One of the major items on the national news tonight was the announcement that the new estimate for the fleet of 28 new, VH-71, presidential helicopters is $11.2 billion, or about $400 million per helicopter.
Last week, the Swedish aircraft manufacturer Saab reportedly made an offer to the Dutch government to provide the Royal Dutch Air Force with 85 Gripen Next Generation (NG) fighter aircraft for around $6.2 billion. That would come to an average $73 million per aircraft. In other words, for the cost of one new VH-71, one could buy five Saab fighter jets.
But not so fast. Are we really comparing apples to apples? What all is included in the VH-71 price tag, and what all is included in the Gripen NG price tag?
But, regardless, the $400 million helicopter price tag is sure to raise eyebrows (and perhaps even red pens) in Congress and with the administration, especially with the state of the economy and tight budgets.
And that brings me to the real topic of this post: international military fighter aircraft procurement developments, challenges and cost/price issues.
The last few days have seen an explosion in the number of articles, editorials, and opinion pieces on upcoming budgetary decisions and, in particular, on upcoming decisions related to military aircraft.
I summed up some comments and opinions on this subject, attributed to U.S. Secretary of Defense, Robert Gates by TIME in “TIME’s View of SecDef Gates’ “Taming of the Shrew,” and in the January-February issue of Foreign Affairs, “A Balanced Strategy—Reprogramming the Pentagon for a New Age.”
It is not only the U.S. that is faced with tough military procurement decisions in a time of shrinking budgets. There are several nations that are close to making similar decisions to replace their aging fighter aircraft, possibly by joining or continuing to participate in the development, testing and eventual production of the U.S.-led, multinational F-35 Joint Strike Fighter (JSF) program.
In my “Multinational Defense Contracts, Multinational Economic Issues,” I wrote about the upcoming Dutch decision on replacements for their legacy F-16 fighter aircraft.
The following is from a couple of recent articles on the ongoing debate in the Netherlands on this issue—an issue that is certainly heating up.
In a February 13 article in the Dutch NRC Handelsblad, editor Steven Derix reports that the Swedish aircraft manufacturer Saab has offered 85 Gripen NG fighter aircraft for 4.8 billion euros [approximately $6.2 billion], nearly one billion euros [$1.3 billion] less than the (Dutch) Ministry of Defense has allocated for the replacement of the Dutch F-16s.
Apparently last week, the Saab Group gave a confidential briefing at their headquarters in Linköping, Sweden, to a Defense delegation of the Dutch Parliament. The delegation spent two days in Sweden to learn more about the Gripen NG fighter, “the only serious competition to the U.S. F-35 JSF.”
In the same article, the author notes that “the Dutch Ministry of Defense gives notice that the price of Saab was already known to the department.” and that, according to the Defense spokesman not everything had been taken into account in the price and that “the real amount is much higher.”
In an updated Dutch article in the Handelsblad over the weekend, Derix’s lead paragraph reads: “Swedish sources say that Saab can deliver the successor to the F-16 for billions less that Lockheed Martin (JSF). Nonsense, says Defense.” Derix then asks, “Who is right?”
I am sure we’ll find out soon enough when all the details of the Swedish “bid” are known, and after Lockheed Martin reviews it and hosts a visit by the Dutch members of Parliament on the F-35.
But for now, a little more about the Saab offer. According to the Handelsblad:
Saab is still in the race for the F-16 successor for the Royal Dutch Air Force.
Before the end of April, the Dutch Lower House of Parliament has to approve the purchase of the first two F-35s in order to participate in a test program in the U.S. in 2010
As far as Saab is concerned the competition is now being decided. If Parliament approves the purchase of the test aircraft for the JSF program, Magnus Olsson [Saab’s test pilot and marketing director] tells the Dutch members of Parliament, Saab withdraws from the race.
Saab offers 85 Gripens for 4.8 billion euros, almost one billion euros less than the present budget for F-16s replacement. And Saab makes another offer: If the Netherlands buys the Gripen, the Swedes will guarantee a firm price for operation and maintenance of the aircraft over the next 30 years. According to the Swedes the total “life cycle costs” of the Gripen (procurement and operation) should be around 10 billion euros. In comparison, the Ministry of Defense announced in December that the lifecycle costs of the JSF over a 30-year period would probably come to approximately 14.4 billion euros. That amount is not guaranteed, but rather an estimate .
Just a word of caution, and back to the Dutch Defense spokesman’s remarks that “not everything had been taken into account in the price.” As I have mentioned before, when comparing costs/ prices of military aircraft one has to be very careful to make sure one is comparing “apples to apples.”
One should be especially careful with vague “lifecycle costs,” operation and maintenance costs, etc. In in a huge, complex, multiphase, multinational program such as the JSF, with three basic “variants” and multiple nation/service/mission-unique derivatives, it just boggles the mind how one can or should compare two aircraft with slight—or not so slight—differences in roles and capabilities, across a vast spectrum of activities such as: research and development, prototyping, integration and testing, production, “operation and maintenance,” training, spares, support, offset/industrial cooperation agreements, etc. and, then, over a 30-year period. It is all too easy to make serious “accounting snafus.”
Back to the new presidential helicopter. Without knowing what sophisticated self-protection, communications, survivability, etc., systems and other “options” and items are included, comparing it to the Saab Gripen NG is truly comparing apples to oranges, and the offer of “five fighter jets for your helicopter” really becomes silly.
Photo: Gripen Next Generation (India variant) Courtesy Gripen International
