Lessons from the JSF: Get A Grip on Large Projects for the Purchase of Defense Equipment
(Source: Netherlands Court of Audit; issued March 06, 2019)
Lessons can be learned from the development and purchase of the fighter aircraft Joint Strike Fighter F-35 (JSF). The Netherlands Court of Audit, which has followed this process for more than 20 years, presents 11 lessons in a row on the eve of a new series of military purchases by the Minister of Defense.

Administrative message

With “Lessons from the JSF,” the Court of Audit intends to use the experiences from research into the purchase of large defense equipment for future decisions. In the current government's term, much is already planned: around 30 projects for the purchase of all kinds of equipment, such as submarines, frigates and army vehicles.

This involves between € 6 and 17 billion. These purchases lead to considerable operating costs that the Minister of Defense has to pay annually from the current budget in order to be able to deploy weapon systems and other equipment.

Defense investment program

Up to and including the budget for 2018, the Minister of Defense published this overview as an appendix in the draft budget. The overview shows the investment expenditure for the 27 largest weapon systems of the armed forces, plus a 28th 'residual group' 5 years ago and 15 years in advance. We have shown the numerical overview as a graph. Each layer represents the expenditure for one weapon system. In blue, in the middle, the expenses for the JSF. It can be seen that after the JSF large investments are planned in, among other things, submarine capacity and frigates.

“Awkward mix”

In the protracted decision-making process for the JSF, these three elements formed “an awkward mix”, according to the Court of Audit. If parliament wishes to retain control over such projects, it must remain “alert from the very beginning and in every step”. If it is taking part in an international project, it is particularly important that parliament always knows “how much room for manoeuvre there is”.

The report considers the various roles the Netherlands played in the development and subsequent procurement of the JSF. In 1996 the first Kok government decided that all F-16s would eventually have to be replaced. In 2002, the second Kok government decided to participate financially with the American Defence Department in Lockheed Martin’s development of a new fighter aircraft: the JSF. The government took the final decision to have the JSF replace the F-16 11 years later in 2013.

“False start”

With a procurement budget of €4.5 billion, the Rutte/Asscher government decided to make the Netherlands’ biggest defence procurement ever. In hindsight, the Court of Audit observes that the process was very drawn out. The Ministry of Defence committed itself financially to the JSF long before it expressed a wish to replace the F-16. The Court of Audit calls this a “false start” in its report. “Avoiding a false start” when procuring weapons and goods is therefore one of the lessons drawn by the Court of Audit. The Minister of Defence is not the only person involved in such a decision. The government and parliament decide what tasks the armed forces must carry out. The outcome of such a political decision, which actively involves the Minister of Foreign Affairs and other ministers, will determine what military materiel is needed.

Weigh up the alternatives

Parliament needs a timely and realistic insight into the financial resources available to procure defence materiel. The Court of Audit also recommends that all alternatives should be carefully weighed up, including the question of whether or not older materiel actually needs to be replaced. The decisions taken on the construction of the Betuwe freight-only railway line from Rotterdam to Germany is relevant in this context: very little thought was given to alternatives such as transport over existing railway lines or by water.

The 11 lessons learnt from participation in the development of the JSF cover a wide range of subjects. They include ways to ensure development projects remain manageable and the importance of controlling budgetary risks arising from exchange rate fluctuations, because “some dollars are worth more than others”.

What were the results?

A total of 11 lessons were distilled from twenty years of research into Dutch participation in the development of the JSF and the acquisition of the combat aircraft. An important lesson is that if Parliament wants to keep a grip on such projects, it must be alert from the outset and at every step.

The report also sheds new light on the generally complex and extensive process of acquiring defense equipment. They are often considered unique. But our studies show that three elements are always important when purchasing defense equipment.

Firstly, the Ministry of Defense regulations for equipment selection for purchases from € 25 million, which divide the process into five orderly phases.

Secondly, the own dynamics of an (international) program to develop defense equipment. With the JSF program, the Court of Audit writes, the Netherlands could, as an international partner, 'only choose to get on the bus or let it pass'.

And thirdly, political support during the long term of the project for an investment with such a large financial burden.

Click here for the full report (42 PDF pages) on the Rekenkamer website.


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