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  • Gripen's Norwegian Blues
    Posted by Bill Sweetman 12:00 PM on Dec 09, 2008

    Saab was debriefed by the Norwegian government last week on why Norway overwhelmingly rejected the Gripen and chose the JSF. Of course it's always the loser's role in these situations to say "we was robbed, I tell you, robbed", but this has to be one of the strangest source selections in recent history.

    To recap, the Norwegian government said that the JSF would be less costly to buy and to operate than Gripen and would be more effective. The last point is a toss-up, depending on the criteria and the weight given to those criteria - but it's the cost numbers that are raising eyebrows.

    Norway said that 48 JSFs would cost 18 billion kroner (NOK), about $52 million each, compared to 24 billion NOK for the same number of Gripens. But it's very hard to see how those costs are comparable.

    Saab does not dispute the Gripen acquisition cost figure - but according to Rob Hewson at Jane's, supported by Saab statements throughout the campaign, it was a firm, fixed-price offer for the entire package in current NOK and included initial training, initial spares and all mission planning and support systems.

    The JSF number is on the low end of projections for the average unit flyaway costs of the F-35A. It's lower than the USAF's budgeted figures, and is even lower than the $63 million that Lockheed Martin itself cited earlier this year. Moreover, the low fixed prices claimed by Lockheed Martin are only good if all the export customers sign on to a block deal within the next year or so, and Norway has indicated that it's not ready to sign a firm contract.

    And again, it's a unit flyaway cost - and does not include the extras included in the Gripen price above.

    Also, the Swedish bidders now say that they provided guaranteed life-cycle costs to the Norwegians for 20 years of operations, including regular upgrades and fuel, for 11 billion NOK. Then they offered another ten aircraft, for a total price - aircraft and operations - of 55 billion NOK for 30 years. The Norwegians, however, claim to have estimated costs that were three times higher.

    At first sight, the comparison does not make sense. To begin with, the Gripen is half the size of the JSF and will burn less fuel. Its airframe and system costs are known, because the NG is in those respects pretty much identical to the in-service C/D, and the engine maintenance costs are also known. Saab therefore could not contemplate making unrealistic claims:  the Norwegians can easily call the Czechs and ask them how the airplane works.

    Moreover, the Norwegians didn't simply reject Gripen:  they were at pains to point out that it was not only expensive but did not meet their requirement in basic ways.

    In the last few days, though, I've heard from a senior retired Norwegian officer, with a good view of the campaign.

    In his view, the driving Norwegian consideration had nothing to do with the numbers either side submitted to the evaluators.

    "What finally decided it in favour of Lockheed Martin (in spite of the fact that Saab had the best industrial package by far) was risk." Government evaluators concluded that "even if the number of JSF produced should be reduced by 50% the unit cost would only go up by 20%. The risk that Saab would not succeed in selling more than 60 to 100 planes - meaning that R&D costs over the lifespan of the aircraft could skyrocket."

    Norway's decisionmakers also fretted that Saab is "a relatively small and vulnerable producer. If Saab were to go bankrupt - leaving Norway with an aircraft that from that moment on would not be developed further - at least not a an affordable price."

    Result:  JSF was selected because ultimately it is backed by the US government, and the US taxpayer will take care of any overruns.

    Our source also said that the negative language directed towards the Gripen was aimed at pre-empting objections from the SV party, on the left wing of Norway's coalition, which was seen as favoring Gripen.

    My personal view:  Norway has exaggerated the risks of going with Gripen. After all, the Swedes have maintained an independent combat aircraft industry for decades on a very small production base, and have a far better record of delivering on time and on cost, and keeping aircraft current in service, than Lockheed Martin or the US industry in general.

    And in the process Norway has committed to an aircraft that has barely started flight tests, with no fixed prices or guarantees at all - and with a business model which implies that by 2014, when Norway is talking about a firm contract, there will be no Western alternative available. Now that's risk.

    Tags: ar99, Norway, JSF, gripen

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