Thursday, March 10, 2011

F-35 purchase could cost double: reports

F-35 purchase could cost double: reports | Canada | News | Edmonton Sun

The Parliamentary Budget Office is expected to release a report on the purchase of the planes Thursday.

In it, it is reportedly estimated each F-35 could cost $149 million plus $450 million in service costs over 30 years.

The government, though, has maintained the costs of $70 to $75 million per aircraft and $200 million for 20 years of service were firm.

Just a thought...

Of COURSE it's going to cost more if you use different assumptions.

The original assumptions were for the current purchase price plus maintenance for 20 years. Twenty years, I assume, is the reasonable useful life of a fighter jet. Now I don't know where the Parliamentary Budget Office is getting their figures, but assuming the purchase price figures are accurate, the contract would come out to $21 Billion over 20 years, not $29.3 Billion.

The real disparity in numbers is that the PBO seems to be including the refurbishment costs to extend the useful life of the jets to 30 years, and in a case like that, then OF COURSE your contract is going to have a heinous cost overrun. The planes aren't designed to run for 30 years under normal maintenance. Technology changes. Technology advances. It costs almost as much to refurbish a 20 year old plane to use new technologies as it does to purchase a new plane. Not only that, the fuselage has undergone 20 years of stress which would make the refurbished plane less capable than a new counterpart.

At the end of the day, the PBO is trying to add 10 years and make the contract look worse than some people think it is. None of it really casts doubt on the governments numbers unless the PBO actually recalculates THEIR numbers based on a 20 year timeframe rather than their 30 year timeframe.

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