CH47 Chinook
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I've sat back and watched two recent stories state clear falsehoods about the Chinook program. Below is a story from Matthew Fisher. Matthew is a highly educated journalist in regards to military matters, which frankly, is rare in Canada. I know this from personally speaking with Matthew while deployed to KAF. The link to the story is below:
http://www.calgaryherald.com/mobile/iphone/news/top-stories/SOMNIA/6360700/story.html
Unfortunately, what Matthew states about the Chinook program is wrong as he is, unfortunately, perpetuating myths about the Chinook. The costs have not doubled. The a/c is not behind schedule to be delivered. The a/c was never to be a "re-build of used Army airframes". The problem is that the old Auditor General (AG) confused the Maritime Helicopter Program (MHP) with the Chinook and thus very wrongly stated that the Chinook program is "3 years behind schedule". The program is on schedule for delivery of the first a/c in June 2013.
Costs. The same old AG assumed that the costs had doubled when in fact she once again became confused. She combined the cost for acquiring the a/c AND the cost of supporting the a/c. Thus, it appeared that the cost had doubled, when in fact, these costs were always clearly stated. Too bad the AG and most journalists can't read.
Re-build of old US Army airframes? Not sure where this one came from, but in general, the CF do NOT buy re-builds of old airframes. The D model Chinook was bought (x4) as a stop gap measure to immediately support our troops in KAF. The intention was to ALWAYS to buy new F model Chinooks.
To any journalists reading this post, check your facts, and stop passing on this incorrect info about the Chinook. The AG screwed up and no one (it seems) ever corrected her.
Overall, Matthew's story is well balanced and it clearly points out the silliness surrounding purchasing any major equipment in the CF, but I just had to correct these mistakes. I feel better now, had to get that off my chest.
http://www.calgaryherald.com/mobile/iphone/news/top-stories/SOMNIA/6360700/story.html
Unfortunately, what Matthew states about the Chinook program is wrong as he is, unfortunately, perpetuating myths about the Chinook. The costs have not doubled. The a/c is not behind schedule to be delivered. The a/c was never to be a "re-build of used Army airframes". The problem is that the old Auditor General (AG) confused the Maritime Helicopter Program (MHP) with the Chinook and thus very wrongly stated that the Chinook program is "3 years behind schedule". The program is on schedule for delivery of the first a/c in June 2013.
Costs. The same old AG assumed that the costs had doubled when in fact she once again became confused. She combined the cost for acquiring the a/c AND the cost of supporting the a/c. Thus, it appeared that the cost had doubled, when in fact, these costs were always clearly stated. Too bad the AG and most journalists can't read.
Re-build of old US Army airframes? Not sure where this one came from, but in general, the CF do NOT buy re-builds of old airframes. The D model Chinook was bought (x4) as a stop gap measure to immediately support our troops in KAF. The intention was to ALWAYS to buy new F model Chinooks.
To any journalists reading this post, check your facts, and stop passing on this incorrect info about the Chinook. The AG screwed up and no one (it seems) ever corrected her.
Overall, Matthew's story is well balanced and it clearly points out the silliness surrounding purchasing any major equipment in the CF, but I just had to correct these mistakes. I feel better now, had to get that off my chest.
A
aesop081
Guest
Scoobs said:
The AG might have gotten that impression from the US Army where the CH-47F contract consisted of both new-built 47F and re-manufactured D-models upgraded to F.
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The AG in her report was quite correct that the project deliveries will have been delayed three years from the original intended timeline; a trickle-down effect of the contract with Boeing being signed three years later (2009 vice 2006) than originally foreseen.
(see timelines here)
The original timelines of the MHLH project advance contract award notice (ACAN) in early 2006 stated a 2010 delivery of the first aircraft, based on a delivery 36 months after contract award originally anticipated to be signed in mid 2007. The contract was actually signed in July of 2009. The first aircraft will be delivered this summer, still 36 months after contract award. The aircraft (and a sister ship) will immediately enter a year-long flight test program, and the first operational, Canadianized aircraft will be delivered in the summer of 2013, per the AG's timeline noted above.
The AG's report contains no mention of D-model rebuilds delaying the program, this is an inaccuracy reported by Mr. Fisher. Ms. Fraser and her staff were quite aware of the differences between the interim six D-model Chinooks being procured based on the Manley Report recommendations, and of the long-term new-build aircraft based on the F-model Chinook of the MHLH project.
Mr. Fisher fell prey, as did many other reporters, to a hasty analysis of various planning estimates that could lead the uninitiated (or those who might deliberately want to add drama with comparatives) to the incorrect conclusion that acquisition costs more than doubled. This is not accurate since the 2006 figure in Treasury Board documents included ONLY the capital acquisition costs. The 2006 estimate for capital acquisition costs was $2.022B. The 2009 budgeted and contracted amount was $2.313B, a 14% increase. These amounts are clearly presented in the AG's report at Exhibit 6.6 - Estimated costs for MHLH presented in Treasury Board submissions. (figures below are copied from Exhibit 6.6)
Preliminary Project Approval Effective Project Approval
June 2006 November 2009
(In millions of Canadian dollars)*
Capital costs
Medium- to heavy-lift helicopters 1,025 1,245
Initial set-up (engineering, spares, training) 457 496
Project management 48 122
Contingency and escalation/inflation 430 232
Infrastructure 62 218
Total capital costs 2,022 2,313
Personnel, operating, and maintenance costs
Contracted in-service support not included 2,573
National Defence personnel not included not included
National Defence operating costs not included not included
Total personnel, operating, and maintenance costs — 2,573
Total costs 2,022 4,886 ( <-the source of the 'more than doubled' phrase)
* Figures have been rounded.
