, Minister of National Defence, Gordon O'Connor, when he wasn't making up detainee transfer stories, announced the acquisition of slightly used Leopard 2 main battle tanks: 20 on loan from the Germans and 100 to be purchased from The Netherlands. The total cost of the deal was announced to be $650 million, including spare parts and modification to Canadian standards.
Canada is negotiating government-to-government agreements for both borrowing and acquiring the Leopard 2 tanks. The total project cost of the loaned tanks, the acquisition of 100 surplus tanks from the Netherlands, the requisite upgrades and enhancements to this new Leopard 2 fleet, and an initial acquisition of spare parts is $650 million, which will be funded from existing departmental allocations.
No other expenditure was announced and no further estimate of funds was discussed. As it is, taking $650 million from "existing allocations" means shifting money from other essential operations and maintenance.

Today, however, the real cost of buying main battle tanks was disclosed.
Canada's purchase and long-term support of 100 slightly used Leopard 2A6 battle tanks will be $1.3 billion — roughly double the Conservative government's initial public estimate last month.

As he detailed a laundry list of military hardware the Conservative government plans to buy over the next few years, Defence Minister Gordon O'Connor surprised the Commons by announcing there will be a 20-year, $650-million service contract attached to the tank deal.

“The capital acquisition is $650 million and the support for 20 years is about $650 million; about the same range,” he said in reply to an opposition question during debate over Defence Department estimates.

Once this little disclosure was made DND officials starting bobbing and weaving, sucking and blowing and generally answering questions by speaking into their lapels.

The official did not explain why the Conservative government broke with its long-standing practice of rolling both the purchase price and long-term support costs into one package.

When other big-ticket equipment purchases were made, such as the $4.7 billion acquisition of 16 heavy-lift Chinook helicopters, the entire program cost was announced at the same time.

It's really not all that confusing, and Dawn Black nailed it.

New Democrat defence critic Dawn Black accused the Conservatives of deliberately trying to hide the true of cost the tanks.

“They know that Canadians are becoming more and more concerned about the mission in Afghanistan and they're low-balling” the cost pricetag, she said.

“Canadians are concerned about all of the costs of the mission.”

Yes. It's a lack of transparency, a lack of accountability and, well, dishonest. And if you think that's all there is, you'd be wrong.

Also on Thursday night, Mr. O'Connor released a revised estimate on the cost of Canada's current mission to Kandahar. From February 2006 to February 2009, when the mission is slated to end, it is estimated that $4.3 billion will have been spent by the Defence Department — an increase of $400 million since the last forecast in November.

The increase is attributed to the additional cost of reinforcements, including tanks, which were dispatched to Kandahar last September by the Conservatives.

“We've added a few hundred more soldiers; they cost money,” Mr. O'Connor said. “There's more machines in there.”

The latest estimate does not include the price tag of all of the new equipment the Defence Department has purchased over the last few months specifically for the mission.

So, in truth, the cost of the Afghanistan mission is even higher than the revised and increased estimate provided by O'Connor today. Why didn't he provide the true figure?

Easy.

He's deliberately burying the true figure. Even though new equipment has been purchased he will defend the cost by stating that new artillery, new ammunition, new vehicles, etc. are all now a part of army's permanent equipment inventory and the fact that it's all been purchased for the Afghanistan mission is irrelevant. Count on it.

Again, all of that money comes from the fixed Defence budget which means operations and maintenance in other areas of the Canadian Forces is succumbing to funding shortfalls. If the money isn't coming from the Defence budget then it's being taken from other departments and that is illegal. Parliament is required to be consulted on estimates and amending budget items is a decision of the House of Commons.

Worst. Defence. Minister. Ever.

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