The Carter administration has offered to sell a new U.S. Navy jet fighter to Canada for less than the U.S. Navy will end up paying for it.
Critics contend the deal is unfair to the taxpayer and invites other foreign customers to demand the same kind of bargain in buying American weaponry.
Pentagon architects of the arrangement counter that it will put more fighter planes in the skies over North America to defend both the United States and Canada.
Some Canadian officials rather than being delighted with the offer affirmed by Defense Secretary Harold Brown this week, were hoping for more.
The plane is the F18, a twin-jet fighter that was supposed to be cheaper than the Navy F14 now on carriers. But the F18's price is climbing so fast and its mechanical problems are so numerous that some critics are referring to it as "Brown's second TFX." (The TFX, now designated the F111, was a figher forced upon the Air Force and Navy in the 1960s, while Harold Brown was Pentagon research director and later Air Force secretary.)
Canada chose the F18 last April as its fighter for the future. It plans to buy at least 129, with delvieries to start in October 1982. And Canadian Defense Minister Gilles Lamontagne said on Tuesday, after meeting with Brown at the Pentagon, that he still felt the choice of the F18 was sound.
"I do think that we have a good plane," said Lamontagne, who is a pilot. "I flew it, and came down safely, so it must have been a good plane."
Canadian leaders hoped to buy the F18 from its manufacturer, McDonnell Douglas of St. Louis, without the Pentagon adding any of its usual research and development charge to the price.
The Pentagon, by dividing the total research costs by the expected number of planes to be produced, figured the research charge for each F18 sold to Canada should be $877,690, or $113.2 million for the 129 planes.
However, to encourage Canada to buy more than 129 planes for North American air defense and its NATO squadrons in Europe, and yet retain the principle of sharing research costs, the Carter administration decided to forgive up to $70 million of the research costs.
In exchange, Canada is obliged to find an extra $70 million on its own. The whole $140 million would then pay for an additional eight planes -- increasing the buy from 129 to 137.
U.S. officials suggested that Canada obtain its $70 million by forgoing the 9 percent sales tax it ordinarily would impose on the F18 purchase by the Canadian defense ministry.
The Pentagon does not care where Canada gets its $70 million, as long as the money goes for buying more F18s.
Because the Navy is already stuck with the bill for the research and development on the F18, it is bound to end up paying more for the fighter than Canada would under the $70 million discount deal.
Pentagon and Canadian officials insist it is too early to say how much either country will pay in the end. But Pentagon executives conceded that forgiving research costs gives Canada an edge over the U.S. Navy.
They said that the Carter administration offer of a $70 million discount stands firm but that Lamontagne must now see if his government will match it.
Rumors that such a deal was in the works prompted at least two congressional leaders to express their concern to the Pentagon.
Chairman Jack Brooks (D-Tex.) of the House Government Operations Committee has asked the General Accounting Office to look into the propriety of waiving research and developments costs for Canada. Brooks asked GAO to investigate reports that Canada would pay $14.2 million to $17 million for the F18 compared to the Navy's cost of $19 million to $21 million.
"I do not believe it is fair to waive R&D costs for Canada on the sale of the F18, at the same time collecting F16 R&D costs from other NATO allies, such as Belgium, The Netherlands, Denmark and Norway, not to mention the U.S. taxpayer," Brooks wrote.
Chairman Joseph P. Addabbo (D-N.Y.) of the House Appropriations subcommitttee on defense has written Brown to demand "the legal basis for the waiver on the sale to Canada." Addabbo's subcommittee is scheduled to consider on July 23 how much to appropriate for Navy purchases of the F18. The Canadian deal is a likely subject of discussion at that time.