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.
On a positive twist for Saab is that Norway by officially presenting the F-35 LCC costs (estimates) has told Denmark how expensive the JSF could get and Saab could offer additional guarantees on costs.
When you have two aircraft, and one has almost twice the weight of the other, the heavier one will be more expensive....That's basic physics.
As to the $52M price tag for the JSF, that is a fantasy too, unless engine and radar are extra cost options.
There is some serious accounting shenanigans here.
If there is one thing we can say for sure it's that Saab and Sweden understand cost control and the US does not. They schedule delays and pricing overruns that have plagued the JSF programme before it's even got anywhere would not, could not and have not happened in Sweden.
Norway has proved masterful at ignoring all of Sweden's financial figures but here's one more attempt. The ENTIRE PROGRAMME COST for the Gripen to date research, development, testing and production of 210 aircraft (A to D) plus upgrades, mods and weapons is NOK130 billion (USD18.23 billion at current exchange rates).
Read that figure again and then tell me that Gripen has too much cost or too much risk.
We already have a good idea how lean the Gripen NG development is. We know that Sweden is spending SEK3.9 billion (at the time USD611 million but now only USD476 million) on the Gripen Demo project AND the conversion of 31 JAS39A/Bs to C/D standard... so the entire Gripen Demo development and flight test project costs about the same as one or two LRIP JSF airframes.
Had Norway taken up the Swedish offer it would own and control the programme, and its tech development instead being of the very junior JSF 'partner' it will now become.
The real risk to Norway is not simply that JSF will arrive late, over budget and wildly over-hyped but that it will tie Norway forever to a US leash to be fed biscuits or hit with a stick as its masters whims decree.
To start with the overhead picture at the press conference with the F-35 un-fixed flyaway price was displayed next to a fixed price Gripen package deal and the message was in visual and audio "JSF is cheaper".
Hours later after sending out the initial press release to media and countries like Denmark, Croatia and so on they released with little fanfare the document showing something completely different. We've talked about it here already but it was now clear the JSF could cost all things included some 10 times above the price shown at the press conference.
And a comparable Gripen price had not even been calculated. Just a dry sentence on how they thought it would be more expensive. Despite fixed prices and 100,000+ hours of a operative Gripen program plus the Super Hornet engine with close to a million hours in flight.Their utter refusal to acknowledge any of the criticism is also interesting but naturally in the now ongoing plan to defend the JSF and hurt Gripen.
Airpower - excuse me if I start getting a bit black-helicopter here, and for the benefit of JSF fans, what follows is a hypothesis.
We know that JSF is going to come with more restrictions and phone-home features than any military export since the "RAF" Thor missiles. It's going to be the $100-million equivalent of the GPS-equipped rental car which rats you out to Hertz if you drive it to Tijuana or test out its VMax on the I-5, and the Men In Black are going to want to know about the political affiliations of the third cousin twice removed of every conscript on the flight line.
Suppose, though, that the Norwegian military professionals not only don't mind this, but actually like it? Because one day they might have an SV government that wants to intervene on behalf of the oppressed Wgasa people in central Ghastlistan, and then they can say "It's not that we don't care, but every time we try to program Ghastlistan into the Holistic Active Logistics 9000 says sorry, Olaf, I'm afraid I can't do that".
Paranoid mode off.
However, I would point out that those of us who have in our lives bought cars know that the ideal form of negotiation is not to say: "I want THAT ONE... how much is it?" This elementary rule seems unknown in Oslo.
Right now, it does seem as if the Norwegians have tied themselves over the barrel - and if nothing else, they should have held the Gripen deal in their hip pocket until they settled a price for JSF. (But this may have been the problem, with the SV and industry rooting for Linkoping.) However, I may be wrong and I'm sure that JSF's defenders will pop up to explain why.
An article in the news section of 'defence-aerospace.com' highlights the probable accurate costs that Norway will have to pay; it states that the projected costs to the US military will be about $109M per aircraft. I'm sure the folks at Saab will ensure all other Gripen V F35 customers are informed of the real costs of an F35 (the Dutch and the Danes)and I believe they may be in with a good shout with the Swiss who will be making a decision in 2009 I believe (Swiss Hornets using the same F414 engines would cut down on engineering training).
Finally, I wonder what the legalities are:- although the Norwegians have said they're going with the F35, as I understand it, no contract will be signed until 2014. Also, will there be a General Election in Norway before this date? If the pro Gripen left wing party get into power would they cancel the F35 order and go for the Gripen?
All the best Fred.
There will be TWO elections in Norway between now and then.
Not to mention another one in the US.
And of course there is no contract - nothing has been signed. So a different decision could easily emerge in the future - there's nothing to cancel. Despite all the mayhem it has caused, all Norway has done is to restate its commitment to JSF without moving the project forward one iota. In fact, the timeline has actually been set back by a 2014 contract date.
Which again begs the question - why now Norway? Why did you do this right now??
One factor could be the JSM missile programme where the JSF has a substantial market potential. It might be difficult to proceed without some firm prospects ahead to plan for. Technically, for instance, the sooner you can clear the missle for internal carriage the better as you avoid having to redesign the outer mold due to other new weapons comming aboard.
B. Bolsøy
Oslo
Thanks for that. 2 elections eh? Maybe interesting times ahead. Just watched the 10 minute download by Ake Svenson on www.saabgroup.com. It's worth a look. He blows out of the water Norways financial (creative accounting)? reasons for not signing up for the Gripen aircraft. As Energo said, why now?