Norwegian Government select JSF

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More questions from a confused man

So many nations seemed to have signed up to JSF as a partner, or selected the aircraft, but how many have actually placed firm orders them and how many?

Countries that are in the JSF program as a partner and have therefore put miney forward for development costs-does this money come off the eventual order(hasn't the UK put a substanial amount in) and what happens if any partners decide they don't want to buy the aircraft? Do they get development cost back, maybe a percentage of the amount made on sales dependent on what they put in or profit, or do they just lose the money.

I know it seems unlikely that the UK will pull out, but people mention numbers being cut, and the finacial situation is difficult, but it seems unlikely that all that money would be lost on someone elses aircraft?

cheers

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More questions from a confused man

So many nations seemed to have signed up to JSF as a partner, or selected the aircraft, but how many have actually placed firm orders?


None, so far, except maybe a couple of test aircraft. The UK, Italy & the Netherlands have announced plans to buy a few (as in maybe 2 or 3) such, but neither the UK nor Italy has placed an order yet. Not sure about the Dutch. The development & test aircraft contracted for by the USA are the only firm sales I know of so far.


Countries that are in the JSF program as a partner and have therefore put miney forward for development costs-does this money come off the eventual order(hasn't the UK put a substanial amount in) and what happens if any partners decide they don't want to buy the aircraft?

AFAIK -

No discount for the money you've paid upfront. I think you may get a royalty on sales in proportion to your contribution to development cost. You also get the right for your national firms to bid for work designing (in which case development money comes back into your economy) & making bits for the aircraft.

In theory, no connection between partnership & orders. You still get revenues from making & selling parts for whoever buys it, regardless of whether you buy any.

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it is pretty clear that the US DOD plans to 'subsidize' the cost to export customers through higher US costs

That seems plausible - the US DOD would like western/NATO countries to buy the F-35 and is prepared to underwrite the cost in excess of US$58 million to those countries. If that were certain, it would severely compromise the prospects of western/NATO countries selling any of their own products. How could they (Dassault/Eurofighter/Gripen) hope to compete against a company selling a rival product at a substantial loss?

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LM is under contract to the US government. All monies paid by partner nations are paid to the USG, who incrementally releases those monies to LM based on worked performed (progress payments) as determined by the Government Program Office and Defense Contract Auditing Agency, DCAA. JSF Team Partner companies are subcontracted to LM.

All costs, including profit and other fees, are negotiated and approved by the Government Program Office with review by Pentagon higher-ups. The Pentagon will not let those fees get out of hand because they are reportable to Congress, and hundreds of Congressmen would love to gain rock star status by busting "evil price-gouging defense contracts" in front of the media's TV cameras.

The price any government will pay for F-35 is pretty much up to the US government, not LM or any partner company. If the USG wants to cut a deal with another country, its totally up to them.

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I like the Gripen demo, I like it alot. but the big problemo of some of the statements being made is that the Gripen is cheaper than the F-35. And sure it is.. the Gripen.. not the Gripen demo and whatever production model that becomes the NG. Norway might well become the launch customer of this new variant that will most likely be in low production numbers, and will require further funding to develop.

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I like the Gripen demo, I like it alot. but the big problemo of some of the statements being made is that the Gripen is cheaper than the F-35. And sure it is.. the Gripen.. not the Gripen demo and whatever production model that becomes the NG. Norway might well become the launch customer of this new variant that will most likely be in low production numbers, and will require further funding to develop.

This is a new radar, new avionics, new undercarrige, new internaltanks, engine uppgrade(cheaper than RM12?), MAWS, Satcom. Most of it is already paid by the norweigian gov. And some by the swedish(upgrades for C/Ds)

so its a upgrade that mostly paid for, and the LCC is stated to go down not up. eg. Engine and AESA needs less service.

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So, it has started. The phantasmagoric LM $58mil price figures have not lasted more than a week.. :cool: I said previously I would never place my bet under $100mil UPC. Now I feel like rising the estimate a bit higher.

