Wednesday, December 17, 2014

ANAO DMO major projects report has been released

The Australian National Audit Office (ANAO) has issued a report today on major projects for the Defence Material Organisation.

See the PDF at this link.

We will first look at the F-35 for Australia as it has some interesting information starting on page 177. Note that the ANAO is completely ignorant on combat capability and looks at all of this from a money-spent for widgets delivered approach.

The following will be some very crude numbers I have pulled from the report.

The first batch of 14 aircraft are put down for $2.751M. (Originally announced as $3.2B)This includes the airframe, engines and various initial costs.

The second batch of 58 shows in the report as $10.512M same contents as above.

Total batch cost per aircraft are as follows:

14 F-35s at $196M each and 58 F-35s at $181M each.

Of interest are the basic cost per airframe and motor for the first 2 F-35s that were rolled out recently.

It shows 2 F-35s and 3 engines (1 spare).

F-35 $134.35M each; engine $16.7M each. F-35 with airframe and engine: $151M

All this is of some interest since there are still so many risks with the program. That and the aircraft is likely to get shot down vs emerging (and some existing) Pacific Rim threats. That by itself should raise a red flag of why are we buying this?

You can add some various millions above mentioned in the ANAO report for the MOU contract itself and various other handling fees.

Page 185 has a risk chart. It is a joke considering all of the program risks. It should read high and to the right.

The ANAO report misses a lot. For an organisation that is so concerned over the green eye-shade aspect, they have overlooked on how Australia will pay to run this aircraft. ANAO admits that logistics is a big unknown but Australia will press ahead anyway? Would you want to know how much and aircraft costs to fly each year before buying it? Example, the Dutch figure each F-35 to cost $9.3M (USD) per year to sustain.

For Australia, 72 x $9.3 is $670M per year. So from the RAAF scheduled 2023 for full operating capability to 2043 that could be $13.3B (USD).

Comparative cost per flight hour:

Current legacy F-18 Hornet: $12,000.
Super Hornet: $23,000
F-35: $46,000~$58,000 (USD)

Other costs like engineering changes (the mistake-jet syndrome) are also a wild card. All in all, sustainment of the F-35 is high risk. It is locked in to one U.S. vendor and there won't be any competition. If a widget for the aircraft costs x3 one year and is raised to x5 the next year, Australia has no choice but to eat the cost. The true definition of the fox telling the farmer, the definition of a chicken.

The F-35 fan-club and other dilettantes will see the ANAO report as business-as-usual, manageable and something to move on with.

Hard to fathom when every F-35 we send out against a first-team threat is unlikely to return to base.


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“It’s about $37 million for the CTOL aircraft, which is the air force variant.”
- Colonel Dwyer Dennis, U.S. JSF Program Office brief to Australian journalists, 2002-

". . . US$40 million dollars . . "
-Senate Estimates/Media Air Commodore John Harvey, AM Angus Houston, Mr Mick Roche, USDM, 2003-

" . . US$45 million in 2002 dollars . ."
-JSCFADT/Senate Estimates, Air Commodore John Harvey, Mr Mick Roche, USDM, 2003/2004-

". . average unit recurring flyaway cost of the JSF will be around US$48 million, in 2002 dollars . . "
-Senate Estimates/Press Club Briefing, Air Commodore John Harvey, 2006

". . the JSF Price (for Australia) - US$55 million average for our aircraft . . in 2006 dollars . ."
-Senate Estimates/Media AVM John Harvey ACM Angus Houston, Nov. 2006-

“…DMO is budgeting around A$131 million in 2005 dollars as the unit procurement cost for the JSF. .”
-AVM John Harvey Briefing, Office of the Minister for Defence, May 2007-

“There are 108 different cost figures for the JSF that I am working with and each of them is correct”
-Dr Steve Gumley, CEO of the DMO, Sep./Oct. 2007-

“…I would be surprised if the JSF cost us anymore than A$75 million … in 2008 dollars at an exchange rate of 0.92”
-JSCFADT Dr Steve Gumley, CEO DMO, July 2008-

". . Dr Gumley's evidence on the cost of the JSF was for the average unit recurring flyaway cost for the Australian buy of 100 aircraft . ."
-JSCFADT/Media AVM John Harvey, Aug. 2008-

Confirmed previous advice i.e. A$75 million in 2008 dollars at an exchange rate of 0.92,
-JSCFADT Dr Steve Gumley, CEO of the DMO, Sep. 2009-

" ...about $77 million per copy."
-Robert Gates, U.S. Secretary of Defense, Feb. 2008.


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-Time's Battleland - 5 Part series on F-35 procurement - 2013 
-Summary of Air Power Australia F-35 points
-Bill Sweetman, Aviation Week and the F-35
-U.S. Government Accounting Office (GAO) F-35 reports
-F-35 JSF: Cold War Anachronism Without a Mission
-History of F-35 Production Cuts
-Looking at the three Japan contenders (maneuverability)
-How the Canadian DND misleads the public about the F-35
-Value of STOVL F-35B over-hyped
-Cuckoo in the nest--U.S. DOD DOT&E F-35 report is out
-6 Feb 2012 Letter from SASC to DOD boss Panetta questioning the decision to lift probation on the F-35B STOVL.
-USAFs F-35 procurement plan is not believable
-December 2011 Australia/Canada Brief
-F-35 Key Performance Perimeters (KPP) and Feb 2012 CRS report
-F-35 DOD Select Acquisition Report (SAR) FY2012
-Release of F-35 2012 test report card shows continued waste on a dud program
-Australian Defence answers serious F-35 project concerns with "so what?"
-Land of the Lost (production cut history update March 2013)
-Outgoing LM F-35 program boss admits to flawed weight assumptions (March 2013)
-A look at the F-35 program's astro-turfing
-F-35 and F-16 cost per flying hour
-Is this aircraft worth over $51B of USMC tac-air funding?
-Combat radius and altitude, A model
-F-35A, noise abatement and airfields and the USAF
-Deceptive marketing practice: F-35 blocks
-The concurrency fraud
-The dung beetle's "it's known" lie
-F-35's air-to-air ability limited
-F-35 Blocks--2006 and today
-The F-35B design is leaking fuel
-F-35 deliveries
-ADF's wacky F-35 assumptions
-Gauging performance, the 2008 F-35, Davis dream brief
-Aboriginal brought out as a prop
-Super Kendall's F-35 problem
-LM sales force in pre-Internet era
-History of F-35 engine problems
-Compare
-JSF hopes and dreams...early days of the Ponzi Scheme
-The Prognostics
-2002--Australia joins the F-35 program
-Congressional Research Service--Through to FY2013, F-35 has received $83.3B in funding
-F-35 choice gives Dutch a shocking high cost per flight hour

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