Netherlands Concerned Over Spiralling JSF Costs

ALTHOUGH THE Netherlands plans to be involved in the next phase of the Lockheed Martin F-35 Lightning II Joint Strike Fighter (JSF) development programme (see News Briefs, November, p12), the Dutch Court of Audit is expressing concern at the cost of the project. In its latest report to the Dutch House of Representatives, released on October 11, the Court says the cost per aircraft still cannot be calculated and there is no insight into development costs because 65% of the test phase still has to be completed.

If JSF is acquired for the Royal Netherlands Air Force (RNLAF), the current plan is to acquire around 85 aircraft, cut down, in order to reduce costs, from the original requirement of 114 previously identified as the minimum needed to replace the F-16 fleet. According to the Dutch Ministry of Defence’s latest calculations, the expected whole life cost of 85 aircraft over 30 years is put at an estimated EUR 14.6 billion ($18.6 billion), at 2005 prices, comprising EUR 5.5 billion ($7 billion) for acquisition and EUR 9.1 billion ($11.6 billion) for operation. This is already a massive increase over the original estimated total project cost in 1999 of EUR 4.5 billion ($5.73 billion) for acquiring and operating 114 JSFs. The payment in instalments to the US of a total of $800 million is already being made by the Netherlands for its participation in the current System Development and Demonstration (SDD) phase of the JSF programme, expected to run through to 2013. Before the end of 2006, the Netherlands plans to sign a Memorandum of Understanding (MOU) in order also to be involved in the Production, Sustainment and Follow-on Development (PSFD) phase, due to run from 2007 to 2052. The PSFD phase will cover, amongst other things, pre-production test and evaluation aircraft, the low-rate initial production and full-rate production phases, sustainment and later follow-on development. The Netherlands plans to buy an initial three aircraft in Block 1 and Block 2 configuration in 2007 for the test and evaluation phase (from 2007 to 2012), plus a further 82 production aircraft, the first batch of which would be ordered in 2010. The Court report notes that, as the Netherlands gets deeper into the development programme, it is becoming increasingly difficult to withdraw from the project without a major loss of capital. Purchasing fewer aircraft would also have a significantly adverse financial effect.

Regarding orders to be placed with Dutch companies as part of the programme, the report notes that estimates for the total projected production run for JSF continue to decrease, meaning less work for Dutch industry. In 2002 the manufacturer was quoting a total production run of 6,000 aircraft, although when the Netherlands joined the SDD phase that same year, it was based on an estimate of 4,500 JSFs being produced, including 1,390 to non-partner countries. However, the draft for the upcoming PSFD MOU only accounts for a production volume of 3,173 JSFs, comprising 2,443 for the USA and 730 for partner countries. As the overall production figure of 4,500 is said to still stand, this would imply that the balance of 1,327 JSFs would be ‘off-the-shelf export purchases.

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