Canada set to spend $9-billion on 65 US Fighter Jets - F35

[luke_sandoz]

Mark,

Hear ya, but I can't agree. Your ability to predict the future is much better than mine. My take is the world is rapidly going all wobbly and wars and conflicts are coming, lots of them. Canada, despite the CBC efforts to re-write history, has a long proud tradition of being there on day 1 of serious stuff like WW1 & WW2.

Also, "stealth" is an advantage in ALL missions and although much is written about the F-35=stealth, the real advantage of the F-35, the technologies that put the F-35 so far ahead of its 4g competition is the Sensor Fusion. Big, big, big win for the pilot.

With respect to cost, yes the F-35 is not inexpensive, but that cost focus - Canada can afford the F-35, is a smokescreen that masks what should be discussed - the Value Proposition.

The F-35 represents excellent value for money.

Canada can afford to put its pilots into top of the line equipment . . . no reason to settle for sort of good aircraft.

The lives of Canadian pilots are worth the investment.

[cafpilot]

As for where the training will take place, it really doesn't matter. As the article points out our J-Herc crews currently train in the US anyways, and you don't hear a peep out of Canadians about that.

Oh, one last thing - someone earlier, I forget who, made a comment about Canada needing an IMF loan to purchase our CF-35's. Unlike Europe and the United States, Canada is in a fine financial state and this purchase, along with our purchase of new naval vessels, will be paid for from our own pockets, thanks very much.

And don't forget about the Canadian C-17 pilots who train out of Altus, fighter guys training at ENJPPT at Sheppard AFB, and Chinook pilots doing training in the US also. It is not to much of a step to train F-35 pilots at Eglin when the time comes.

As for the money, it is already budgeted/set aside, so no big worry there.

cheers

[m]

As for where the training will take place, it really doesn't matter. As the article points out our J-Herc crews currently train in the US anyways, and you don't hear a peep out of Canadians about that.

Finally with regards to Tomahawks and other first day of war arms - it's one thing to have the capability to carry them, to acquire and utilise them is something else entirely.

Oh, one last thing - someone earlier, I forget who, made a comment about Canada needing an IMF loan to purchase our CF-35's. Unlike Europe and the United States, Canada is in a fine financial state and this purchase, along with our purchase of new naval vessels, will be paid for from our own pockets, thanks very much.

Sir, there is Europe and countries in Europe. Countries, as for instance Norway, Denmark, Sweden, Germany, The Netherlands can pay their bills too and are not in a position like some other European countries.

Personally I think training in the US seems a very good, may be even the best option for allied pilots like also Canada. Getting a same level in Canada seems to me very difficult to accomplish concerning F35 knowledge

[hotrampphotography]

And don't forget about the Canadian C-17 pilots who train out of Altus, fighter guys training at ENJPPT at Sheppard AFB, and Chinook pilots doing training in the US also. It is not to much of a step to train F-35 pilots at Eglin when the time comes.

As for the money, it is already budgeted/set aside, so no big worry there.

cheers

Agreed!

To me, it's just interesting how every little thing about this program - even details that already exist in other programs - draw fire. We didn't hear anything about this stuff when we got our Hercs, Globesmashers, and Chinooks...and yet now it's the end of the world! lol

[hotrampphotography]

Sir, there is Europe and countries in Europe. Countries, as for instance Norway, Denmark, Sweden, Germany, The Netherlands can pay their bills too and are not in a position like some other European countries.

Personally I think training in the US seems a very good, may be even the best option for allied pilots like also Canada. Getting a same level in Canada seems to me very difficult to accomplish concerning F35 knowledge

Agree with you regarding European countries. My comment was just out of frustration as many people believe that as the USA goes, so goes Canada - it couldn't be further from the truth. But this is an aviation forum...hehe

FYI - there are already RCAF personnel involved in the program and rest assurred their knowledge is very extensive concerning the F-35 and how not only will it meet Canada's needs but with every intricate nuance of the planes systems as well.

Cheers!

[alloycowboy]

Here is a really good article by Bob Cox on Canada's commitment to purchase the F-35.

