Costing the Jerc
Much has been made of the supposed premium Canada is going to be paying for 17 C-130J's to buttress our overworked and consequently close-to-crumbling tactical transport fleet. The spin doctors are out in force (read the comments to see some really lame sock-puppetry). The opposing politicians are braying. The journalists looking to manufacture controversy to sell papers are scribbling madly.
I asked a couple of different places for information on this, since conflicting numbers were flying around like mad. Mark has been all over this issue as well. Since a contract hasn't even been signed yet, the project costs are even more difficult to pin down. But here's what I was told - by a number of different people inside and outside of DND.
Firstly, the purchase price per airframe of the C-130J is going to end up around $70M USD. That works out to around $1.4B CDN for 17 tails.
Secondly, the $3.2B number bandied about is an estimated total project cost. It includes not only the purchase price of the actual aircraft, but a pile of ancillary costs as well - at least one of which is a big, fat, maybe. It includes infrastructure upgrades, such as necessary hangar improvements and the like. It includes three years worth of "delivery" costs such as maintenance, spare parts, training, et cetera - everything associated with operating the planes until the whole fleet is fully delivered and support is passed to DND's Weapons System Manager (WSM) at Full Operation Capability. It includes the salaries and project management costs of not only the DND staff devoted to it, but a cost associated with PWGSC's involvement (known as a "Revenue Dependency Charge"). It even includes an undisclosed amount automatically built in for contingency and escalation costs - a "just to make sure we err on the high side" cost, for crying out loud.
Those who want to complain about the pricing of this acquisition need to do a couple of things if they want to be taken seriously: if they're going to propose an alternative to the Jerc procurement, they need to cost it; and when they cost any alternative, they need to do it on an apples-to-apples basis. Anything less is unserious at best, misleading at worst.
I asked a couple of different places for information on this, since conflicting numbers were flying around like mad. Mark has been all over this issue as well. Since a contract hasn't even been signed yet, the project costs are even more difficult to pin down. But here's what I was told - by a number of different people inside and outside of DND.
Firstly, the purchase price per airframe of the C-130J is going to end up around $70M USD. That works out to around $1.4B CDN for 17 tails.
Secondly, the $3.2B number bandied about is an estimated total project cost. It includes not only the purchase price of the actual aircraft, but a pile of ancillary costs as well - at least one of which is a big, fat, maybe. It includes infrastructure upgrades, such as necessary hangar improvements and the like. It includes three years worth of "delivery" costs such as maintenance, spare parts, training, et cetera - everything associated with operating the planes until the whole fleet is fully delivered and support is passed to DND's Weapons System Manager (WSM) at Full Operation Capability. It includes the salaries and project management costs of not only the DND staff devoted to it, but a cost associated with PWGSC's involvement (known as a "Revenue Dependency Charge"). It even includes an undisclosed amount automatically built in for contingency and escalation costs - a "just to make sure we err on the high side" cost, for crying out loud.
Those who want to complain about the pricing of this acquisition need to do a couple of things if they want to be taken seriously: if they're going to propose an alternative to the Jerc procurement, they need to cost it; and when they cost any alternative, they need to do it on an apples-to-apples basis. Anything less is unserious at best, misleading at worst.
posted by Babbling Brooks at 12:38 p.m.
4 Comments:
Are you talking about the comments to this post?
It’s Gary here, responding to Babbling Brook’s post and some of his suggestions about myself and others who question him and Mark on the C-130J purchase. He labels us as “spin doctors” and if you follow his links you will see he raises questions about my motives. So here’s the other side of the story (which I guarantee Babbling Brooks and Mark don’t want out there):
1) Babbling Brooks questions who is paying my salary simply because I have challenged him and Mark on their unrelenting worship of the C-130J. In fact, Babbling Brooks has suggested than ALL OF US who are making posts that don’t praise the C-130J in glowing terms must be “spin doctors”. I’m retired from business so who pays my “salary” is the government of Canada (CPP which is small by the way) and RRSP revenue from some well placed investment. So much for your big conspiracy that I’m so puppet of the big corporations. I just have views that don’t jive with you and Mark, which seems to make you awfully upset doesn’t it? And just who pays the salaries of Mark and yourself while we’re at it?
2) Again on to another one of your conspiracy claims. You claim that since I’m now listed as “anonymous” I must be the same individual the others who have had less than complimentary things to say about the C-130J. Again, that is pure BS. I signed up with my name and email and put my profile available for this blog. I didn’t hide anything. Then in one stroke overnight night a whole lot of us became “anonymous.” I noticed among those people included Chris Henderson, a military public affairs officer who wrote on this blog about media relations. Why did this happen? You tell me Babbling Brooks! It’s your blog isn’t it or you at least control a large portion of it. The one thing I did notice is that most people who disagreed with you and Mark became “anonymous” overnight. How convenient for you two. The label undercuts our comments and then you get to claim we’re all the same person trying to say bad things your precious C-130J.
