Dutch Signing on to Multinational F-35 Testing?
Back in 2006, when it was time for partner nations to sign on to the F-35 Joint Strike Fighter’s production definition phase, the Dutch came aboard relatively early. That appears to be true again. A Dutch MvD leap year release indicates that they will participate in the multinational Initial Operational Test & Evaluation (IOT&E) Phase of the JSF program, rather than conducting this phase on their own. IOT&E will be used to validate the F-35A’s capabilities, while testing and refining both operational tactics & employment concepts, and ensuring smooth integration of the aircraft into the Dutch Air Force in time for the scheduled Initial Operational Capability (IOC) in 2016.
The first test aircraft is scheduled for a decision before May 31/08, with down-payment of 10% of the aircraft’s costs for long-lead items. A Cabinet decision will follow in 2009 re: both test aircraft, with a second aircraft arriving that year if the decision is positive. Otherwise, the long-lead items et. al. will be sold to other operators.
The decisions seem straightforward enough, but they have become very contentious.
The multinational IOT&E phase will pool 24 aircraft in total (10 F-35A, 8 F-35B, 6 F-35C), and will run from 2011 or 2012 to 2014. The estimated cost for the Dutch will be about EUR 274.6 million, plus EUR 16.1 million in operating costs over this time frame. In contrast, a national program was estimated at close to EUR 500 million, with IOC in 2018 at the earliest, and would require leased space in another country anyway due to space restrictions at home.
The full acquisition program will be postponed, however, because of changes to timing and numbers on the American side. These would have forced the Dutch to buy earlier in overall production, which can raise costs sharply. One option being discussed is called “Level Line Pricing,” in which partnering countries agree on a common price over multiple production blocks. This makes prices more stable, but costs more for those planning to buy later in the level-line period. At present, the Netherlands expects their final F-35A delivery to take place in 2023, with a total budget of EUR 5.667 billion instead of EUR 5.465 billion for their 85 aircraft.
Key Events & Updates
March 12/09: Lockheed Martin Aeronautics Co. in Fort Worth, TX receives an estimated $265 million advance acquisition contract for long lead materials and effort associated with the Lot V JSF Low Rate Initial Production (LRIP) buy. This contract also provides associated ancillary mission equipment, sustainment support, special tooling/special test equipment and technical/ financial data. Parts will be purchased for
- 12 US Air Force F-35As
- 1 F-35A for Tier 2 partner the Netherlands.
- 14 US Marine Corps F-35B STOVL(Short Take-off and Vertical Landing)
- 1 US Navy F-35C
Work will be performed in Fort Worth, TX (35%); El Segundo, CA (25%); Warton, UK (20%); Orlando, FL (10%); Nashua, NH (5%); and Baltimore, MD (5%), and is expected to be complete in January 2010. This contract was not competitively procured (N00019-09-C-0010).
Dec 18/08: Tier 2 Joint Strike Fighter partner The Netherlands issues a comparative study of the F-16 Block 60+, JAS-39MG Gripen, and F-35A, which has been compiled in cooperation with several organization, and audited by 2 ministries and RAND Europe. Unsurprisingly, it recommends the F-35 as the best combat aircraft. Surprisingly, it also concludes that the F-35 also has the lowest capital costs, and the lowest anticipated life-cycle costs. The issue will now go before Parliament.
Nov 27/08: In a new letter to Parliament, the Dutch Secretary of Defense says that the Netherlands will delay making a decision concerning the first F-35 IOT&E (Initial Operational Test and Evaluation) test aircraft by 3 months, to the end of April 2009. The country is already committed to long-lead procurement items worth a maximum of 10% or $14 million, and they will have to pay an additional $12.5 million as a financial guarantee to cover the parts being produced while they wait. See also Nov 20/08 and Nov 4/08 entries.
These parts might be resold for some money, if the Dutch decide to decline the LRIP Lot III F-35A test aircraft, but Secretary de Vries’ letter [PDF, in Dutch] adds that finalization costs (beëindigingskosten) could also drive up the cost of a decision to decline. If the Netherlands doesn’t buy its first test aircraft, then LRIP-3 lot production goes from 17 to 16. That would raise the average price tag for other partnering countries, as fixed costs are spread over fewer aircraft. The Netherlands might end up paying some compensation, unless another partner country steps up to buy that aircraft.
JSFnieuws.nl adds [in Dutch] that this works both ways, noting that the Netherlands would also have to pay more for its own plane if the British or the USA postpone or cancel aircraft buys during LRIP Lot III; the USA, for instance, has already removed 2 aircraft from that lot. Indeed, the Dutch will already be paying quite a bit more than expected, unless some form of production cost averaging agreement is signed soon; in 2006, the plan for LRIP Lot III was 49 aircraft, which would have pushed the production curve down and lowered costs.
Nov 20/08: The Dutch daily ‘Trouw’ reports that 2 of the 3 parties in the Dutch government coalition want the decision on an IOT&E aircraft purchase to be delayed by 3 months. While the CDA party stuck to its end of February time frame, the PvDA and CU want to allow more time to compare it with Saab’s JAS-39NG, adding that the F-35 program’s test phase finish has been delayed, by 4 months, from November 2012 to February 2013.
Nov 4/08: The Dutch government releases 2 documents. One is the ‘decisions report’ from the Defense Committee [PDF, Dutch]; Agenda item #9 mentions that Secretary of Defense De Vries has sent the second document, a letter to the chamber with further information on the F-35 IOT&E phase. Additional questions to be filed by Nov 10/08, replies by Nov 17/08.
That letter explains that the F-35 IOT&E has been delayed from November 2012 to February 2013, ending in the first half of 2014. The timetable for buying these aircraft was set in the signed Production MoU; it is by the end of February annually. In schedule terms, the decision has to be made by the end of February 2009 for the first Dutch IOT&E JSF to be delivered in November 2011, and in February 2010 for the 2nd IOT&E aircraft for deliver in Q1 2012. Based on this delivery schedule the Dutch pilots and crews will be fully trained for the IOT&E in 2013. The Dutch site JSF Nieuws disputes this timeline, stating that it would be possible to acquire 2 LRIP Lot IV aircraft in 2010 instead, if that was required.
De Vries’ letter adds that the USA is willing to accept a 3-month IOT&E contract postponement, so long as the Dutch offer a financial guarantee (refundable option fee, really) for part of the aircraft’s cost, on terms that remain undetermined. De Vries recommends pulling the Parliamentary motions to wait for the results of the ‘candidates evaluation’ (F-35A vs. JAS-39NG), while he obtains more information from the US government concerning the IOT&E refundable option fee proposition and associated timeline issues. MvD release | De Vries Letter [PDF, Duch] | JSF Niews: “Kamerdebat : Wanneer start de IOT&E fase van de JSF?“.
Nov 4/08: The Netherlands was scheduled to hold an important Parliamentary vote today re: participation in the F-35 test program. Many opposition parties want a delay in buying any planes until there is more clarity re: F-35A performance, cost, and relative performance vs. the JAS-39 Gripen – and so does the CU within the governing coalition.
The vote was expected to be very close, but Motion 26 488 nr 116 [PDF, Dutch] is stamped AANG (Aangehouden, means ‘detained’ or postponed’), per the Secretary of Defense’s recommendation. The decision will now have to take place some time before the end of February 2009.