CASR

Canadian
American
Strategic
Review

USAF C-27J Spartan Transport – Fixed-Wing Search & Rescue Project – February 2012 Is the USAF Disposal of New/Used C-27J Spartan Transport Aircraft a Procurement Opportunity Canada Should Take? Buying Italian Planes Update: 27 Feb 2012 – Alenia Aermacchi has now announced that it won't support any C-27Js sold  by the US government. According to  CEO  Giuseppi Giordo, Alenia is simply exercising its contractual rights (perhaps explaining why earlier USAF C-27As are now just sitting in the Davis-Monthan 'boneyard' ). What seems to be a simple second strike against 'buying Italian' may also have implications for ex-US  VH-71 helicopters bought by Canada. AgustaWestland would like to see some of those new EH101 variants returned to operational status to back up the Cormorant fleet. But, like Alenia Aermacchi, AgustaWestland is a Finmeccanica firm. Are those contractual limitations applied to any foreign sales not 'approved of ' by Finmeccanica? As previously noted in Re-assessing FWSAR, the Harper Cabinet has signed off on FWSAR, the Fixed Wing Search and Rescue project. That  'outstanding' FWSAR requirement has been a top priority for DND planners and successive Chiefs of the Air Staff for so long that the true value of  FWSAR is never questioned internally. That's not at all unusual for any bureaucracy but it does transfer the burden of  thought to the Harper Government. So where's the critique? MND Peter MacKay has succeeded, once more, in getting the FWSAR Project back to the top of the pile without any real re-examination of the requirement. Small wonder Mr. MacKay is so popular amongst military planners! But, ultimately,  neither Mr. MacKay, nor the Cabinet he is part of, works for the military. But the minister in the trickest position over the FWSAR Project is Julian Fantino, the Associate Defence Minister who is responsible for military procurement. Cabinet signing off is not the only reason that the FWSAR Project has gone critical. As a part of  $525B budget cut, US Secretary of  Defense. Leon Panetta. announced a US Air Force plan to dispose of  its entire fleet of  C-27J Spartans.  This transport aircraft is, of course,  the same type that  our Air Force was accused of  writing its  FWSAR requirement around. Presumably, the 13 in-service USAF C-27Js and 8 yet-to-be-delivered Spartans would be for sale at a much lower price than purpose-built RCAF C-27Js. Short of  re-assessing FWSAR, what is at stake? We had previously stated that rumours of a pending C-27J purchase announcement by ADM Fantino ignored the political  'optics' involved. First is the appearance of ramming through the RCAF Directorate of Aerospace Requirement's darling. (Mud doesn't have to be true to stick.) But Messers MacKay and  Fantino  face other obstacles. A National Research Council report on the FWSAR requirement is yet to finish its internal review. And we are assured by spokes- man for Mr. Fantino that his Government is "looking at all [ FWSAR ] options". That includes likely proposals from  Lockheed Martin (short-bodied C-130J Hercules), EADS (CASA C-295), Bombardier (Q400 derivative), and, possibly,  Viking Air with its  DHC-5 NG Buffalo  proposal. Were all of that not enough, ADM Fantino faces another hurdle with regards to the FWSAR Project. Obviously, as Minister responsible for procurement, Italian-born Mr. Fantino cannot afford to get caught up in the perception  that the FWSAR contest was "rigged  in favour of the Italian-made C-27J". The allegation of rigging has been vigorously denied by all involved but, again, there is the distance between today's political hay-making and the truth tomorrow. Una Cavallo Senza Fantino: or Not Being Perdermi In Te when Buying Aeroplani Italiani ADM Fantino is a proud  Italian-Canadian. But  that perception that  DND wrote the FWSAR requirement around the Italian aircraft presents him with a near-insurmountable problem – fair or not. And, of course, that's not the end of  it. Once allegations of contest rigging are shaken off politically, there is still the risk of once hopeful, now thwarted,  defence contractors suing their erstwhile potential customers. A sport which seems only to gain in popularity with large corporations. And finally, Prime Minister Harper's efforts to expand Canadian trade in Europe. Unfortunately, Canada has a substantial  trade deficit with Italy. [1]  That imbalance has been growing but there's been little actual growth in trade between the two countries. Of  the $2.6B trade deficit reported in 2009,  72% of  the value was in Italian manufactured goods coming to Canada. And  imbalances like that will make it very difficult for any trade-conscious Canadian Government to justify increasing the deficit by handing over another $1.55B to Italy for C-27s. Is Trading Treasure for Tubby Turinese Transports Funneling Funds to Forgetful Friends? While on an official tour of  Italy  in Aug 2011, ADM Fantino and  his  Italian opposite, Guido Crosetto, reaffirmed the two nation's "common defence priorities". How is that demonstrated? Well,  Italy was happy to have the Canadian CF-18s  flying against Libyan targets just across the Med. But when Canada desparately needed CH-47 helicopters (on loan) to save Canadian lives in Kandahar, not a peep out of major Chinook-operator, our friends in Italy's military. [2] So, minor grousing about our ' bestest ever pals ' ? Let's salt that scratch. When the Canadian Forces bore the brunt of combat in Kandahar province, Italy was 'nation-building' in Herat. No picnic but not quite the same as slugging it out in Panjwaii.  