Stricter checks of JSF invoices

Audit leads to supplementary agreement with the US

The invoices the Netherlands receives from the United States for the development and procurement of the JSF fighter aircraft contain a considerable number of errors. Fortunately, they are promptly identified and corrected by the Ministry of Defence. An audit carried out by the Netherlands Court of Audit with the Office of the Auditor General of Norway has resulted in The Hague receiving more financial information via the Pentagon from the American companies concerned. Further to its investigation, the Court of Audit has made a series of recommendations that are also relevant to the Netherlands’ future foreign military procurement projects.

Cover report Financiele processen JSF

The audit report published on 31 October 2018, Financial Processes for the JSF – International cooperation, national audit, was carried out at the Pentagon partly in cooperation with the Office of the Auditor General of Norway. It is the first time that foreign supreme audit institutions (the Dutch and the Norwegian, both countries are partners in the JSF project) have examined the financial processes surrounding the Joint Strike Fighter in the US. Not even the US Government Accountability Office has done so.

Sharing information with international partners

In response to this audit, earlier agreements on the provision of information regarding the JSF project have been correctly implemented by the US and improved on certain points. For many years, the JSF Program Office (part of the Pentagon) did not share audit reports issued by US institutions on the accuracy of commercial invoices raised by the aircraft builders Lockheed Martin and Pratt & Whitney with the eight international partners taking part in the programme. The Dutch Minister of Defence therefore had to make additional agreements with the US aircraft builders to give audit institutions access to the information.

Errors in recharged costs

The audit in the US found errors in the JSF costs recharged to the international partner countries. The Netherlands Court of Audit then established in the Netherlands that the Minister of Defence strictly checked the payment requests. Between January 2017 and June 2018, Dutch civil servants found and corrected 59 errors in 838 payment requests.

Findings relevant to other military investment projects

The Court’s audit highlighted the need to carry out additional checks of payment requests in the Netherlands and other partner countries. A minister in a partner country must be satisfied that the financial checks satisfy the applicable standards and agreements. They can then be included in the minister’s report to parliament on expenditures and revenues

According to the Court of Audit, the audit findings and recommendations are also relevant to other, future projects to procure military materiel where foreign payments are often spread over many years.

The Netherlands has signed several agreements to contribute €1.76 billion to the development and production of the F35 Joint Strike Fighter. Seven other countries (the United Kingdom, Australia, Canada, Denmark, Norway, Italy and Turkey have concluded similar agreements to procure this aircraft from the US. In 2013, the Netherlands decided to procure 37 JSF aircraft to replace its F16s. Most of them will come into service between 2019 and 2023 at a cost of up to €4.5 billion. The minister has announced that she intends to scrap this ceiling. The Netherlands will pay for the procurement mainly in the years 2017-2025.

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