Finnish DefMin Interest in F-35s NOT Gripens

Program progress, politics, orders, and speculation
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loke

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Unread post08 May 2014, 08:17

mk82 wrote:Loke, the Eurofighter Typhhon is not a good example of necessarily being cheaper than the F35. Auditors for the German government recently discovered that the support cost for the Luftwaffe's Eurofighter will be much more than what was originally forecasted (much much more!). Sure, its not an apple to apple comparison but it does raise the possibility that the Eurofighter consortium deliberately (?not entirely honest) underestimates the support cost of the Eurofighter.

LOL I am aware of that -- however this useless thread is mainly about the cost of purchasing the stuff not operating it :wink:
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Unread post08 May 2014, 08:35

loke wrote:OK I I'll bite :D
Alright... in so many words, you've basically admitted that F-35 provides superior cost-benefit to anything else... along with being a politically-sound choice to boot.


What are you doing here again? :? Perhaps your irony isn't conveying well across the internet.
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Unread post08 May 2014, 15:28

loke wrote:
In addition to the above, Canada is also F-35 partner.

That Canada will go for F-35 is therefore a "no-brainer". One of the very few things that can potentially "ruin" that would be if some stupid politicians in Canada decides that the F-35 will be too expensive. Or that huge rocks from out space hits LM and P&W manufacturing facilities.

However in the (highly unlikely) scenario that happens, the SH will clearly be the second option; it is US made, it is quite capable, Boeing is desperate to sell more and will offer a "good deal", and it is an evolution of what Canada flies today. But again this is very very unlikely to happen.

Thus; the probability that any other fighter than the F-35 or the SH will have a chance of winning in Canada is very very close to zero.



I wonder why other eurocanards are trying then?

Canada has been an F-35 partner since 1997--wonder why Saab wasted its time trying to convince Canada for a split buy at all? seeing as its a no brainer and all, and below you explain that Saab doesn't mess around with bids it can't win, I wonder why the bothered with the Canadian No Brainer as much as they did? I wonder why they withdrew so quickly while others stayed, and before the Canadians could take a good look at them?

The reason I heard they withdrew is they got caught trying to sell some Bull poo to the Canadians one too many times, and they didn't want a detailed audit similar to the ones being run on the F-35 to taint there claims and learn that...


...Wait for it


The Gripen NG and F-35 are going to be near the same cost to buy just as the Clueless Finnish Defense Minister claims (poor stupid thing)

However as if the above reasons were not enough (they should be!) I believe there is another reason why Saab is not participating in Canada: Saab is a small company and they can support only so many competitions around the world. Let's say they can target 4-5 countries at any time. The logical thing would then be to look around, make an assessment of the probability of a win, and target the countries with a highest probability of a win. Switzerland is obviously in (50% chance of "winning" in the referendum); Malaysia (Gripen cheaper than Rafale/Typhoon/SH, and can offer a cheap lease deal); Indonesia (needs a very cost-effective solution) and a few other countries.


Bang up job so far! Saab has only withdrawn NG from Canada, and lost in India and Norway, looks like they won't have to bother with Finland at least. it will be fun to see how future contests shake out. (you know if they bother to enter them at all against all the other "no brainers")
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Unread post09 May 2014, 03:18

Now it is time to elaborate on my previous post. Hang on, it will be worth it!

First a little detour to the comptrollers office for some budget materials (P-40 exhibits) where we will see how actual contract prices have gone below previous years estimates.

Sources are:
Air Force Aircraft Procurement Vol 1, FY14 page 63
http://www.saffm.hq.af.mil/shared/media ... 08-079.pdf

Air Force Aircraft Procurement, Vol I, FY15 page 37
http://www.saffm.hq.af.mil/shared/media ... 10-041.pdf

How to read dollar figures in the P-40? Well, the dollar amounts in the column of the budget year is the estimate and in that years dollar value. To the left you have realized values in dollar values of those years. Thus, using these documents we can compare what was predicted for FY13 and was the actual contract value.

Estimated flyaway/gross unit system cost 2013, million $
153.114 / 176.488

Realized flyaway/gross unit system cost 2013, million $
126.859 / 145.324

Realized flyaway/gross unit system cost 2013, in % below estimate
20.1% / 22.0%

When that 22% popped up, I instantly connected it to Brigantis editorial Recent Statements by F-35 Program Chief Strains Credibility.

