Peter Zimonjic · CBC News

· Posted: Jun 10, 2025 10:08 AM EDT | Last Updated: 31 minutes ago

Canada's plan to buy 88 U.S.-built F-35 fighter jets is facing significant challenges, including skyrocketing costs, a shortage of trained pilots and a lack of critical infrastructure, according to a new report from Auditor General Karen Hogan.

The audit for the F-35 program is part of Hogan's spring audits, released Tuesday, which also found contracts awarded to GCStrategies for the ArriveCan app and other services regularly did not follow proper processes or deliver value for money. 

In December 2022, the Liberal government announced it had signed a deal to buy 88 F-35 fighter jets from the United States to replace Canada's aging CF-18 Hornet fleet.

Hogan's audit of the F-35 program focused on whether National Defence's plan to acquire the jets was on schedule and on budget, finding significant challenges on both fronts.

"This is a large, multi-year project that requires active and ongoing management of risks and costs to ensure that the CF-35 fleet can be brought into service on time," Hogan said in a statement.

According to the report, the cost of the F-35 program has risen to $27.7 billion — up from the $19 billion National Defence announced in 2023. That's without factoring in the costs for essential infrastructure upgrades and advanced weapons purchases.

Securing critical infrastructure, such as operating bases, and weapons, such as missiles for the aircraft, will cost at least an additional $5.5 billion, the audit said.

Part of the reason for the increased base costs of the program was that National Defence used outdated cost estimates when it announced the deal, it found, but global factors are also to blame.

"We found that an important part of the increase in the department's updated cost estimates of $27.7 billion was caused by global factors, specifically: rising inflation; fluctuations in foreign exchange rates and heightened global demand for munitions."

The audit also said "unforeseen infrastructure complexities" significantly impacted National Defence's cost estimates.

Pilots and facilities

According to the audit, the construction and outfitting of the fighter squadron's main operating bases in Cold Lake, Alta., and Bagotville, Que., are more than three years behind schedule.

The original plan was to have these bases up and running when Canada started receiving its first delivery of F-35s in 2028, but that date has now been pushed back to 2031.

Construction was delayed after National Defence determined that the design of the operating bases needed to be reworked to accommodate specific requirements of the F-35, it said.

While the rising costs and delays to infrastructure are a challenge in order "to make the CF-35A fleet fully operational, the Royal Canadian Air Force will need more trained pilots," Hogan's report added. 

ArriveCan app contractor

Hogan's audit also looked at the contracts awarded to and payments made by federal organizations to GCStrategies, focusing on whether the federal government received value for money and whether appropriate processes were followed. 

Between April 2015 and March 2024, 31 federal organizations awarded 106 contracts to GCStrategies worth $92.7 million — of which about $64.5 million was ultimately paid out, the audit said.

That $64.5 million includes the value of the four contracts GCStrategies received to develop the ArriveCan app during the COVID‑19 pandemic. Hogan's February 2024 report estimated that GC Strategies received $19.1 million for its work on ArriveCan.

WATCH | Federal watchdog digs into ArriveCan scandal (from March 2024): 

In March 2024, the federal government suspended GCStrategies' security clearance and no new contracts were awarded to the company in the 2024–25 fiscal year.

"The findings in this audit echo those of previous audits, where we found deficiencies in how public servants applied federal procurement rules," Hogan said in a statement.

"There are no recommendations in this report because I don't believe the government needs more procurement rules. Rather, federal organizations need to make sure that the rules that exist are understood and followed."

Hogan's audit included an analysis of a representative sample of the contracts given to GCStrategies, excluding the ArriveCan contracts, finding that in one-fifth of cases, the firm's work was proceeding without the proper security clearances.

The audit also found that in one-third of the contracts it examined, the federal government could not show GCStrategies "had the experience and qualifications needed to complete the required work," or whether the rate the company was being paid reflected its ability to do the job assigned. 

"We found that neither Public Services and Procurement Canada, nor any other federal organization, collects government‐wide information on rates paid and supplier performance," it said. 

"This type of information would help federal organizations evaluate whether the supplier is qualified to perform the work and validate that the rates charged are not higher than market rates," the report added. 

Hogan's report concluded that when it came to the work awarded "to GCStrategies and other companies incorporated by its co-founders … value for money for these contracts was not obtained."