Secret Squirrel Examines Aircraft Cost Overruns.

Secret Squirrel looks at the recent F35 purchase costs, and ponders the ever increasing costs of an aircraft regarded as being barely sufficient to the needs of nations such as Australia,an aircraft many regard as inadequate yet one they are purchasing,having made the decision to,an aircraft whose costs have magically ballooned to twice the signed for costs.


THE Rudd government gave the green light to Australia's largest ever defence purchase, approving a buy of 14 F-35 joint strike fighters at a cost of $3.2 billion. What do we find, and di we find, after a year or two,that the price Zooms from $50 Mil Original Cost Per Aircraft to $80-95 Mil in 2002.

In 2003 the Current terms did not require foreign partners to pay for cost overruns, and the Pentagon has not asked its partners to cover any such,but as you know that ALWAYS changes when the Americans are involved.The other eight nations participating in the program - Australia, Canada, Denmark, Italy, the Netherlands, Norway, Turkey and the U.K. - aren't going to be happy about the cost increases either. I suspect some sweetheart deal will be made to make them less unhappy.

But the fact remains, that cost overruns,are always present in American programs,and anyone you're involved in, sweet deal, then, more cost added, of course, cost over run.America itself,what with maintanance figured in etc etc etc for THEIRS, is at a cost of over a trillion, about equal to Canada's GDP,and they claim it costs more than Australia's GDP,with respect to America's purchase and maintenance of it's purchase of this type of aircraft,albeit in much larger numbers,so no wonder America has huge unpayable debts....but does America worry, not really it just prints up more money to cover it, other
nations..........can't do that.Canada, which has agreed to buy 65 planes at an official program cost of $14.7 billion,($20 billion on 72 F-35.)the cost over the next 30 years would be $29.3 billion twice the official estimate of $14.7 billion. The F-35 does not have the stealth, power (supercruise ability), or range to engage SU-30 as a fighter aircraft,Su-30 out performs it but the F-35 has a larger weapons load, 42 aircraft being procured by Indonesia, By August 2010,they cost $4.3 billion or $102 million each,far less than the F35.Now, not to argue who's getting a better deal in a superior aircraft, we do see substantial savings in the Soviet aircraft, as a final cost.

So we do have to consider that Australia would have been much better off in the first place buying from the Soviets,at enormous savings, not withstanding the American cost overruns, but we do have to look on America with great suspicion with respect to stated purchase,sale ,cost of the aircraft.A cost overrun, also known as a cost increase or budget overrun, is an unexpected cost incurred in excess of a budgeted amount due to an under-estimation of the actual cost during budgeting. Cost overrun should be distinguished from cost escalation, which is used to express an anticipated growth in a budgeted cost due to factors such as inflation.So cost overrun is common in infrastructure, building, and technology projects,it is profitable, and increases profitability,in short, it is an influencable form of profit fraud,contract fraud,as all nations let the developing nation off the hook as it were,over the initial signed and price stated contract,final cost contract,or a stated, final cost.

However, in all such cases, there is no binding litigations with respect to final cost, no abilities for lawsuit, utterly no abilities to hold anyone, to the stated contract cost.However all round we must consider that a cost overrun results in increased final costs, and in all cases at levels at least twice those of stated contracts,and we really do have to recommend and consider that it would be better for Austrailia, as one nation,or perhaps any other nation, not purchase a selected aircraft until the final cost emerges, and so consider purchase at a final off the shelf cost, and then knowingly,regardless, not have a crippled aircraft, but a fully developed and working one,purchased at a clearly stated and final cost.