But that link somehow doesn't work anymore....

But fortunately SMsgtMac was on top of things and caught Briganti airing his skepticism.

The $98 million cost quoted by DellaVedova is $28.8 million lower than the $126.8 million budgeted by the US Air Force for LRIP 7 aircraft, implying that the JPO was able to negotiate a reduction of 22% in the price of F-35A fighters

http://elementsofpower.blogspot.dk/2014 ... y2019.html


It could seem that the F-35 has beaten all pessimistic cost predictions since 2010 by a large margin.

But I went to the comptroller to get the gross unit system cost of the F-35A. Because the gross unit system cost of the Gripen for Switzerland is also known (but somehow not made public to the English-speaking community by the Gripen proponents).

Acquisition phase cost of the Gripen E for Switzerland is budgeted to $3.4B. This doesn't tell us much. But documents and details were leaked to the Swedish engineering journal nyteknik.se.

http://www.nyteknik.se/nyheter/fordon_m ... 776435.ece

From this we know that the Swiss lease of interim Gripen C/D will cost the Swiss $280M. We can also see that the price of the Gripen E hardware and service rendered from Saab amounts to SEK17.7B. This is very close to the definition of gross unit system cost and it translates to $121M per plane!

F-35A LRIP7 was $145.324M. Even when being very, very conservative, LRIP7 is already within 30% of the price for an Gripen E export customer.

It is of course possible to point to other F-35A partners like the Netherlands. Here we shall remember that the €4.7B the Dutch set aside is an acquisition phase cost, not just the price of hardware and services from LM. It also includes €500M which has been spent on SDD and €300-400M used on two OET&E aircraft. So only €3.9 is left for the actual acquisition phase. And of this 10% is set aside for risk, which will be spent on additional F-35s if not used. The budget is also based on estimates, where real contract values have gone below (and which the Norwegians have confirmed in their press releases when finalizing contracts). Going by the Swiss ratio of acquisition phase/hardware money, the funding available for the dutch for hardware and services from LM would be €3.1B for the remaining 35 F-35. That is a gross unit system cost of $123M by the way. Gripen E was $121... Australia has budgeted with AUD130M gross...

So just scratch the surface and understand what lies beneath the big numbers instead of reinforcing a flawed narrative.

Finally, on direct costs... There can be found examples that much heavier aircraft can cost the same LCC. For instance I have recently been cued that The Seahawk won over the Wildcat in Denmark. The Seahawk weighs 60% more but cost the same LCC. The Seahawk happens to have 10 times the numbers over the Wildcat.

Just like fighters, helo DMC also correlate strongly with weight.

Using weight as a first order approximation is fair. But it assumes all is equal which it is not. If one aircraft is operated in 10 times the quantities the approximation is no longer a fair representation.
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Unread post09 May 2014, 14:46

bumtish, I think BIO had a great point when he suggested that comparisons make the most sense within a competition, I think they must be done with great care between. Consider that:

1. In Switzerland the Typhoon bid was significantly more expensive than the Gripen E (T > E)

2. In SK the bid F-35 bid was significantly more expensive than the Typhoon (F > T)

It is difficult to make sense of items 1 and 2 if you want to reconcile with the claim that:

3. "Gripen E and F-35 cost the same" ("F > T, T > E, F = E")

unless you bring some other factors in. Keep in mind both the SK and Swiss sales are for roughly the same period, AFAIK (delivery starting 2018).

Also interesting to note is that when I pointed out that Typhoon was cheaper than F-35 in SK, it was explained by referring to LRIP, and the cost curve for F-35 that has not gone down yet... well if you want to make such considerations for F-35 would it then not be fair to do the same for Gripen E? Consider that the Swiss Gripens Es will be among the very first produced (if they vote yes in the referendum). One alternative would be to recognize that costs of all a/c (not just the F-35) is changing as a function of a number of factors including numbers of a/c produced at the time, TOT, offsets, "add-ons", etc, etc.

I have the impression that most of you seem to assume that only F-35 will keep coming down in price, and this cannot happen with the Gripen E. Obviously Saab would need to sell more to bring costs further down, however considering that 2 export countries have selected it even before the first E has been finalized, I would say that's a quite good sign. Rafale, Typhoon, SH, none of them were in such a position at that point in the development.