3) What gives with your revisionism in this posting on the price of the C-130J? Defense Minister Gordon O’Connor said in the Commons (and thus read into the official Hansard) that the cost of the C-130J for Canada WILL BE $80 million U.S. That’s direct from the minister of national defence, a guy who should know. Then you come along and claim its $70 million (U.S.). And to top it off, you crap on others, suggesting they got it wrong or are misleading people on the price. BUT IT’S YOU WHO HAS IT WRONG. My question is why? What is your agenda here? Why did you deliberately low-ball the price of the C-130J when the official government response is that it will cost $80 million U.S. per plane? Did your corporate masters at Lockheed Martin tell you to do so?
4) If you and Mark aren’t getting directly paid by Lockheed Martin you should be. You’re doing a great job for them promoting the C-130J and all Lockheed Martin products. I notice you’ve even put on Lockheed Martin stock prices on this blog. Maybe we can all get a few free brochures on how to invest in LM while you’re at it. Too bad you didn’t have the interests of the taxpayer and the CF at heart as you do your own corporate masters.
Gary: I too am retired and on a pension.
Aircraft prices are always negotiated with all sorts of factors--including a changing Canadian$ exchange rate. My latest post on C-130J costs was simply giving facts from AW&ST on the recent prices for the US.
Please provide one example of a post of mine "promoting" the LM F-35.
And since LM has some involvement with the C-27J, please explain the view I take in this post:
"Fixed-wing SAR replacement: Single-sourced?"
http://toyoufromfailinghands.blogspot.com/2007/01/fixed-wing-sar-replacement-single.html
As for "unrelenting worship of the C-130J"--it's hardly worship, it's just the only plane available for the job as far as I can see. As did the Liberal government in November 2005.
Get a life.
Mark
Ottawa
Babbling Brooks questions who is paying my salary simply because I have challenged him and Mark on their unrelenting worship of the C-130J.
No. I questioned who was paying your salary because you suggested that Lockheed Martin had us on its payroll. After my black-and-white denial of that - we don't receive one red cent of money, perqs, or other inducements for anything we write here - I figured turnabout was fair play. And to be honest, you've sounded a lot more like a shill for Airbus than we ever have for LM, IMO.
As far as who pays my salary, I've made no secret over the course of the past two and a half years of blogging at both The Torch and my own personal website Babbling Brooks that I'm a commercial insurance broker, and that blogging is nothing more than a hobby.
Then in one stroke overnight night a whole lot of us became “anonymous.”
If you didn't in fact change your own profile - and none of us here at the blog have the ability to do that for you - then I apologize for suggesting it. I didn't know anybody else could have done that, so I assumed it was you. Just to be perfectly clear, two of us at The Torch are "blog administrators" and can delete comments, but we can't change what's written, including the profile of the writer - that's a Google function. I've deleted comments that were simply trolling and comments that were spam - maybe half a dozen in almost a year. Other than that, agree or disagree with what we write, they stay up.
Why did you deliberately low-ball the price of the C-130J when the official government response is that it will cost $80 million U.S. per plane
The contract has yet to be signed. The MND, to be kind here, has put his foot in his mouth more than once in the HofC - go back to Dawn Black's questions regarding the Excalibur shells if you're looking for evidence of that - and he did it again in this case. I verified my figures both inside and outside of DND, and everybody I talked to gave the same ballpark. At the end of the day, when the ink dries on the signatures on a legal document, I may well be proven wrong. If that's the case, you'll see it in print on this site. But in the meantime, about $70M USD per tail is the number I'm hearing from multiple sources.
I notice you’ve even put on Lockheed Martin stock prices on this blog.
Really? I'm unaware of that. Care to provide a link to the offending post?
Gary, if you want to debate the relative merits of another option opposed to the C-130J, feel free. I'm not thrilled about the purchase, because I'm not thrilled that we don't have any realistic alternatives. That is to say, I support the C-130J procurement by default. If I'm wrong, go ahead and convince me why.
But to say Mark and I are shilling for Lockheed Martin is insulting bunk, and unsupportable to boot (you'll note that I'm calling for a full competition on the FWSAR replacement instead of "favouring" an ACAN for the C-27J). The slurs and insults just undermine the weight of your opinions here.
Post a Comment
<< Home