Next Generation Fighter Capability - 2013 Annual Update

The Government's Seven-Point Plan called on National Defence, through the National Fighter Procurement Secretariat, to provide annual updates on the cost estimates of the F-35. The second Annual Update presents the estimated life-cycle cost for a notional F-35A fleet, based on updated cost data received from Canadian sources and the F-35 Joint Program Office. The report compares current life-cycle cost (LCC) estimates with those reported in the 2012 Annual Update. The full life-cycle cost estimate includes development, acquisition, sustainment, operating and disposal for 65 F-35A aircraft being acquired between 2017 and 2023 and 30 years of operations for each aircraft. A summary of the results is presented in the table below.

• * It is estimated that seven to eleven aircraft could be lost over the useful life of the fleet and that the cost to replace these lost aircraft could be in the order of $1 billion. However, this cost is not part of the life-cycle cost estimates.
• ** Although the overall acquisition cost estimate remains unchanged at $9 billion since the 2012 Annual Update, the estimated unit recurring flyaway cost for 65 F-35A has increased by $195 million. Overall, the estimated acquisition contingency has been reduced from $602 million in 2012 to $342 million in 2013.

While cost estimates continue to be refined based on the evolution of the Joint Strike Fighter Program, the comparative analysis indicates marginal changes in various sub-elements of the life‑cycle cost estimate and an overall decrease of 0.3 per cent between 2012 and 2013.

The change in cost can be summarized as follows:

• The increase in the development cost estimate is primarily due to the updated foreign exchange and inflation forecast.
• The decrease in the overall sustainment cost estimate is the result of a significant decrease in the estimates provided by the F-35 Joint Program Office as well as the updated foreign exchange and inflation forecast.
• The decrease in the operating cost estimate results from additional refinement to the cost data for the CF-18 and the updated inflation forecast.
• The increase in the disposal cost estimate results from an updated disposal cost methodology based on CF-18 disposal data.