One final comment about a difference of say, 10%; if we are talking about, say, 2billion USD then 10% is 200 million USD. For some countries that's peanuts however for other countries 200 million USD may be a significant amount of money.
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Unread post09 May 2014, 15:29

loke wrote:
I have the impression that most of you seem to assume that only F-35 will keep coming down in price, and this cannot happen with the Gripen E. Obviously Saab would need to sell more to bring costs further down, however considering that 2 export countries have selected it even before the first E has been finalized, I would say that's a quite good sign. Rafale, Typhoon, SH, none of them were in such a position at that point in the development.



I have the impression that you assume that the Gripen would be mass produced by the thousands and can be compared to the JSF plans in the slightest.

As of right now there are just over 100 that are going to be produced on 2 different assembly lines. This is not at all close to the JSF model mass production model. the costs will come down, but not nearly to the level you are trying to compare with JSF. Because its simply not as efficient. this has been brought up many times with the fantabulous eurocanard deals, and was of course also brought up with Canada as Saab not surprisingly offered Canada the moon including production. (remember Saab withdrew for reasons that are obvious?) The additional cost is not seen as a hindrance thanks to all the jobs its brings, but it is additional cost and an inefficient production scale.

I know it sounds silly to a lot of people now but that was the purpose of the JSF. To come together to deliver an advanced aircraft at an affordable price by pooling resources. Thanks to this the JSF will be able offer excellent value. I think a lot of countries like say, Finland with their kooky defense minister realize that the cost goal will be realized and that they don't have to jump in and buy it right now, but can wait 10 years and reap all the rewards anyway, While the Gripen NG purchase cost will remain relatively high for what it is.
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Unread post09 May 2014, 16:23

XanderCrews wrote:
loke wrote:
I have the impression that most of you seem to assume that only F-35 will keep coming down in price, and this cannot happen with the Gripen E. Obviously Saab would need to sell more to bring costs further down, however considering that 2 export countries have selected it even before the first E has been finalized, I would say that's a quite good sign. Rafale, Typhoon, SH, none of them were in such a position at that point in the development.



I have the impression that you assume that the Gripen would be mass produced by the thousands and can be compared to the JSF plans in the slightest.

Then you have a quite wrong impression -- however even with just a few hundreds the cost will still come down. Saab aims for around 400. Tiny compared to F-35, but not that shabby compared to Rafale, Typhoon and SH. I could turn this around and ask; why don't you think Gripen E costs will come down, just like it did for these other a/c? Sure F-35 cost reductions from the first F-35 produced to number 1000 produced will be much bigger, however keep also in mind that Gripen starts at a much lower baseline.

Anyway it is too early to tell; currently they have an excellent start, in 3-5 years it should become more clear if Gripen E will succeed outside the 3 countries that so far has selected it.

And returning to Finland; I agree that since the capabilities are much better for the F-35, they will definitely go for the F-35, unless something very unlikely should happen (e.g. Finland hit by a big rock, annexed by Russia, etc).
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Unread post09 May 2014, 16:39

loke wrote:Then you have a quite wrong impression -- however even with just a few hundreds the cost will still come down. Saab aims for around 400.


did you miss the part where I said the cost would come down ?

This is not at all close to the JSF model mass production model. the costs will come down, but not nearly to the level you are trying to compare with JSF.


I could turn this around and ask; why don't you think Gripen E costs will come down, just like it did for these other a/c?


did you miss the part where I said the cost would come down?

This is not at all close to the JSF model mass production model. the costs will come down, but not nearly to the level you are trying to compare with JSF.


I don't know If I can make that any more clear.

THE COST WILL COME DOWN ON THE SAAB GRIPEN NG however the nature of its production strategy will keep the cost higher than comparing it to say the JSF, which will utilize a different production strategy.

but the mere fact that we are talking about the "simple/cheap/natural growth/proven" Gripen NG is going to be within even range of the "complex/expensive/risky/not-operation" JSF is interesting in and of itself, 10 percent or not.

One final comment about a difference of say, 10%; if we are talking about, say, 2billion USD then 10% is 200 million USD. For some countries that's peanuts however for other countries 200 million USD may be a significant amount of money.


It should not be that close, for what the Gripen NG is, and what it claims to be. When did "cheap" become "only 90 percent of a the universally-declared-expensive JSF?"

How does that work? Why would 10 Gripen NGs be "a good deal" but 9 F-35s for the same price be "too expensive?" the only advantage the Gripen has at that point is the long term operating costs, and that not because its in the same class as JSF and more efficient, its because its in a lighter weight class with less capability.

