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Sticker Shock:Estimating the Real Cost of Modern Fighter
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<blockquote data-quote="SuperEtendard" data-source="post: 165254" data-attributes="member: 128"><p>PARTE 7</p><p></p><p>2. Saab-BAE Systems JAS-39 GRIPEN</p><p>Program Unit Cost : $ 76.07 million</p><p>Unit Procurement Cost: $ 68.90 million ($55.1 million excluding VAT)</p><p>Manufacturer’s comment:</p><p>Gripen International AB says “the fly-away cost of a Gripen in the market is between $35 million</p><p>and $40 million.”</p><p>Background to cost data and sources:</p><p>- Gripen is now in advanced production, and the only available program cost estimates, including a</p><p>1996 Court of Audit report, are outdated, while the Swedish Parliament has not publicly debated</p><p>the program’s cost for several years. Consequently, another approach was needed. This</p><p>demonstrated the limits of Sweden’s much-vaunted transparency in government affairs.</p><p>Estimating Gripen costs:</p><p>(a) The Swedish defence material agency, FMV, says the total cost of the Gripen program between</p><p>1982 and 2009 is 99 billion Swedish krona (worth $ 13.54 billion at current exchange rates),</p><p>including weapons and simulators but excluding Value-Added Tax, for 204 aircraft.</p><p>We converted this 99 billion krona figure to 2006 prices based on the 14% increase in Sweden’s</p><p>Consumer Price Index between 1994, the program’s mid-point, and 2006. (CPI Index increased</p><p>from 245 points in January 1994 to 279 points in January 2006, see Swedish Statistics agency,</p><p><a href="http://www.scb.se/templates/tableOrChart____33848.asp" target="_blank">http://www.scb.se/templates/tableOrChart____33848.asp</a>)</p><p>This brings the program’s estimated total cost to 112.8 billion krona at 2006 prices.</p><p>We then deducted the cost of simulators and weapons by applying a 20% discount to the 112.8</p><p>billion krona program cost, and added 25% value-added tax.</p><p>The resulting Program Unit Cost is $ 76.07 million per aircraft.</p><p>(b) Both FMV and the office of the Swedish Minister of Defence declined to provide the value of the</p><p>latest Gripen production contract (awarded in June 1997), covering the 64 aircraft of Batch 3,</p><p>claiming commercial confidence.</p><p>Consequently, we extrapolated Gripen’s Unit Acquisition Price from the Swedish offer to Poland</p><p>(November 2002), which was made public at the time and remains the most recent price figure</p><p>available.</p><p>This offer was worth 3,150 million euros ($ 3,780 million) for 48 aircraft, from which we deducted</p><p>30% for the cost of spare parts and support equipment, and added 25% value-added tax to bring it</p><p>in line with our tax-inclusive benchmark.</p><p>The resulting estimate of Gripen’s Unit Procurement Cost is $68.9 million.</p></blockquote><p></p>
[QUOTE="SuperEtendard, post: 165254, member: 128"] PARTE 7 2. Saab-BAE Systems JAS-39 GRIPEN Program Unit Cost : $ 76.07 million Unit Procurement Cost: $ 68.90 million ($55.1 million excluding VAT) Manufacturer’s comment: Gripen International AB says “the fly-away cost of a Gripen in the market is between $35 million and $40 million.” Background to cost data and sources: - Gripen is now in advanced production, and the only available program cost estimates, including a 1996 Court of Audit report, are outdated, while the Swedish Parliament has not publicly debated the program’s cost for several years. Consequently, another approach was needed. This demonstrated the limits of Sweden’s much-vaunted transparency in government affairs. Estimating Gripen costs: (a) The Swedish defence material agency, FMV, says the total cost of the Gripen program between 1982 and 2009 is 99 billion Swedish krona (worth $ 13.54 billion at current exchange rates), including weapons and simulators but excluding Value-Added Tax, for 204 aircraft. We converted this 99 billion krona figure to 2006 prices based on the 14% increase in Sweden’s Consumer Price Index between 1994, the program’s mid-point, and 2006. (CPI Index increased from 245 points in January 1994 to 279 points in January 2006, see Swedish Statistics agency, [url]http://www.scb.se/templates/tableOrChart____33848.asp[/url]) This brings the program’s estimated total cost to 112.8 billion krona at 2006 prices. We then deducted the cost of simulators and weapons by applying a 20% discount to the 112.8 billion krona program cost, and added 25% value-added tax. The resulting Program Unit Cost is $ 76.07 million per aircraft. (b) Both FMV and the office of the Swedish Minister of Defence declined to provide the value of the latest Gripen production contract (awarded in June 1997), covering the 64 aircraft of Batch 3, claiming commercial confidence. Consequently, we extrapolated Gripen’s Unit Acquisition Price from the Swedish offer to Poland (November 2002), which was made public at the time and remains the most recent price figure available. This offer was worth 3,150 million euros ($ 3,780 million) for 48 aircraft, from which we deducted 30% for the cost of spare parts and support equipment, and added 25% value-added tax to bring it in line with our tax-inclusive benchmark. The resulting estimate of Gripen’s Unit Procurement Cost is $68.9 million. [/QUOTE]
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