Fantino, who heads military procurement, said the critics were fueled “by a lot of misinformation, miscommunication, and some jealousy,” the latter a reference to supporters of Boeing, which would like to sell Canada its F/A-18 Super Hornet.

“We will purchase the F-35,” Fantino said firmly. “We’re on record. We’re part of the crusade. We’re not backing down.”

More after the jump!

http://blogs.star-telegram.com/sky_talk/2011/11/canada-committed-to-f-35.html#ixzz1dAQ8Ca7h

[geogen]

More clarification is apparently needed.

A. The Canadian CY2002 $75 quote is larger than LM's CY2010 $65 number for three main reasons:
..1. It is full Flyaway, not REC flyaway as in LM's number.
..2. It includes a 4% buffer that covers both the Blk4 and Blk5 upgrades
..3. It includes development and acquisition funds for both the P&D refueling and the Drag Chute options.

B. The last official DOC that I have seen says that Canada will plan on pilot training in Eglin.

Since when isn't more clarification needed on any aviation Procurement debate??

1. Good catch on the CY2002 'Total Flyaway' 'estimate' of $75m each, indeed based on CY2002 dollars and not 2008 or 2010.

But I'll have to counter too by referring hb's attention to these original 'estimates' found in the original SAR as apparently being based on both expected high volume total sales, eg ~3,000 and high annual FRP rates of production similar to those still currently expected. Not just the annual rates.

2. I think the estimated 4% 'buffer' for block IV/V upgrades is included in 'rest of' portion of DND's $6bn estimate for acquisition opposed to being part of the actual $75m Total Flyaway (if that's what you were interpreting)?

3. Ditto for the chute and probe... is apparently not part of the $75m flyaway, but too included within the remaining portion of DND's estimated $6bn acquisition.

Would you concur?

[geogen]

hb and hotramp:

ALOT of info and specs being debated here... appreciate the lively exchange of viewpoints and insight.

I wanted to follow up on a few:

The 2009 SAR entails a ton of detailed 'current estimates' from that latest SAR from which DND was and is currently still basing judgments from. But with respect to both Schedule related estimates and Cost estimates (being based in part off Schedule) found within the 2009 SAR, one has to unfortunately file this report away as anything from 2010 and prior is to a large extent, obsolete. Expect the next 'current estimate' soon - expect further revised 'estimates'.

The same applies for DND's referenced 2010 TBR. It can more or less be filed away. Expect the next revision, including the latest assessments and estimates to be out shortly.

hb: re my conjecture that RCAF's first combat unit of perhaps 9 F-35 possibly achieving IOC by 2021 was merely based on your info that acquisition would consist of 1,3,9,13,13,13,13 aircraft units procured starting in 2016. The 9 units scheduled for 2018 procurement, delivered by late 2020, IOC by 2021. Would you concur?

Expect annual Full Rate Procurement to be reduced, at least Stateside unfortunately. FRP might be delayed 1-2 yrs too, to coincide with a delayed IOT&E completion and possible 2018 IOC. But in truth, there's not much confidence right now suggesting that high annual rates of 70-80 F-35A units/yr will be procured by USAF. Not only will PUC costs be higher than originally expected for USAF buys, but with Austere budget environments causing cuts, not the necessary increases, there need to be massive cuts in other AF programs (like cutting the entire legacy F-15 fleet eg and delaying the Tanker buy, etc). This would likely further influence Total unit Flyaway and other sustainment economies of scale for all customers.

In relation to DND's $6bn acquisition estimate (section 1) of the PBO Cost comparison: since the $75m 'estimate' appears to be derived from the CY2002 Flyaway estimate, is the $6bn portion (sec 1) of the acquisition 'estimate' also in CY2002 dollars? Adjusted in later years for inflation?

Would sections 7, 8 in the Cost Comparison chart comprising of 20 yr life support and overhaul be adjusted somewhat closer to PBO's estimates in your opinion, if for example economies of scale from worldwide operator VOLUME was substantially reduced from current expectations?

