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  • Ottawa Questions F-35 Cost Predictions
    Posted by David A. Fulghum 8:06 PM on Mar 10, 2011

    Canada is getting into the F-35 cost overrun controversy.

    Its Office of the Parliamentary Budget Officer says that they are considering buying 65 of the stealthy strike fighters at $450 million each for a program total of $29 billion. The latest U.S. Navy estimate is about $132 million each.

    “It is not immediately obvious, given the available evidence, how the cost can be reduced to estimates predicted by Lockheed Martin over 10 years ago,” the report says.

    Titled, “An Estimate of the Fiscal Impact of Canada’s Proposed Acquisition of the F-35 Lightning II Joint Strike Fighter” came out today (March 10). The selected Acquisition Report published by the U.S. Defense Dept. shows an average unit production cost of $91 million per aircraft. Navy analysts predict an average unit cost of $128 million.

    “Unless there is compelling evidence to the contrary, it is difficult to see prices reducing to their original estimated level,” the report says.

    Other U.S. allies are also expressing discontent at the unexpected costs of buying into cutting edge U.S. technology. A senior Royal Australian Air Force officer with insight into the Wedgetail Airborne Early Warning & Control aircraft, a Boeing 737-derivative airframe with a Northrop Grumman L-band active electronically scanned radar, summed up the dilemma.

    “It’s great kit and just what we needed, but it would have been so helpful and caused us so much less pain [with the government] if we had been told up front how big that radar was going to be [3.5 tons], how long it actually was going to take [five years over schedule] and how much it was actually going to cost [more than $4 billlion].”

    The Australian Wedgetail No. 2 Sqdn. is nearing operational status and will field a six-plane fleet.

       The Canadian study listed a number of uncertainties that could change their cost for the F-35.

    • Increases in research, development, test and evaluation costs. Between 2001 and 2009, cost for RDT&E is up 40% and production has increased 54%.
    • Elimination of the alternative engine program that would leave Canada with no competitive leverage to lower engine costs. The cost and quality implications of having a single engine provider are hard to predict.
    • Elimination of the F-35B that could drive up unit cost due to a smaller total buy.
    • Integration of non-U.S. weapons systems. The integration of nation-specific weapons not cleared by Lockheed Martin and the Defense Dept. may lead to additional cost that will be borne by Canada. Negotiations over the purchase of F-35s by the Israeli air force serve to highlight this issue.
    • Reductions in U.S. and international sales. Reductions in intended procurement may lead to increases in the per unit acquisition cost paid by Canada.
    • The unique cost of operating and supporting a 5th generation strike fighter. The cost constitutes a significantly unknown quantity.
    • Changed circumstances at the time of mid-life upgrades and overhauls. They will be expensive and may be dependent on the availability of Lockheed Martin workforce and facilities.
    “Overall, F-35 development is now five years behind the schedule set at the outset of the program, and total SDD overruns are projected to exceed $21 billion, or 60% above the original goal,” according to the Canadian analysis.
     
    Recent Canadian posts on the F-35 government analysis include:
    + The 3Ds Blog
    + Unambiguously Ambidextrous

    Tags: ar99, F-35, Canada, tacair

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