The Esercito Italiano website of that time listed all  the other member countries of  ISAF save one. No prizes for guessing who. Canadians are used to being overshadowed but this was when CF troops led  the way. Maybe we should remember those who forget us. Or, at least, we shouldn't the reward people who do. Egr. sig. Fantino may accept honours from his country of  birth but its unlikely that he or  the Harper Cabinet will overlook the economic realities of Canada-Italy trade. So, where does that leave us? As noted above, there's now an opportunity to purchase new and used C-27Js from our major trading partner instead of exacerbating the Canada-Italy trade deficit. But is it wise? Antying Up for the Beancounters ...  or  Show us the FWSAR  Manzo,  la mia dolce amica ! First let us assume that any Canadian purchase of ex-USAF C-27Js would involve cooperation with Australia, our most probable competitor for this resource. There are 21 airframes available (13 C-27Js delivered to the USAF since 2010 with 8 more yet to be delivered). To replace aged RAAF Caribou transports, the Australians require at least 10 Spartans. Assuming that those were taken from current USAF stocks,[3] only 11 C-27Js are left for Canada. With outstanding USAF orders, buying 4 more C-27Js  (albeit possibly pricier ) is unlikely to be a major problem. $1.55 B is quoted as necessary to procure 15 FWSAR aircraft. In-service support contracts for FWSAR are not included in that amount which simplifies estimates (ISS costs exist regardless of the source of airframes). So, we know that 15 basic transport C-27Js should be cheaper than their sensored-up FWSAR equivalents. And, obviously, there is a potential bargain to be had on ex-US aircraft but no asking price has been released. It stands to reason, though, that used and now-unwanted aircraft will be cheaper (even when upgraded) than buying new from Italy. An imponderable is the political effect of any purchase. Our trade relationship with Italy is set. The consistant trade deficit in Italy's favour means that  the Italians have no incentive –  they are already winning the game. On the other hand, the US remains our major trading partner. In other words, we are the ones with an incentive here. Canada is in a position to buy the aircraft type we want in a 'gently used' condition or even brand new through a purchase from a neigh- bour with whom we currently have a $4.6B trade surplus. Such a buy should make 'Uncle Sam' slightly happier. Any joint deals on C-27Js with 'key ally' Australia should also please the US. So where are the downsides? Well, such end-runs don't make suppliers very happy. Might we save on used C-27Js only to find Alenia less than enthusiastic for product support? Possibly, but it is unlikely. When the USAF lost interest in its earlier-model  C-27As, they were dumped unceremoniously at the Davis-Monthan boneyard. Were that fate to be repeated for C-27Js, it wouldn't bolster the C-27 product rep. So, we're probable safe on used C-27J product support. That leaves us with the Granddaddy of all FWSAR questions. Does a quick purchase to fulfill a FWSAR role make any sense? For that matter, does the FWSAR concept make sense at all ? The Government must decide whether submissions for privately-contracted FWSAR services tally up. In the meantime, let's remind ourselves what Italy uses to perform its  FWSAR duties. "So how is it that they do 'em where you come from?"  Fixed-Wing SAR Flown Italian-Style Short answer: it's not the C-27. In the early 1970s, a SAR variant was proposed to the Italian military. It was rejected  in favour of a utility transport aircraft. Since that time, all Italian fixed-wing SAR has been transferred from their military  to their  Coast Guard and Treasury Police. The latest FWSAR aircraft in Italian use is the locally-made ATR 42 MP, a mission-specialized airliner equivalent to Canadian Q Series aircraft used by other countries. Supporters of  a FWSAR status quo would be quick to point out the trials and tribulations of FWSAR operations in Canadian climatic conditions and over our vast geography. Quite true. Italian conditions are very different. But that is wide of  the point. Italy rejected its own C-27s for FWSAR because military transports just aren't economical in this role. But of course, they are good at being military transports. All that Canadian geography would seem less vast were we to base some of our military aircraft in the North. It is under that condition that buying ex- USAF  C-27Js makes sense. Otherwise, Canada is simply refusing to reconsider an ill-thought through conclusion on military services while piling more Billions into our Italian trade deficit. [1] In the 15 years between 1994 and 2009 that trade deficit grew from $1.26B to $2.64B (hitting a high point of  $3.04B in Italy's favour in 2006) according to the Parliament of  Canada figures. [2] By our count at the time, the Italian Esercito had 26 active CH-47Cs with at least 22 flyable. [3] It would be more equitable to divide the 'used' and new C-27Js between the two countries. But, Australia's need is even more pressing and, for this scenario, they are the senior partner.