F-35 engine costs: ‘cutting the numbers’
After a story broke Sunday in the Ottawa Citizen that revealed that Canada will have to provide an engine for the F-35s they purchase, questions arose over whether the price of the engines is already included in the price of the planes.
Later in the day, Conservative candidate Laurie Hawn appeared on the CBC’s Power and Politicsand said some interesting things about the numbers, specifically detracting attention from the $75 million figure that the Harper government maintained for so long as the price of each aircraft. Instead, Hawn told host Evan Solomon, everyone ought to be focused instead on the total program cost of $9 billion.
“$9 billion is the only number that matters,” Hawn said. “That’s the airplane, simulators, infrastructure, training, initial weapons, initial spares, and a contingency to allow for some price fluctuations… About 65 per cent of the contract is for the airplanes themselves.”
So, let’s break that down a bit.
The Parliamentary Budget Office report from March 10 (An Estimate of the Fiscal Impact of Canada’s Proposed Acquisition of the F-35 Lightning II Joint Strike Fighter), cites DND as allowing $6 billion for acquisition of the planes. That fits with Hawn’s quote of the planes being about 65 per cent of the contract: it works out to approximately $5.8 billion.
For Canada to buy 65 planes for $5.8 billion, it will pay just under $90 million per unit.
Back to Hawn on CBC:
“We’re buying the engines from General Electric, they’re put together with the airframe at Lockheed Martin. [...] It’s a complete package… including the airplane, engine, and all the systems.”
Those engines will cost just under $15 million per unit, and they likely won’t be General Electric engines, as Hawn says. Instead, the primary engine will most likely be the Pratt and Whitney F135. In fact, GE put out a full page ad in some U.S. papers last week, lobbying for their engine (the F136) to have a competition with Pratt and Whitney’s, claiming that it would allow for 21 per cent savings for the program (it’s possible, according to the U.S. Government Accountability Office that a competition between the two might save the program 10-14 per cent).
As Vice Admiral David J. Venlet, Program Executive Officer for the F-35 Program, told the U.S. House Armed Services subcommittee in March, “The Department of Defense continues to believe that the Joint Strike Fighter F136 alternate engine program is unnecessary, and risks diverting much-needed resources from other higher priority programs. The FY12 President’s Budget does not request funding for the development and procurement of the F136 alternate engine.”
So at the moment, it looks like the Pratt and Whitney engine will win out.
As Hawn said on Sunday, “You can cut the numbers or play the math any way you want.”
Let’s do that.
If we take Hawn at his word that the acquisition price of $5.8 billion will be for 65 planes that include the engines, then we can “cut the numbers” like this:
$5.8b/65 = ~ $90m per plane (with engine)
$90m – $15m (engine) = $75m per unit prior to the engine cost.
So, we still come back to that mid-$70m mark for the initial acquisition cost. That number is, once again, not substantiated anywhere else. We can’t ignore, as Hawn suggests, that $75 million per unit cost, as it’s effectively the basis for everything else.
The quoted total program cost of $9 billion relies on it.
© 2011 iPolitics Inc.
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