And returning to Finland; I agree that since the capabilities are much better for the F-35, they will definitely go for the F-35, unless something very unlikely should happen (e.g. Finland hit by a big rock, annexed by Russia, etc).


Indeed, but if you recall the Ministers claim about cost is what started this great debate. You said the guy didn't know what he was talking about and was off his rocker, now you are saying that a Gripen NG may be only 10 percent cheaper than the JSF, which you know, kind of proved him right:

From the first post:

..“Although I advocate co-operation with Sweden, we should not acquire Swedish JAS fighters when we could acquire American F-35 stealth fighters for roughly the same price. Performance must take precedence in the investment,” emphasises Haglund.


You then said:

loke wrote:
hb_pencil wrote:
loke wrote:The reality is that you really don't know, unless you have access to information that is not public accessible -- let's wait and see what the costs will be around 2020 or so.


Lets not wait, because Saab certainly hasn't been in regards to Canada. They have been happy to give us misleading data on the aircraft's cost in order to create as much political disruption as possible. They have said on numerous occasions they never believed they had a chance, but have been happy to say all manner of things in order to further the political mess in our state.

And yes I do have perspective on the Gripen's costing that isn't out there in the public, based on my own work. Is it an exact amount? no, its a pretty rough estimate. I've shown here before ways you can come to that cost based on other contracts and information, like Brazil or Norway.

viewtopic.php?p=266783#p266783

Certainly there are significant unknowns to that, I would admit. However, now you see Defence minister of a neighbouring country to Sweden (one of its closest in terms of relations), suggest the F-35 may well be as cheap as the Gripen. Do you really think he's going to say that if there is no chance that will happen, or based on no information whatsoever? Of course not. He's got a briefing, presumably undertaken by his MOD, which estimates the prices will be pretty close in the future. I assume he's got "not publicly available" information to make that assessment.

What I'm really getting at is that the claims by gripen supporters that the NG is some sort of wunderplane that will be 30~50% cheaper to acquire than the F-35 and 80% cheaper to operate just aren't factual at all. Might it be 10~15% difference? Maybe, and yes we can wait to see that. However 10~15% is enough to make some reasonable inferences about capabilities and force structure decisions that we can talk about.

1. If the Swedes were such lying bastards why are Hungary and Chzeckia happy to renew their contracts? And why does Thailand keep buying more Gripen in spite of their fiscal issues? Also, are you then saying that Saab managed to trick both the Swiss and Brazil into believing their "misleading" data? No doubt they have a marketing dept, and I would not trust what is coming from any marketing dept, including Saab's. However when they respond to an RFP it's a bit different.

2. They did not participate in Canada for obvious reasons, and they are not related to the cost of the a/c. Or do you also think that Rafale and Typhoon participate because they are "cheap" compared to the F-35?


3. Finland is not looking at buying a fighter currently. He is the MoD, his main focus currently is on the army first, navy second, and third comes upgrades of the AF. They are very, very far from doing even an RFI. Thus if you insist on believing the first version, then it boils down to yadayda-talk from a politician that simply don't have the numbers, and no time to even consider looking at them, for a purchase that is so far into the future for Finland. So to say that he "knows" that they cost the same is based on rather thin assumptions, to say the least.

4. I don't know how big the difference will be, that remains to be seen; clearly not as big as those "fanboys" you are so happy to fight against (where are they on this forum? If they are not here why do you keep arguing against their numbers?) Anyway this is again a useless discussions since the Gripen and the F-35 are adressing completely different markets (also see item 2 above).

5. The cost of the a/c will always be just a small percentage of the total; just look at how "expensive" those F-16 deals turn out to be even if the a/c is given for free.


So we are all on the same page now then yes?
Last edited by XanderCrews on 09 May 2014, 17:15, edited 2 times in total.
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Unread post09 May 2014, 16:58

Loke,

We agree that learning curve effects also apply to the Gripen E and that the planes for Switzerland are "early lots." But as Xander pointed out The F-35 just has a lot more ooomph going for it with much greater build rates and total numbers - this allows for much larger reduction as the production matures. I compared F-35 LRIP7 and Gripen E for Switzerland. Relatively the reductions in price for further F-35 lots will be greater than what Saab can achieve. We are already with a 30% difference and the F-35A will close on this.

