The decision to purchase the JSF

The Minister of Defence outlined the future of the Dutch armed forces in a policy document entitled In the Interests of the Netherlands.

This document was produced in response to the coalition agreement signed in October 2012, in which the various parties forming the government agreed to formulate a long-term plan for the armed forces that would be based on the available budget. The problem was that the original plans for the replacement of the F-16 had not proved to be financially viable within the confines of the current budget. This was one of the findings of our audit of the cost of withdrawing from the JSF project (Joint Strike Fighter exit costs). The audit showed that the alternative options would have such far-reaching implications for the armed forces as a whole that the first necessary step would be to formulate a long-term strategy for the armed forces. The government subsequently presented this strategy in the policy document entitled In the Interests of the Netherlands.

Long-term operational capability and financial sustainability

The policy document entitled In the Interests of the Netherlands assumes that the government’s aim is to couple long-term operational capability with financial sustainability. The policy document cites a large number of measures affecting the armed forces, including investments in defence materiel. It also contains an announcement by the Minister of Defence of the government’s decision to replace the Dutch fleet of F-16s with 37 JSFs.

Arguments

Writing in the policy document, the Minister of Defence gave the following reasons as underpinning the decision to buy the JSF: she analysed both the investment costs and the operating costs of the 27 largest weapons systems used by the armed forces, together with a 28th group covering the remaining weapon systems, looking both five years in the past and 30 years into the future. The information on each individual weapon systems consisted of the following five aspects:

1. investment costs;
2. operating costs (including both parts and personnel);
3. the cost over the entire life cycle (presented for five years in the past and 15 years in the future);
4. the level of cost as part of aggregate defence spending;
5. the level of cost as compared with the operational ambitions.

The investment costs and the operating costs of the JSF were included in this analysis.

Validation of the policy document entitled In the Interests of the Netherlands

The Minister of Finance asked us to validate (i.e. audit) the policy document entitled In the Interests of the Netherlands. We concluded that, based on the five aspects outlined above, the financial arguments underpinning the policy document were sound. At the same time, we felt that the Minister needed to ensure that the information required for the financial underpinning was easier to extract from the Ministry’s financial systems. These systems had not been designed with this in mind.

We also concluded that the financial arguments underpinning the decision to order 37 JSFs were sound, albeit that a number of the agreements outlined in the policy document might not be tenable in the long term.

We also examined the minister’s claim that 37 JSFs would be sufficient to enable the air force to perform all its various duties. We did not share the Minister’s confidence.