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So, it has started. The phantasmagoric LM $58mil price figures have not lasted more than a week.. :cool: I said previously I would never place my bet under $100mil UPC. Now I feel like rising the estimate a bit higher.

What are you babbling about now?

The $58.7 million price was made public in June & who knows how long it was the case before that but not public information.

Where is the announcement by the DOD that it has changed?

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What are you babbling about now?

The $58.7 million price was made public in June & who knows how long it was the case before that but not public information.

Where is the announcement by the DOD that it has changed?

1. Norwegian decision for F-35 was met on Nov-20. It took two weeks + something until prices have begun to rise. I don't care about your June, means nothing to me.
2. Screw the official announcements. Important is what the bird really pulls out of your pocket.. And it will be over $100mil whatever you do.

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Dont forget that LM posts f-35 prices in 2002 dollars.

The FY08 budget otoh;

http://img264.imageshack.us/img264/1076/f35usairforcecosts800or4.jpg

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Dont forget that LM posts f-35 prices in 2002 dollars.

How many per cent would one need to add to the "To Comp" price highlighted to get a price in 2014 dollars? 20% / 30% / 40%? Even $79 million + 20% is over $95 million. Is the US govt really going to subsidise Norway to the tune of $35+ million per frame?

This sounds cloud cuckooland stuff to me. What would the reaction be if the US govt said to a Boeing 737 customer that it would would subsidise the purchase price to ensure it was cheaper than the A320?

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Dont forget that LM posts f-35 prices in 2002 dollars.

The FY08 budget otoh;

http://img264.imageshack.us/img264/1076/f35usairforcecosts800or4.jpg


NO, PRICES ARE IN THEN YEAR DOLLARS!!!

AND extrapolated out beyond 2030 (2036 IIRC)!

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Is the US govt really going to subsidise Norway to the tune of $35+ million per frame?

The idea is that production will ramp up so quickly that the ACTUAL price is equal to (or less than) the $58.7 million being paid within a few years.


This sounds cloud cuckooland stuff to me. What would the reaction be if the US govt said to a Boeing 737 customer that it would would subsidise the purchase price to ensure it was cheaper than the A320?

Completely irrelevant & unrelated analogy. More accurate would be for the US Government to say to 'Boeing 737v2014' customers that since it is buying a LOT of them itself, it will cover the 'excess' cost of the 1st few years production so that other customers pay the same price for them as they would/will for later production aircraft so they can (& the hopfully is will) commit to buying them right away instead of waiting a few years for the price to inevitably come down to do so.

The intent is to give export customers a "fixed" price so they know ahead of time what they will pay at a price that is believed to be the price the aircraft will actually be shortly after reaching full rate production.

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NO, PRICES ARE IN THEN YEAR DOLLARS!!!

AND extrapolated out beyond 2030 (2036 IIRC)!

Haha stop being a dumbarse.

The budget is in current fiscal year dollars.

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Haha stop being a dumbarse.

The budget is in current fiscal year dollars.


No, it is is in "then year dollars.

There is a lot of confusion over this term. It means dollars current at the time they are spent. Money spent in 2009 is at 2009 prices, money spent in 2013 in 2013 prices, & so on out to the end of the programme, with an assumed rate of inflation - currently about 2%, I think.

Averages over a period, in "then year" dollars, are therefore affected both by the duration, & how many are bought in each year. If acquisition is weighted towards early years, the average "then year" price will be lower, although the price for each year will be the same.

Historic prices, & current price assumptions out to 2013 are here. Scroll down to section 10, click on Table 10.1

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[SIZE="6"]Norway’s JSF Price Tag is $3.2 Billion and Rising [/size]

(Source: defense-aerospace.com; published Dec. 6, 2008)

By Giovanni de Briganti

PARIS --- Norway did not obtain a firm price from Lockheed Martin for the Joint Strike Fighter, and the price it was quoted will change substantially before the contract is signed in 2014, Norwegian government and industry officials say.