I think it is difficult to use the SK numbers for much as we don't know exactly what they include. As we saw with the Netherlands, the €4.7B for 37 F-35A is in reality closer to €3.2B gross system cost for the remaining 35 jets. But I will offer my thoughts on SK.

The F-35A bid was an FMS sale with a 3.5% fee on top of it.

When F-35 bids, it is locked into a specific package with specific prices, which are non-negotiable since they have to be the same for all (DOD is the direct LM customer). Thus there is little flexibiity as the EADS and Boeing have, which are bidding on DMS terms or close to it. This means they are more adaptable and as an example can push items included in the acquisition phase cost for the F-35, into the support and sustainment phase - aftermarket. They are also financially more flexible. This matters when there is a hard ceiling you must meet as a bidder. F-35A FMS can't do this. The package is pretty much fixed.

I will also point out, that it seems the budget has been reduced 11% for 40 F-35. If it hadn't been reduced, a linear scaling says it would buy 45 F-35A. But it doesn't scale linearly, because the fixed costs for establishing the setup are pretty much the same wether you buy 40 or 45 jets. So when you reduce the budget you lower the variable cost, i.e. the number of aircraft. We are probably closer to 50 jets than 45 if the budget had remained the same.
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Unread post09 May 2014, 17:28

XanderCrews wrote:
did you miss the part where I said the cost would come down ?

Yes actually I did, apologies.
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Unread post09 May 2014, 18:59

loke wrote:bumtish, I think BIO had a great point when he suggested that comparisons make the most sense within a competition, I think they must be done with great care between. Consider that:

1. In Switzerland the Typhoon bid was significantly more expensive than the Gripen E (T > E)

2. In SK the bid F-35 bid was significantly more expensive than the Typhoon (F > T)

It is difficult to make sense of items 1 and 2 if you want to reconcile with the claim that:

3. "Gripen E and F-35 cost the same" ("F > T, T > E, F = E")

unless you bring some other factors in. Keep in mind both the SK and Swiss sales are for roughly the same period, AFAIK (delivery starting 2018).

Also interesting to note is that when I pointed out that Typhoon was cheaper than F-35 in SK, it was explained by referring to LRIP, and the cost curve for F-35 that has not gone down yet... well if you want to make such considerations for F-35 would it then not be fair to do the same for Gripen E? Consider that the Swiss Gripens Es will be among the very first produced (if they vote yes in the referendum). One alternative would be to recognize that costs of all a/c (not just the F-35) is changing as a function of a number of factors including numbers of a/c produced at the time, TOT, offsets, "add-ons", etc, etc.


I completely agree that there are a number of variables involved... I've been saying this throughout this thread. However you need to recognize that this isn't something you can wave your hand and say "oh nobody can do it." Its an specialized field with post-graduate degree programs that allow individuals to undertake research professionally. You just don't know how to do it... as your simplistic logic with the Eurofighter illustrates.

What you completely fail to account for is WHEN the ROKAF and Swiss aircraft were to be purchased. SK mandated that the replacement aircraft be delivered no later than by 2017. So the F-35 are in the LRIP 7 territory with only 200 or so F-35s produced, at production numbers around the 60s. I would also argue that the program cuts to the Eurofighter over the last year has boosted its price, likely making it more expensive than the F-35 if the ROKAF had to run a competition today. The Finnish competition will be after 2020, when there will be over 500 F-35s through production, with large multi year production buys of 80 or more aircraft and major economies of scale. The price decrease pressure is significant at that stage.

What you don't get is that there are no "free lunches" when it comes to fighter aircraft. There is no miracle way to make things cheaper and just as effective. There are ways to make it more expensive and less effective, but the JSF program's structure avoids some of those issues (large volume purchases, stable production length and high levels of commonality between versions). You either don't pay and get less capable, older technology (like the gripen), or you pay for the technology and get cutting edge stuff (F-35). There is no way to have it both ways.

loke wrote:I have the impression that most of you seem to assume that only F-35 will keep coming down in price, and this cannot happen with the Gripen E. Obviously Saab would need to sell more to bring costs further down, however considering that 2 export countries have selected it even before the first E has been finalized, I would say that's a quite good sign. Rafale, Typhoon, SH, none of them were in such a position at that point in the development.


No, the problem is much more complex than that. This is the biggest problem with Gripen: the aircraft's price is totally fixed upon export sales of relatively small purchases, and a total program size of less than 300 aircraft.... and even then its not even 300 aircraft.

