Canberra Contract Costs, Armament Clarified

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Spanish LHD Mockup(click to view full) DID’s recent coverage of Australia’s Canberra Class LHD project wondered about the overall contract’s cost differences between Navantia’s EUR 1.412 billion (A$2.2 billion) and the government’s A$ 3.1 billion. A chat with the Australian DoD has provided us with some answers, as well as some additional insights into the ship’s defensive systems and armament. The short answer is: both figures were correct. The Australian Government had initially budgeted about A$2 billion, and the contract signed with Navantia was indeed for the figures claimed. When the Australian government moved to calculate the final program cost, however, they also looked at inflation from 2007-2015. Within that period, forecasts were made regarding inflation and materials costs in several locales: Spanish labor rate indices and costs, US inflation projections, relative currency projections, and Australian inflation indices for the 23% “Australianization” work. Putting them together yielded a sort of “basket” of projected inflation tables for the project as a whole, which was used to estimate actual dollar costs. On top of that, Australian planners added project management costs, project contingency funds for required infrastructure improvements to ports and berthings, etc. to arrive at the likely “actual dollar costs” over […]

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