Procurement: Dutch Treat For the F-35


October 3, 2013: The Netherlands recently agreed to buy 37 of the new American F-35 fighter-bombers, and possibly more if money became available. Originally the Dutch were going to buy 85 but the escalating cost of the F-35 forced them to reconsider. Some Dutch leaders wanted to stick with the F-16 and upgrade it or consider another new fighter (Gripen, Eurofighter, or F-18E). Some of the other original F-35 customers (like Canada and Denmark) have begun looking at alternatives again. Other nations have also reduced the number they plan to buy. Currently 65 F-35s have been built, including one for the Dutch. The U.S. Department of Defense responded with promises to keep costs under control and presented data showing that design and production changes made it likely that the F-35s would be cheaper than the current price of $85 million each.

The increasing costs of the new U.S. F-35 fighter have been scaring off foreign buyers for years. The Netherlands was quite vocal in expressing doubts about the cost and effectiveness of the F-35 versus their current jet fighters (F-16s). The Dutch had already agreed to buy two F-35s for evaluation but were alarmed at the fact that the F-35 cost 60 percent more (than the F-16, per flight hour) to operate. For many European nations, with static or shrinking defense budgets and growing demands to help with peacekeeping operations, more expensive (to buy and operate) jet fighters just don’t fit in. The U.S. manufacturer of the F-35 is scrambling to responds to these concerns, with mixed success. 

Initially the F-35 operating costs were supposed to be the same or lower than other fighters (like the F-16, F-15, or F-18). But then it was noted that F-35 operating costs were creeping upwards. In 2011, after months of contentious disagreement, the U.S. Air Force came around to agreeing with U.S. Navy claims that the F-35 will cost much more to maintain, rather than (as the F-35 promoters assert) less. The navy, after nervously watching the manufacturing costs of the new F-35C and F-35B carrier aircraft increase, concluded that these aircraft would also be a lot more expensive to maintain. It comes down to this. Currently it costs the navy, on average, $19,000 an hour to operate its AV-8 vertical takeoff or F-18C fighter aircraft. The navy calculated that it would cost 63 percent more to operate the F-35C (which will replace the F-18C) and the F-35B (which will replace the AV-8). These costs include buying the aircraft, training and maintaining the pilots, the aircraft, and purchasing expendable items (fuel, spare parts, munitions). The navy concluded that maintenance alone would be about a third more.

The differences between air force and navy cost estimates came down to different methods of doing maintenance and calculating costs. The two services have, over the decades, developed different ways to use civilian maintenance services and stockpiling spare parts. Most navy warplanes operate from carriers, which is more difficult and expensive than from a land base. In effect, the navy was forced to become more efficient in order to afford operating expensive warplanes at all. But now the air force and navy have resolved a lot of these differences and agreed that the costs of the "cheaper" F-35 are actually higher.

There were also disputes within the American armed forces over how much each new F-35 fighter would cost. The air force insisted it was $65 million each, while the Department of Defense pointed out that when all costs are included it will be more like $111 million each. Another number being debated is how many F-35s will actually be produced. The air force assumes 3,162, but the Department of Defense is not so sure that many will eventually be built. Total development cost is now put at $65 billion, which comes to over $20 million per aircraft if 3,100 are built. Development costs for the new U.S. F-35 fighter-bomber has grown by more than a third over the last few years. The additional development costs are accompanied by additional delays. Current estimates are that the F-35 will enter service in another 3-4 years. The Department of Defense believes production and development costs will continue to rise and that the number to be built will decline. Both trends increase the average aircraft cost. Based on past experience, the higher Department of Defense estimates are more likely to be accurate.

Like the F-22, which had production capped at less than 200 aircraft, the capabilities, as superior as they are, may not justify the much higher costs. The F-35, at least for the navy, is headed in the same direction. The navy can go ahead with the more recent F-18E and keep refurbishing, or even building, the AV-8. The navy recently examined the possibility of buying fewer F-35s, in the long run, and replacing them with combat UAVs, like the X-47B. Politics, and lobbying by the F-35 manufacturer, will probably keep the F-35 headed for fleet service, no matter what the cost.

The 31 ton F-35 is armed with an internal 25mm cannon and 4 internal air-to-air missiles (or 2 missiles and 2 smart bombs) plus 4 external smart bombs and 2 missiles. All sensors are carried internally and max weapon load is 6.8 tons. The aircraft is very stealthy when just carrying internal weapons.

Like the F-22 fighter, the F-35 is stealthy and is stuffed with a lot of new technology. Most (about 60 percent) of the F-35s built will be used by foreign nations. The rising cost of the F-35 brings with it reluctance to buy as many aircraft as currently planned. The success of smart bombs in Iraq and Afghanistan has also made it clear that fewer aircraft will be needed in the future. In any event, it's likely that F-35s will end up costing more than $100 million each.





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