Lastly, in your opinion, could plans for F-35 upgrade to block IV and block V, along with expected regular avionics upgrades every 2 yrs and hardware upgrades every 4 yrs be significantly delayed and reduced if cost 'estimates' are significantly revised to the negative? I guess some would be skeptical given that CF-18 hornets are apparently to be flying until the mid-20s without any further funded avionics upgrades? That would seem to be one reality of unintended circumstances regarding unexpected cost increases and delays.

-------------

Please note that I'm a true Canook supporter. I've got French Canadian heritage. Canadians should be proud of their fiscal responsibility (respects to Mr Flaherty in recent days) and economic policy success overall - a model for the world, really. Despite Canada's ambitious new Fiscal policy plans to see a balanced budget by 2015/16 and surely unpopular political strains which would accompany this plan... I fully support RCAF's best possible TACAIR recapitalization process and only support the best possible cost-effective outcome in the end for Canada. I'd be cheering you on if in 2026 you had 75x F-35 equipping the RCAF, on budget, upgraded on time, and comfortably sustained. My only contention is that the maple leaf be on a fighter which has been openly evaluated and objectively scrutinized and parsed from the latest realistic findings and estimates (subject to change soon). A fighter recapitalization should NOT be about a CRUSADE, it's about cautious analysis and willingness to adjust plans for sake of national defense first. Selecting a jet for long life service is not a religion.

Thus, it shouldn't necessarily be the method one uses to make estimates which is so important, as much as acknowledging that past estimates have been inaccurate and are in fact evolving as we speak. New factors might come into play which should be critically and flexibly studied by any customer in order to secure the best possible platform(s) for acquisition. If the F-35 is still the jet to fit the bill, then more power to Canada... Just think twice before signing and committing to cancellation fees before new schedule/cost revelations surface in the near-term. imho.

God speed RCAf~

[SpudmanWP]

@Geo: Nope, the Blk4&5, P&D, and Chute upgrades are part of the $75 (I just read my cached docs again).

[hb_pencil]

Using a baseline of 2008 for the $75 brings the BY$USD to $82.6/$86 mil (2014/2016)

http://www.aph.gov.au/Hansard/joint/commttee/J12801.pdf

Okay, I now know that the Australian figures are for $75 million AUD at 2008... or $69 million USD. With the CAD and USD near parity, and accounting for some mods, you have $75 million. I know its stated officially somewhere however... I had to check it when I did my own calculations. Also I suspect both Australia and Canada sing from the same song sheet when it comes to prices.

[geogen]

m -

Good points. No doubt that just about ever Country has their own distinct accounting format they use with regards to fighter aviation procurement. I just got an education on this here from hb, lol, and then with further reading on the link he provided. I do realize that US uses a system which tends to add to the Total Flyaway Cost all of the following: PGSE equipment, Peculiar training equipment, Integrated Logistics Support, other engine support and miscellaneous initial support, pubs data, and initial spares... all as part of the 'Total Procurement Unit Cost'.

This 'PUC' is what's essential to know though, regardless of how a foreign customer actually accounts for it. It will eventually trickle down somewhere to some various method of accounting for costs.

As I believe what hb was clarifying in Canada's case, they calculate a 'Production' component within their total estimated Acquisition Cost. This includes the Total Flyaway + any customized features being included (ie refuel probe and chute) + 2 block upgrades (IV and V).

The other aspects of a US jet Procurement however are apparently spread out among other acquisition and maintenance components of Canada's 'Total Program Cost'. So it's not like a foreign customer isn't billed for US's costs found within a PUC cost, but it's simply spread out and itemized differently in different categories. Hence, the US's PUC cost - in addition to Total Flyaway - is actually a pretty good reference point by which foreign govts of prospective customers can evaluate and judge how much their system will cost Total budget outlays after all said and done.

Take for instance this 'fixed + incentive' priced LRIP-4 order which after being muscled by DoD, is now estimated to have a REC flyaway (lowest subset of the Total cost) of about $123m. But the PUC? The current LRIP-4 PUC is apparently estimated at over $220m! My guesstimate back at the time was conservative as I was still thinking about $200m, or slightly over - even after a 'fixed' contract. And yes... I was catching a lot of flack at the time for even suggesting such an astronomical price.

