JSF Programme Delayed, F-16 Replacement More Expensive
(Source: Dutch Court of Audit; issued March 24, 2011)
The government has postponed a decision on the procurement of a replacement for the F-16. A final decision has not yet been taken in favour of the Joint Strike Fighter (JSF). Preparations need to be made, however, for the arrival of the JSF. The Ministry of Defence believes the Joint Strike Fighter (JSF) is the best aircraft to replace the F-16 and the government intends to purchase a second JSF test aircraft in 2011.

It is uncertain whether and, if so, how many aircraft will be purchased in total. An appendix to the coalition agreement, however, states that there will be 'fewer'.

The government took steps in 2010 that further strengthened the case for the JSF. Postponement of the procurement decision and delays in the international JSF programme will have additional financial and operational consequences as the F-16 will have to be kept in operation for longer. The Ministry of Defence cannot yet indicate how much this will cost.

The government of the day decided in 1996 that the F-16 aircraft of the Royal Netherlands Air Force would have to be replaced. A procurement decision on the replacement aircraft has not yet been taken. The Ministry of Defence is working with a 'planning number' of 85 new military aircraft and informs the House of Representatives of cost developments in the international JSF Programme.

The multiannual budget the ministry has been using for the project has been revised on several occasions owing to the cost developments. The Netherlands does not have a fixed project budget for the new fighter aircraft.

Owing to delays in the international JSF programme and new cost increases in 2010, the Minister of Defence will again review the ambitions for the Dutch armed forces, partly in the light of the proposed public spending cuts. This will create an opportunity to make a clear choice for the replacement aircraft.

The Court of Audit reached this conclusion in its report published on 24 March 2011, Monitoring the replacement of the F-16 – situation in December 2010, including the develpoment of the Joint Strike Fighter. Commitmet to the JSF is increasing even though decisions have not yet been taken on which aircraft will replace the F-16, how much replacement of the F-16 may cost and how many aircraft will be purchased.

Provision of information to the House of Representatives

The Court of Audit has reported each year since 2005 on developments in this major procurement project of the Ministry of Defence. In the past, the Court of Audit had published a similar series of reports on the F-16. The Court's report of 24 March 2011 outlines the development in 2010 of both the international JSF programme and the Dutch F-16 Replacement programme, and considers the Minister of Defence's provision of information to the House of Representatives. The Court expresses its appreciation in the report for the minister's stated ambition of further improving the provision of information.

In December 2010, the minister increased the estimate for the acquisition of 85 JSFs to EUR 7.6 billion. The moment at which the Ministers of Defence and of Economic Affairs, Agriculture and Innovation submit their annual report on this project to the House of Representatives – in accordance with the agreements made with the House in the Large Projects regulation – does not agree with the moment at which the US defence ministry (the Pentagon) provides the Netherlands with the latest cost information on the JSF.

The Court of Audit recommends that these information flows be better coordinated with each other.

Maximum industry contribution in business case

The state has contributed $800 million to the cost of developing the JSF. Additional agreements were made in 2010 between the state of the Netherlands and the Dutch defence industry. The difference between participating in the development of this fighter aircraft produced by the US company Lockheed Martin or buying 'off the shelf' will not be fully compensated by the industry by means of payments to the state. The maximum contribution from industry will be EUR 105 million. Furthermore, the agreements include a 'reasonable and fair' clause, under which industry and the state can go back on the agreements in certain circumstances.

Response of the ministers

The Ministers of Defence, Finance and Economic Affairs, Agriculture and Innovation responded to the Court of Audit's findings. The Minister of Defence is preparing a policy letter with measures to make the armed forces future-proof and affordable. It will consider the operating costs for fighter aircraft and the consequences for the current F-16.

Click here to reach the download page for the report (84 pages in PDF format), on the Court of Audit website.


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