] As a purchaser of the JSF, the Netherlands pays a price both for the aircraft and for all the related parts and equipment. Because both the aircraft and the equipment have long useful lives, the costs associated with their acquisition are referred to as investment costs.
The purchase price of the aircraft accounts only for part of the total investment costs, which also include a large number of other essential items such as equipment, spare parts, training materials and tools, plus adjustments to the infrastructure and the cost of the operational test phase.
The arrangement made in the financial framework is that the total investment costs may not exceed €4.5 billion. This upper limit is index-linked, which means that it is adjusted every year in line with inflation so as to keep pace with current prices.
The investment costs budget includes a 10% contingency reserve that is not available for spending.
Transfer of funds
It became clear in 2013 that, while the annual budget for operating costs would not be sufficient to pay for 37 aircraft, there was nonetheless a large surplus on the budget for investment costs. For this reason, the government decided to transfer part of the investment costs budget, viz. a figure of €270 million, to the annual budget for operating costs. This represents an annual increase of €9 million in the budget for operating costs over a 30-year period (based on 2013 prices).
Breakdown of JSF investment costs in 2016
The chart shows, very broadly speaking, the nature of the costs involved in buying the JSF and their relative shares of the aggregate investment costs (please note that the chart only provides an indication of the costs and that no exact figures are given).
The Minister of Defence includes the latest cost estimates in the regular progress reports on the replacement of the F-16 and the acquisition of the JSF. The progress reports also state the amounts actually paid in practice, which may be either higher or lower than the estimates.