The unfortunate fact is however... that US's remaining LRIP orders are going to be further delayed and reduced, FRP will likely be pushed back a year or two, and when FRP does arrive it will most likely consist of substantially reduced US orders. Add to this already higher than originally estimated unit costs and unfortunately Unit Costs are not likely going to track even close to where current expectations advertise them to go.

FWIW, my guesstimate for FY16's F-35A 'Total Flyaway' cost - assuming minimum 75% of currently expected FY16 orders placed - would have to be closer to $130m in TY dollars (and perhaps a $105m REC flyaway, then year cost).

[m]

Does any Canadian know about their F35, both systems Probe and Boom? Or Probe or Boom? Curious, because this is interesting.

Both systems on board will give Canadian pilots a real advantage when on a mission.
Even back home it doesn’t matter what kind of refuelling tanker is in the air, a Canadian tanker or even any other tanker from the US.

[hb_pencil]

Does any Canadian know about their F35, both systems Probe and Boom? Or Probe or Boom? Curious, because this is interesting.

Both systems on board will give Canadian pilots a real advantage when on a mission.
Even back home it doesn’t matter what kind of refuelling tanker is in the air, a Canadian tanker or even any other tanker from the US.

Canada has asked whether it is possible if their units can be equipped with both for interoperability with the US. Last I've heard its being studied by LM.

[geogen]

@Geo: Nope, the Blk4&5, P&D, and Chute upgrades are part of the $75 (I just read my cached docs again).

Spud:

Could you copy and paste that reference from your cached doc??

Not trying to nickle and dime ya but if the case it would seem to conflict then with the 2009 SAR cited by DND giving CY2002 Total Flyaway of $75m in 2002 dollars?

And it would seem to conflict with the DND vs PBO Cost comparison doc which appears to itemize the expenditures making up the $6bn as follows:

"F-35A costs obtained from the 2009 Selected Acquisition Report and reflects 2002 dollars adjusted for inflation in the years of delivery." ie 65 jets x $75m = $4.875bn, plus the remainder ($1.125bn) implied as going towards the following:

-- potential modifications such as an Air-to-Air Refuelling Probe and a Drag Chute (development, material and installation)

-- two block upgrades (Block 4 and Block 5) estimated at 2% of acquisition costs per upgrade.

[hb_pencil]

CY2002 'Total Flyaway' 'estimate' of $75m each, indeed based on CY2002 dollars and not 2008 or 2010.

But I'll have to counter too by referring hb's attention to these original 'estimates' found in the original SAR as apparently being based on both expected high volume total sales, eg ~3,000 and high annual FRP rates of production similar to those still currently expected. Not just the annual rates.

Okay, see I think this is where I think you see some data and make it fit your view. Let me try to explain this to you simply, for a final time.

There are several influences on cost, but the biggest one is the learning curve... basically how your labour force learns to build an aircraft more efficiently. Its actually a very mechanical process; the more experience an individual gets, the cheaper it is to produce a unit. How many builds you have in the future cannot affect the individual unit costs.

IF you want a more complex view of how an individual lot price is arrived at, I culled this from an RAND corporation report on the F-22. It was used to identify the future unit costs of a F-22:



As you can note, there is no factor here about the total size of the buy used to estimate unit cost. The primary inputs here (in green) are all particular to a current unit or before: Lot production quantity, Prior unit and profit. Now Tail-up can be considered a future cost, as it refers to the specific costs associated with the closedown of the F-22's line. However for the purposes of the F-35 discussion, that is not relevant unless you are stating by 2020 they will decide to close down the line.

One of the few way that a future cost can affect current unit prices is in multi-year buys. In that case the contractor can buy large quantities of subsystems, components or materials in one buy, decreasing their overall costs. However the effect of that does not translate in normal acquisitions because of the mechanics of a lot by lot purchase system. The other one is long lead items, but thats really just buying some equipment early for the lot after the current one.

As I've stated before, Total buy numbers main effect is at one point in a procurement program; at the start when DoD decides how many aircraft it decides to purchase and over what time frame. That then helps determines the size of the production line, which in turn determines lot size.

I'm sorry Geogen but you are wrong about this. Total buy numbers are less important than lot buys.