Canadian Defence Procurement – December 2004
Auditing the Upgrades to the CF-18 Fighter Aircraft [Part 1]
The Auditor-General reviews the CF-18
Incremental Modernization Project
Auditing the CF-18 IMP — CF-18 Incremental Modernization Project
The staff of the Office of the Auditor-General began planning for their audit of DND's ongoing
CF-18 Incremental Modernization Project in the summer of 2003. The
summary of this audit of the CF-18 IMP 'Phase 1' to date can be viewed at:
'Phase 1' of the project consists of upgrades to be completed on 80 CF-18s (out of the total fleet of
119 aircraft at the start of the project) between 2001 and 2006. Phase 2 was to commence in 2004 and to be
completed by 2009. The ultimate goal was to extend the CF-18's operational life and effectiveness until
2017 or beyond.
For details on Phase 1 upgrades see Alan Ng's December 2003 In Detail article,
The CF-18 Incremental Modernization Program. The basis for Phase 1 is
Boeing's Engineering Change Proposal 583. ECP-583 includes new radar
and IFF , radio and mission computer, stores managment and navigation systems, data link
, multi-purpose cockpit displays, and helmet sights. All the Phase 1 systems must be fully integrated to be fully effective, and
to allow for the effective use of new air-air missiles which are being procured for the CF-18 as separate
The OAG team focused on five individual projects within Phase 1 of CF-18 IMP.
We examined the acquisition process for three on-aircraft projects, the
Advanced Distributed Combat Training System (ADCTS) project for flight
simulation training, and the development of the new colour [cockpit] displays. The development work for a sixth
project,  Data Link, was added after we started the audit, so we did not examine it. We did not assess the military
decision to modernize the CF-18 aircraft but rather focussed on whether the upgrades will address identified
The exclusion of that sixth project, "Data Link", was not mentioned idly. Much was made of CF-18s
operating over Kosovo being unable to communicate with allied aircraft over a secure channel. Link 16 is
a NATO network which will give upgraded CF-18s this ability. Link 16 also has great tactical importance
– from giving CF flight leaders a greater 'situational awareness' to providing AWACS
with the data needed to coordinate allied aircraft within a war zone's airspace.
Clearly Link 16 is a critical part of ECP-583 and its delay is not to be taken lightly. The auditors did
note that "work was being done on Data Link..." while the audit was underway "to integrate [it]
with the CF-18s". To catch-up, both DND and its contractor must work fast. The auditors seemed satisfied
with their progress but the delays in implementing and integrating of Link 16 into the CF-18 have some-
what ominous implications. DND has far more complicated plans for its ongoing AIMP (Aurora Incremental
Modernization Project – the CP-140 patrol
aircraft's equivalent to the CF-18 IMP) involving compatibility with multiple data links.
While examining DND's CF-18 Phase 1 performance, the auditors also reviewed the roles of Public Works and
Government Services Canada (PWGSC) and the Treasury Board of Canada Secretariat (TB) in this project. In
general terms, the role of PWGCS is to award and manage supplier/contractor contracts, manage project risk, and
oversee programs. The role of the TB Secretariat is to approve expenditures, "encourage good management
practices", " ensure the integrity of the expenditure process", and review (but not manage)
Overall, the auditors found that DND was following the contracting policies and procedures established by
Public Works in the PWGSC Supply Manual.
We examined the largest-dollar contract in each of the five projects.
All are within costs and the payments are on schedule. Contract payments are based on delivery of aircraft, spare
parts, documentation, hardware, and training ... delivered by the contractor according to either milestones or on a
time-and-material basis, as required by the contract.
The auditors did have concerns over some of DND's procedures. However, we will address the OAG staff's
criticisms of the Public Works and Treasury Board involvement with the CF-18 Incremental Modernization Project
first in Part 2.