Price information provided by these officials paints a quite different picture from that provided by initial media reports, and illustrates many apparent inconsistencies.

For example, the $2.57 billion figure widely quoted as the cost of the 48 aircraft is wrong because it is based on the wrong exchange rate. Maj. Jarle Ramskjaer, head of information for the Norway’s Project Future Combat Aircraft Capability office, told defense-aerospace.com Dec. 2 that Lockheed Martin’s price is based on a January 2008 exchange rate.

Using this rate (5.5 Norwegian kroner to the dollar), the JSF’s 18 billion kroner cost works out to $3.27 billion, or $68.12 million per aircraft, substantially higher than the $54 million (wrongly based on Nov. 2008 exchange rates) unit price that was widely reported.

Asked to clarify how Norway had computed the JSF price, Ramskjaer said in a Dec. 5 e-mail that “Conversion between NOK and USD is somewhat more complex than multiplying with the exchange rate. The net present value is then derivated as follows: First, we periodize expenses according to the payment plan and adjust for the escalation indices. Then we create a “currency future” based on the money marked interest rates in the two currencies, as advised by the Norwegian Ministry of Finance. Those “currency futures” are then used for each period, converting foreign currencies to NOK. Last, we discount with a factor to get real time yearly cost.”

Additionally, Norway has calculated that the life-cycle cost for 48 JSF will total 145 billion Norwegian kroner (or $26.3 billion at January 2008 exchange rates) over 30 years, Ramskjaer said. This is also substantially higher than previously reported.

The $3.27 billion price tag is also incomplete. It covers “48 fly-away aircraft (Unit Recurring Flyaway, or URF, price) including Alternate Mission Equipment (AME) but not weapons or spares,” Ramskjaer said. In addition, the agreement with Lockheed Martin includes “an escalation clause to update the price at the delivery of the aircraft (when payments are due). We have based our estimates on historical development of the indices, and future predictions”, he added.

“Cost information provided to Norway in response to a Request for Binding information in April 2008 was a ‘budgetary estimate’ in 2008 US dollars,” Lockheed Martin JSF spokesman John Kent said in a Dec. 4 e-mail. The cost “includes aircraft Unit Recurring Fly-away cost plus Ancillary Mission Equipment, e.g., fuel tanks, weapon pylons, safety pins, weapons racks, etc.”

When these factors are added to the basic price, Norway will end up paying substantially more for its 48 JSFs. And, as the price is quoted in dollars, currency fluctuations over the next six years will substantially affect the final price in Norwegian kroner.

“We do not understand how the Norwegians came to the figures that they presented,” Lasse Jansson, a spokesman for Gripen International, said in a Dec. 5 e-mail. He added that officials from Gripen parent company Saab AB and the Swedish Defence Matériel Agency, FMV, had been debriefed by Norwegian officials on Dec. 4, and that “we are now trying to sort out if what we got out of that meeting made things [any] clearer to us.”

Norway has made provisions for other cost variations, such as “future growth (material and labor) indices, currency terms, net present value of the future investment etc, all which has been calculated according to Ministry of Finance directions,” Ramskjaer said.

Given these uncertainties regarding prices, and the fact that the contract will not be signed until 2014, today's Norwegian JSF price figures are pretty meaningless. It is thus difficult to understand how Norway’s Parliament can usefully debate the proposed JSF acquisition during the debate it has scheduled for Dec. 19.

Other prospective JSF customers are no better informed regarding JSF prices. Asked whether he was “any clearer about the unit cost of a Joint Strike Fighter” than during a previous hearing in January 2008, General Sir Kevin O'Donoghue, Britain’s Chief of Defence Materiel, told the House of Commons Defence Committee on November 25, 2008 that “No, I do not think I am, am I?”

