Dear Mr Akin,

I wonder where you get the $400 million per aircraft?

Following costs are from Defense Industry Daily (2006):

"The C-17 sale itself will be handled as a direct commercial sale rather than a foreign military sale, in order to facilitate the industrial offsets that its purchase requires. As such, the 4 plane order is unlikely to be announced by the DSCA. Based on Australia's recent order, the likely cost is around USD $180-200 million per aircraft.

This proposed USD $1.3 billion sale of related equipment and support will involve various contractors, including:

* Boeing in Long Beach, CA (C-17 builder)
* Boeing Training Systems in St. Louis, MO
* AAI Services Corporation in Goose Creek, SC (AVS-9 NVGs)
* United Technologies in East Hartford, CT (F117 Engines)
* Northrop Grumman Systems Corporation in Rolling Meadows, IL (LAIRCM)
* Additional subcontractors may be needed depending on the exact nature of the contracting arrangements."

So at this point that's about USD $500 million per plane if you add the support contract to the actual cost of the airframes.

Then there's the life-cycle cost:

"...Canada's entire program has a limit of about USD $3 billion."

Perhaps you divided the first figure in this DND document by 4 and rounded down:

"The estimated total project cost for this strategic lift aircraft acquisition is $1.8 billion, plus an estimated contract value of $1.6 billion for 20 years of in-service support..."

But that $400 million figure, as the DID story above shows, includes a lot more than the cost of the airframe--and a lot less than if the in-service support were included. If all costs are considered one might say the price of one plane is $800 million.

Lots of fun with figures, but it would be helpful if when you give these costs per plane you would make clear what is included, and what is not.

Mark
Ottawa

A good comment by Fred at Daimnation!:

"over at Army.ca David said the $400m came from DND sources.

Figuring cost of “ a C17” is complex because you can’t really just buy “a plane”, but if you could, the base price for a spanking new one is (was in July 2006) $US 195 million.

Ref:
July 31/06: Boeing subsidiary McDonnell Douglas Corp. in Long Beach, CA received a $780 million firm-fixed-price, undefinitized delivery order contract that will provide 4 C-17 aircraft to the Royal Australian Air Force ($195 million per plane).

[External Link]


Then there is the burdened price of a current model C17, which includes “Training and Initial Spares”. Having been a manager in an Integrated Logistics Support Department for a major Defence contractor, I can tell you that phrase covers a lot of possibilities and quantities. So that means it is a variable price, with different customers buying more or less training and initial spares. Depends on your Support model and a whole raft of variables that are assessed and quantified, often very subjectively.

I have googled articles with prices ranging from $US 225m - $US 330m.

One source, usually reliable has the Canadian burdened price per CC177 + Training and Initial Spares is $US 330.8million. Convert that over to Canuck_bucks and it might explain DND sources telling David about $Cdn 400 million per aircraft.

Ref [External Link]

“Current USAF C-17 unit cost is US$330.8M including training and spares.”


The big bulk of the rest of published price is the 20 year maintenance deal, which really skews the aircraft price in the mind of John & Jane Q public.

It would be like Honda saying the price of a new Accord is $155,000 dollars – the life cycle cost of 15 years gas, insurance, repairs etc.


A complex area that neither DND or the MSM has explained in simple, easily understood language.


I would have gone with the base price number, converted to $Cdn 210 million dollars."

Mark
Ottawa

Further to Fred:

Mr Akin (keep reading) has an explanation for the figures and gets good reviews from the military. I still wish the figures were made more understandable to the public.

Mark
Ottawa