What does a weapons program really cost?

Article published on Nov. 2, 2015
Article published on Nov. 2, 2015

This article has not been vetted by an editor at Paris HQ

In the midst of the economic crisis, the armament debate revolves heavily around spending. Budget is frequently the subject of conversation that governments throughout the world are struggling to justify. Faced with costs that can vary from moderate to expensive, public opinion is often wary. Worse still, this uncertainty leaves the field open to all hypotheses, even the most outlandish.

Why then is it so difficult to estimate the overall cost of a weapons program? These programs involve special parameters that are difficult to control because the costs that vary at multiple levels are taken into account. Here are some explanations.

Ask for the Bill

« Too big to fail ». The F-35 program has encountered severe turbulence and the price of the aircraft, destined to become the figurehead of American aviation, has continued to soar. This is cause by complex design and production costs. "It gets worse. These are just the production costs. Additional expenses for research, development, test and evaluation are not included," reflects Winslow Wheeler, a member of the Project On Government Oversight. This highlights an important aspect in the calculation of a weapons program and is often underestimated. Indeed, the total cost of a weapons program must take into account the cost of purchasing it, but also the R&D necessary to its development. This demonstrates a strong capacity for anticipation. Armament programs takes a long time to design and produce, which significantly increases the financial uncertainties. And the program will not have the same price as the R&D that was funded from existing funds by the manufacturer or by the program partners (the U.S. in this case). In addition, one must take into account that the testing phase prototypes are expensive.

The F-35 program exemplifies the case where the race for technology has transformed gradually into a financial abyss, swallowing public funds (a total of a trillion dollars). The program’s errors that increase the bill come mostly from countries that had been seduced by the new U.S. combat equipment. Indeed, costs have more than doubled and delivery has soared (nearly ten years late), prompting some partner countries and future stealth aircraft customers to review their armament strategy. This is the case for Australia, which has expressed doubts regarding the program, as well as Denmark, which wishes to renew some of its facilities, in particular, the nation wants to replace its outdated F-16. And the urge to have immediate combat-ready aircrafts (not by 2020) led Denmark to explore alongside Boeing and its F / A-18 Super Hornet. This combat-proven model is indeed proven, which gives it an added advantage.

Combat-proven topics

Governments are increasingly sensitive to arguments around confirmation of the endurance, versatility and high performance of equipment during operations. This equipment, already "tested and approved," has the merit of providing an accurate perspective on maintenance costs when in practice (ammunition, fuel, etc.). This approach creates a better appreciation for the overall cost of the weapons program. During the economic crisis, armament budgets completely evaporated, especially in Europe. With more space for experimental weapons or gadgets, it’s time for versatile equipment, adapted to changing threats in the midst of economic gloom. More than ever, armies invest in reliability and opportunities to share costs between other armies, especially when it comes to maintenance and repair.

Far from the tumultuous Ground Combat Vehicle Program (USA), or Close Combat Vehicle in Canada, Germany and the Netherlands, they have successfully deployed the Boxer program in Afghanistan. Similarly, the Finnish AMV from Patria and the French VBCI from Nexter Systems also made an impression in operations since then, especially in Mali for the last one. A major difference with oversized programs, with exponential costs, and perhaps sufficient reasons to opt for "Best value for money." On the contrary, Denmark has recently made the decision to replace two major pieces of equipment: the F-16 and the M113. Lockheed Martin F-35 is supposed to take over the first one and GDLS Piranha 5 had recently been chosen to replace the last one. In both case, those choices are surprising, considering the lack of information available on those new equipment. Not only are they not combat-proven, but their real cost remains unknown. But this type of purchase also means taking politics into consideration, more so than usual.

The political-industrial cost

Beyond the most cost-effective, governments must also consider another factor in a weapons program. In fact, these programs have a "political cost" and a significant industrial cost. It is necessary therefore to negotiate for the best ‘compensation’ or accommodation towards the buyer. In Denmark’s case, defense minister Nicolai Wammen was clear: "all candidates will be Informed of the same: If there will not be jobs coming to Denmark, then we will not be buying planes from them," he said with regard to the renewal of the fleet of the royal air force. The nation foresees that it will invest 30 billion in new combat aircrafts and the strategy is also to provide jobs in the country. Boeing has established several partnerships with Danish companies, including Danish Aerotech, Falck Schmidt Defence Systems, Terma, among others.

Denmark’s recent choice, Piranha V, comes with the risk that most of the production line may not benefit the Danes, as General Dynamics European Land Systems (GDELS) is known to produce the parts of its vehicles outside of the investor country, even the simplest parts (supposedly for technological reasons). Their first experience in the UK (FRES-SV program in 2008) wasn’t successful because of that reason. Denmark is therefore taking a risk to see the final price of the Piranha drastically surpass the original bill.

If domestic supply would not be sufficient to fulfill the defense requirements, a contract with a foreign country now assumes a positive impact on the national economy. This calculation is based on a pragmatic strategy and allows citizens to concretely understand the implications of a weapons program. One way to alleviate some of the (necessary) secrecy surrounding these high-flying negotiations.