So lets think about this. The F-35 has an established global supply chain, where most aircraft (in the order of 2,500), will be manufactured using the same parts and processes, with final assembly in Fort Worth. It maximizes the potential learning curve effects, and creates massive economies of scale.

The Gripen is a mishmash of production. The Swiss order of 22 aircraft is the only genuine Gripen order on the books. The Swedish aircraft are remanufactured C models, and Brazil will eventually produce over 80% of the aircraft in-country with only the first few being built in Sweden. This means that there are extremely low learning curve effects. Even small disruptions to production means a company has to lay off workers, many of whom do not return. Then you need to train new workers and design new processes... which means no decreases in cost. This is a clear issue with the Eurofighter program, where constant starts and stops helped to increase the aircraft's costs.

So right now, no its not likely that there will be much of a decrease at all. You have an estimated total production of 300, with less than 50 being actual new Gripens. The rest will either be conversions, or produced in Brazil, possibly to a completely different standard.

loke wrote:One final comment about a difference of say, 10%; if we are talking about, say, 2billion USD then 10% is 200 million USD. For some countries that's peanuts however for other countries 200 million USD may be a significant amount of money.


If its 10% is the cost difference then I would suggest that most countries would select the F-35 over the Gripen without much second thought. 1 gripen does not equal 1 F-35. The F-35's capabilities are far in excess of that 10%. you can buy fewer F-35s and carry out a broader range of missions more successfully than the Gripen. For example, the F-35's sensors and comms systems allow you to cover a far broader area, more effectively than the Gripen. Lets say you had to defend an city from a low-flying cruise missile attack. Which aircraft do you think is going to have a better success rate identifying targets close to ground clutter and destroying them? The Northrop Grumman APG-81 equipped F-35 or the Selex Raven NG? I would argue that virtually all states interested in success would go with the F-35.

One of the biggest advantages you get with the F-35 through FMS isn't just the aircraft and its capabilities, but you also take advantage of U.S. training and doctrine. You don't need to figure out the broad swaths of doctrine on your own, you get the US to teach it to you and then you modify it for local uses. You also receive the opportunity to tack on to meaningful upgrades that the other partners are implementing. Those, in reality, are worth more than 10% or even 20% of cost: it ensures that you're actually able to employ these aircraft to their greatest potential for their expected lifecycle.
Last edited by hb_pencil on 09 May 2014, 19:48, edited 1 time in total.
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Unread post09 May 2014, 19:09

bumtish wrote:Loke,

We agree that learning curve effects also apply to the Gripen E and that the planes for Switzerland are "early lots." But as Xander pointed out The F-35 just has a lot more ooomph going for it with much greater build rates and total numbers - this allows for much larger reduction as the production matures. I compared F-35 LRIP7 and Gripen E for Switzerland. Relatively the reductions in price for further F-35 lots will be greater than what Saab can achieve. We are already with a 30% difference and the F-35A will close on this.

I think it is difficult to use the SK numbers for much as we don't know exactly what they include. As we saw with the Netherlands, the €4.7B for 37 F-35A is in reality closer to €3.2B gross system cost for the remaining 35 jets. But I will offer my thoughts on SK.

The F-35A bid was an FMS sale with a 3.5% fee on top of it.

When F-35 bids, it is locked into a specific package with specific prices, which are non-negotiable since they have to be the same for all (DOD is the direct LM customer). Thus there is little flexibiity as the EADS and Boeing have, which are bidding on DMS terms or close to it. This means they are more adaptable and as an example can push items included in the acquisition phase cost for the F-35, into the support and sustainment phase - aftermarket. They are also financially more flexible. This matters when there is a hard ceiling you must meet as a bidder. F-35A FMS can't do this. The package is pretty much fixed.


I'm almost certain that Boeing and EADS used commercial division sales tactics to artificially decrease their acquisition costs in order to meet the DAPA guidelines. The rules of the competition there with an extremely low upper acquisitions ceiling as a mandatory requirement was ridiculous, to say the least. It basically encouraged cheating by those two manufacturers while completely handcuffed Lockheed martin who had to go through the highly constrained FMS process rather than the DCMS route.

Edit: what does commercial sales tactics mean?

