Cofinancing agreement between the Dutch state and Dutch aerospace companies
As a partner in the JSF programme, the Dutch state invests in the development and production of the JSF. Although these investments involve a higher level of expenditure than would be incurred in buying an existing aircraft, they also generate orders and jobs for Dutch aerospace companies. This was why the Dutch government signed a cofinancing agreement with the Dutch aerospace industry. Under the terms of the agreement, aerospace companies are obliged to remit a certain percentage of their turnover to the Dutch state. This covers part of the extra cost.
It costs more to take part in the development of the JSF than it would to buy the aircraft off the shelf after it had been developed by other countries. But how much more? The difference in cost was calculated both in 2002 and again in 2010, in the wake of a court judgment. The conclusion was that the Dutch state incurred an extra cost of €157 million as a result of its role in the development of the JSF. Despite this, the Dutch government nonetheless decided in 2002 to take part in the development of the aircraft. One of the reasons for doing so was that this would generate certain benefits for the Dutch aerospace industry. Because Dutch aerospace companies benefit from the country’s role in the JSF programme, the government felt that it was reasonable for them to make up the difference in cost.
The arrangements were laid down in 2002 in the form of a cofinancing agreement between the Dutch state and Dutch aerospace companies. Under the terms of the agreement, the companies in question are obliged, each year during the period from 2002 to 2052, to remit to the Dutch state a certain percentage of the turnover they earn from JSF-related contracts. The section entitled Remittances contains more information on these remittances and how they are calculated.
Who pays what?
The aggregate extra cost resulting from the Dutch role in the development of the JSF has been calculated at €157 million. The Ministry of Defence and the Ministry of Economic Affairs and Climate Policy each contribute €26 million towards this extra cost, i.e. €52 million in total. The aerospace industry is responsible for the remainder, i.e. €105 million.
Dutch aerospace companies are required to pay the Dutch state remittances for turnover earned from JSF-related contracts. In return, the state does its best to ensure that they are awarded such contracts. The Dutch government appointed a ‘Special Representative’ for this purpose in December 2013.
A total of 44 companies signed the cofinancing agreement on 7 June 2002. There have been a number of further signatories since then – all businesses that are keen to secure JSF-related contracts. A number of companies have been removed from the list, as a result of going into administration, for example, or following a merger with another company. The progress reports on the replacement of the F-16 and the acquisition of the JSF record the number of signatories (of whom there were 84 at the end of 2015).
There are also companies – known as ‘free riders’ – that work on JSF-related orders without actually having signed up to the cofinancing agreement. While these companies are not required to pay any remittances to the state, they do not benefit from the Special Representative’s promotional activities.