Transition costs

Investments still need to be made in the F-16

The Ministry of Defence assumes that the F-16 will have to remain operational until 2023, the year by which all 37 JSFs ordered by the Netherlands will have been delivered. This means that investments will still need to be made in the F-16. The Ministry of Defence has been working on three projects since 2012 the aim of which is to ensure that the F-16 remains serviceable over a relatively long period of time:

• A project known as ‘Sustainment’ is intended to ensure that the fleet of F-16s remains in good technical condition. This involves, for example, performing major repairs and maintenance work on the engines and replacing components.
• The Operational Self-Defence Project is designed to ensure that the F-16s remain operationally deployable, by improving their standard of self-defence against modern weaponry.
• The Flight Safety and Airworthiness Project involves fitting the F-16s with new computers and software, so that they meet the latest (mandatory) standards of communication.

Writing in the policy document entitled In the Interests of the Netherlands, the Minister of Defence estimated that it would cost €177 million (in 2013 prices) to keep the F-16s operational for longer than originally planned.

No information available on operating costs of the F-16 until 2013

Until fairly recently, the Ministry of Defence was not able to say exactly how much it cost to operate the F-16s. This was because the Ministry’s accounts were not designed to record the costs of individual weapon systems. The government made clear, in the policy document entitled In the Interests of the Netherlands that the number of JSFs the Netherlands would be able to order was dependent on the operating costs budget for the F-16, which was normative in this respect. It was for this reason that the Ministry manually ‘reconstructed’ the operating costs of the F-16 from its accounts. The accounts for the year 2012 indicated that the annual cost was €270 million (i.e. in 2012 prices). This figure includes the cost of the air force bases in Volkel and Leeuwarden.

The Minister of Defence also made clear at the same time (i.e. in the policy document entitled In the Interests of the Netherlands) that action would be taken to provide more information on the operating costs of each weapon system in future.

Longer period of operation results in higher operating costs for the F-16s

Our audit report entitled Joint Strike Fighter exit costs (2012) showed that the operating costs of the F-16s would rise sharply as from the middle of 2015. The Ministry of Defence claimed that there would be an annual rise of €2 million in the additional costs with effect from 2015, culminating in a rise of €10 million in 2019. This would mean that keeping the fleet of F-16s operational would result in an aggregate additional cost of €30 million during the period from 2015 to 2019 (in 2012 prices). The main contributing factor here is maintenance: the older the aircraft, the more maintenance they need:

• more inspections need to be performed to check the condition of the aircraft (for example, to ensure that there are no hairline cracks in the metal);
• more repairs are required.

The Ministry expects the operating costs not to rise any further after 2019. This is because the fleet of F-16s will gradually diminish in size between 2019 and 2023.

F-16 flies part-time

The policy document entitled In the Interests of the Netherlands announces a measure that is intended to prevent the operating costs of the F-16s from rising any further. This involves reducing the number of flying hours for the F-16s, known as the ‘flying hours budget’. Normally speaking, the flying hours budget is calculated by multiplying the number of available aircraft by the number of potential flying hours per aircraft. Writing in the policy document, the Minister of Defence announced that the flying hours budget would henceforth be based on 61 aircraft instead of on 68 aircraft, as was previously the case. At the same time, because 68 aircraft would still remain available for ‘producing’ the total number of flying hours, the net result would be a reduction in the number of flying hours per aircraft. In other words, the aircraft would be deployed on a ‘part-time’ basis. The idea is that the aircraft will require less maintenance as a result.

Projects relating to the replacement of the F-16

The Ministry of Defence is investing in certain weapons that are suitable for use on both the F-16 and the JSF. These are formally known as ‘projects relating to the replacement of the F-16’. Two of these involve: 

• the purchase of improved precision-guided bombs;
• a plan to purchase infrared guided missiles.

The Ministry of Defence will be procuring the bombs in two batches (or stages). The Ministry estimated in 2013 that the first batch of precision-guided bombs would cost €59.1 million and the second batch €75.3 million. The missiles would cost €31.9 million (in 2013 prices).

Projects relating to the replacement of the F-16 listed in the annual List of Materiel Projects

The annual reports on the replacement of the F-16 for the years up to and including 2012 contain a list of the costs of the projects relating to the replacement of the F-16.

Since 2014, however, when new reporting arrangements were made with the Lower House of the Dutch parliament, these investments have no longer been included in the progress reports. Information on the infrared guided missiles is, however, included in the List of Materiel Projects. This list accompanies the draft budget presented by the Ministry of Defence every year. The List of Materiel Projects has not included any information on the purchase of precision-guided bombs since 2015, as the first stage of the project has now been completed. Once the second stage of the project starts in 2020, this information will once again be included in the List of Materiel Projects.