Another apparent inconsistency is that Norway’s basic $68.12 million unit price tag is substantially lower than the price the US Air Force expects to pay for the F-35s it plans to order in FY 2013, one year before Norway expects to sign its contract.

According to USAF FY2009 budget documents :
http://www.saffm.hq.af.mil/shared/media/document/AFD-080204-081.pdf
(page 43), the US Air Force’s 48 F-35s planned for FY2013 will cost $4.336 billion, or $90.3 million per aircraft.

When advance procurement costs ($468.8 million) and initial spares ($372.7 million) are added, the USAF’s total bill for the 48 aircraft increases to $ 5.177 billion, or $107.8 million per aircraft, about 57% more than the URF price offered to Norway.

http://new.isoshop.com/dae/dae/articles/features/tab-05122008.gif

Ramskjaer declined to comment on the price differential with the USAF order, but said that “on a general basis we can say that the learning curve could have an effect on the acquisition cost (low rate initial production vs. mass production). It all depends when the aircraft is ordered, and which block/batch they will [originate] from.” Lockheed’s John Kent referred questions on this subject to the US government JSF Program Office.

Thus, contractual price information will not be refined until the contract is signed in 2014, and many factors can change substantially over those six years. Ramskjaer says, for example, that Norway did not receive, nor did it expect, a firm price at this stage, and that contractual prices, escalation clauses and penalty clauses for late delivery “will be addressed in the [2014] contract.”

-ends-

http://www.defense-aerospace.com/cgi-bin/client/modele.pl?session=dae.43399338.1228924155.M7jrJH8AAAEAABII1HkAAAAG&cat=5&prod=100347&modele=feature

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Stonewall,

“Cost information provided to Norway in response to a Request for Binding information in April 2008 was a ‘budgetary estimate’ in 2008 US dollars,” Lockheed Martin JSF spokesman John Kent said in a Dec. 4 e-mail. The cost “includes aircraft Unit Recurring Fly-away cost plus Ancillary Mission Equipment, e.g., fuel tanks, weapon pylons, safety pins, weapons racks, etc.”

Fly-away price is STILL the same $58.7 million (FY2008 dollars & at some 2008 exchange rate) the DOD has said it is, the difference between $58.7 million & $68.1 million is Ancillary Mission Equipment & possibly a different exchange rate used.

USAF FY2009 budget documents are in THEN YEAR DOLLARS, not constant dollars. How many times does this have to be stressed before people get it?

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17 years 10 months

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SAAB Video statement

Summary and recap of the news today.

Simulations:
Norway refuse to hand out the simulated scenarios that formed the basis for their very public statement that Gripen didn't meet their requirements. Saab again asked for these during the debrief meeting but again Norway won't provide the information.

Neither has any information been provided as to what threats might have been available in the simulations.

Norway had not at any time during the tender asked for the highly dynamic information that is required to do credible scenario simulations and Saab has not provided them, such as various rcs data, ew capability, defensive aids, weapons data, proximity fuses (Saab being the developer of the METEOR proximity fuze for instance) etc.

Price:
Without any contacts with Saab, Norway has changed the price evaluation to be on 58 aircraft instead of the offered 48. They has estimated a much higher fuel consumption on Gripen, they have changed the LCC, they have written in that half of the fleet is lost over a period of 30 years and need to be replaced but refuse to comment at what exchange rate they have calculated, and at what price the replacement aircraft is listed as. (The last one is interesting because Saab never offered Gripens at fly-away prices but offered a fixed price package deal.)

Again, all changes without any contact with Saab.

Norway also replaced Gripen experience with F-16 experience on costs, including adding significantly higher upgrade costs. The Norwegian price estimates is so high that even if Sweden would have developed the Gripen NG free of charge and given 48 jets free of charge the Norwegians still think that the JSF would be cheaper.
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Hahaha nice going Noggies. What's so difficult in just saying from the start "We want the JSF" and stop wasting all our time and money with a fake tender.