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  • Down To The Wire In Amsterdam
    Posted by Bill Sweetman 1:18 PM on Feb 17, 2009

    Saab will pull out of the Netherlands if the country signs up for two F-35A test aircraft in April, test pilot and marketing director Magnus Olsson told a group of Dutch members of parliament last week. The MPs - from the lower house of parliament and including many who have questioned the program - visited Sweden to review the Gripen NG program, and will be in the US next week for a first-hand look at JSF.

    The Netherlands was always an uphill battle for Saab (this is the country where Air Force officers include Lockheed Martin slides in their presentations) and the company needs to focus its resources on other upcoming contests such as Brazil and Switzerland, followed by Eastern Europe - plus a rearguard action in Denmark. (India is still considered a long haul - like other fighter teams in Bangalore last week, the Saab marketeers expect to be still fighting when the 2011 show rolls around.)

    None of this stopped Saab, last week, from telling the Dutch exactly what they will be passing up if the lower house approves the F-35A buy. As the Dutch newspaper Handelsblad reported:

    Saab offers 85 Gripens for EUR4.8 billion euros, almost one billion euros less than the present budget for the F-16 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.

    And Saab made it very clear what was meant by "procurement" - pretty much everything except weapons and a tank of gas.

    blog post photo

    That works out to $71 million per aircraft at today's rates. Even if there is an escalation factor present, and that the price is denominated in 2009 values, that is not a bad deal.

    There is no fixed cost for the JSF, but John Young's famous memo of January 16 - identifying a 38 per cent increase in costs - is very much in line with the GAO's average procurement estimate, in its March 2008 report, of $104 million in FY2006 dollars, or $110 million today. Note: that is an average procurement cost, not "flyaway" - which would encompass, basically, the first two lines of the Gripen proposal. It's also in line with Navy/Marine budgeting for FY13 - the first year of high-rate production - which shows about $125 million, then-year and without spares, for the slightly more expensive B and C models.

    But of course, none of those numbers are fixed yet, and if Saab pulls out the Netherlands will no longer have any negotiating leverage. Good luck with that, Cloggies.

    Tags: ar99, gripen, jsf, netherlands

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