Basically manufacturers make huge discounts on the aircraft purchase costs, then sell parts at higher cost to make up the difference. Since you're locked into the supply chain, you have no choice in this matter. Militaries have started to crack down on this practice, because there are often legal limits to the profits that a company can accrue from government sales contract.

http://theblogbyjavier.com/2014/02/15/b ... -for-2013/
http://online.wsj.com/news/articles/SB1 ... 2829051078
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Unread post10 May 2014, 20:37

HELSINKI — Finland’s surprise decision to move toward a historic defense pact with NATO is expected to bolster the country’s interest in acquiring F-35 aircraft to replace the F/A-18 Hornets in 2025-30.

Yet the government here is playing down local speculation that the April 22 memorandum of understanding (MoU) with NATO marks the beginning of a process toward membership within 10 years.


http://www.defensenews.com/article/2014 ... ATO-Sweden
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Unread post11 May 2014, 11:03

Thanks, Vlad!
"When a fifth-generation fighter meets a fourth-generation fighter—the [latter] dies,”
CSAF Gen. Mark Welsh
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Unread post24 May 2014, 22:01

bumtish wrote:Now it is time to elaborate on my previous post. Hang on, it will be worth it!

It is of course possible to point to other F-35A partners like the Netherlands. Here we shall remember that the €4.7B the Dutch set aside is an acquisition phase cost, not just the price of hardware and services from LM. It also includes €500M which has been spent on SDD and €300-400M used on two OET&E aircraft. So only €3.9 is left for the actual acquisition phase. And of this 10% is set aside for risk, which will be spent on additional F-35s if not used. The budget is also based on estimates, where real contract values have gone below (and which the Norwegians have confirmed in their press releases when finalizing contracts). Going by the Swiss ratio of acquisition phase/hardware money, the funding available for the dutch for hardware and services from LM would be €3.1B for the remaining 35 F-35. That is a gross unit system cost of $123M by the way. Gripen E was $121... Australia has budgeted with AUD130M gross...

.


Some correction concerning Dutch figures
€4.7 billion I have never read before in letters to parliament. The SDD phase money is not part of the €4,500 milion budget
Actually the IOT&E phase is a separated project within the JSF project. The two test F35's were not seen as part of the possible 85 F35's to order. In that case the number would have been 87.
Because of shortage of money these two F35's became included in the number to order.

When the Dutch joined the JSF project they never budgetted money for 85 F35's, only a budget for a first batch of F35's.
A second batch would be ordererd by a government in charge, in case this would be needed (situation in the world, as well economically)
At the moment political parties (at least 5 parties) seem like to favour raising the defence budget.

Known figures:
- Budget: €4.500 million
- Reserves within budget €4,500 million: 10%
- Used budget IOT&E phase etc: ±€450 million
* Reserves budget, estimated operational costs: 10%

Budget: €4,500 million
- 10%: €450 million
Total: €4,050

€4,050
IOT&E phase, including order F35A(2x) ±€450 million
Total: €3,600 million


Budget 35 x F35A: €3,600 million
In case the F35A will not become more expensive (expected), €450 (10%) will be used for ordering more F35’s.

A. €4050 (35)
F35A (all in): €115,7 million

B. €3600 million (35)
F35A (all in): €102.85 million

C. €450 million (4): theoretically
4,3 F35’s


Theoretically
Including 2 test F35, 35 F35, plus 4 F35: 41 F35
o €4,050 (39): €103.8 million p/35A (all in) / €3,600 (35) + €450 (4)
o €4,050 (35): €115.7 million p/F35 (all in) / €4,050 (35)

All in price (US $)
o Per F35A (all in): $138.4 million (€103.8 million)
o Per F35A (all in): $154.3 million (€115.7 million)

Actually the price is cheaper while 21% are taxes BTW
o 21% = €21,7 million: €82.1 million ($109.5 million) p/F35A (all in)
o 21% = €24.2 million: €91.5 million ($122 million) p/F35A (all in)

The price of a F35 becomes cheaper for the Dutch as well, while they receive a few hunderd thousand dollars per sold F35 to none levelpartners.

[u]IOT&E phase[/u]: ±€450 million
This budget concerned not only buying 2 F35A (one orange wired) plus spares etc, but the needed money for participating the IOT&E phase as well.
€8 million for bombs, missiles, grenades (25 mm) etc. being used during the IOT&E phase is a separated budget, not part of the Dutch F16 replacement budget,

Rate: may 24, 2014
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