Source: Key approval documents—unaudited figures
In 2006, the specific contracted in-service support costs had not been formalized yet, and could not be presented, as those costings were still being developed by the project team and Boeing.
Could a reporter say "the costs more than doubled" in an apples to oranges comparison? Yes, they could (and did). But if they were to do so, one would expect a professional also to note to the reader that the earlier costs did not include the maintenance costs to maintain the Chinooks for 20 years. To my knowledge, not a single reporter has done so.
What is often missed (ignored?) by many is that DND was up front with its cost estimates from the very beginning, estimating a total project cost that was in fact $2B higher than the eventual Cabinet-authorized budget. Ms. Fraser and her team identified it in the report's paragraph 6.67:
The thing is, the media doesn't like to report "DND TO DELIVER HELICOPTERS FOR 2 BILLION LESS THAN THEY ASKED FOR."
Now, to be totally accurate with an analysis of the total project costing, one can't say that DND saved $2 billion -- one must also ask themselves what DND's Personnel and Operating costs would be during the in-service period of the Chinook - remember, they were also 'not included' in the original 'preliminary project approval' document. DND has lots of room for its operating costs to end up being lower than its original estimates -- $2 billion (the difference between the $6.9B estimate and the $4.9B acquisition and maintenance costs) over 20 years is $100 million annually for salaries and fuel for the Chinook fleet.
Rough order-of-magnitude costing would look at say, 500 personnel directly or indirectly involved in Chinook operations. I don't know how much a DND average per person cost is, but let's use a conservative average of $100,000 to include salary, pension, administration, HR cots, etc... so that's 500 x $100,000 = $50 million annually for the "P" of P, O & M. Now how about the Operations? Let's say the fleet will fly a per aircraft yearly flying rate (YFR) similar to the Griffons. Prorated for the 15 Chinooks, that would be between 5000 and 7000 hours annually. Let's be conservative, and take the larger number, so 7000 hours flown, multiplied by 1,400 L/hr burned by a Chinook, multiplied by a conservative $1.50/L for kerosene = $14,700,000 annually. So...we add $50 million for people and $14.7 million for direct operating costs, add on say $5 million a year to run the squadron facility...that puts us at $69.7 million annually, compared to DND's original estimate of $100 million annually for P&O costs.
Thus, over 20 years, it's reasonable to estimate that the pers and operating costs would be 20 x 69.7M = $1.394 billion.
Add that figure to the $4.886 billion figure for capital acquisition and in-service support costs and we have:
$4.886B + $1.394B = $6.280B
So, in 2005, DND estimated the Chinook would cost $6.9B over a 20-year service life. Using approved budgets and some rough estimation, it is entirely reasonable that DND would actually spend $6.3B. That actually looks like a projected savings over the Chinooks's service life of $600 million from the original estimate...or $30 million / year underspent.
My :2c:
Regards
G2G
(see timelines here)
The original timelines of the MHLH project advance contract award notice (ACAN) in early 2006 stated a 2010 delivery of the first aircraft, based on a delivery 36 months after contract award originally anticipated to be signed in mid 2007. The contract was actually signed in July of 2009. The first aircraft will be delivered this summer, still 36 months after contract award. The aircraft (and a sister ship) will immediately enter a year-long flight test program, and the first operational, Canadianized aircraft will be delivered in the summer of 2013, per the AG's timeline noted above.
The AG's report contains no mention of D-model rebuilds delaying the program, this is an inaccuracy reported by Mr. Fisher. Ms. Fraser and her staff were quite aware of the differences between the interim six D-model Chinooks being procured based on the Manley Report recommendations, and of the long-term new-build aircraft based on the F-model Chinook of the MHLH project.
Mr. Fisher fell prey, as did many other reporters, to a hasty analysis of various planning estimates that could lead the uninitiated (or those who might deliberately want to add drama with comparatives) to the incorrect conclusion that acquisition costs more than doubled. This is not accurate since the 2006 figure in Treasury Board documents included ONLY the capital acquisition costs. The 2006 estimate for capital acquisition costs was $2.022B. The 2009 budgeted and contracted amount was $2.313B, a 14% increase. These amounts are clearly presented in the AG's report at Exhibit 6.6 - Estimated costs for MHLH presented in Treasury Board submissions. (figures below are copied from Exhibit 6.6)
Preliminary Project Approval Effective Project Approval
June 2006 November 2009
(In millions of Canadian dollars)*
Capital costs
Medium- to heavy-lift helicopters 1,025 1,245
Initial set-up (engineering, spares, training) 457 496
Project management 48 122
Contingency and escalation/inflation 430 232
Infrastructure 62 218
Total capital costs 2,022 2,313
Personnel, operating, and maintenance costs
Contracted in-service support not included 2,573
National Defence personnel not included not included
National Defence operating costs not included not included
Total personnel, operating, and maintenance costs — 2,573
Total costs 2,022 4,886 ( <-the source of the 'more than doubled' phrase)
* Figures have been rounded.
Source: Key approval documents—unaudited figures
In 2006, the specific contracted in-service support costs had not been formalized yet, and could not be presented, as those costings were still being developed by the project team and Boeing.
Could a reporter say "the costs more than doubled" in an apples to oranges comparison? Yes, they could (and did). But if they were to do so, one would expect a professional also to note to the reader that the earlier costs did not include the maintenance costs to maintain the Chinooks for 20 years. To my knowledge, not a single reporter has done so.
What is often missed (ignored?) by many is that DND was up front with its cost estimates from the very beginning, estimating a total project cost that was in fact $2B higher than the eventual Cabinet-authorized budget. Ms. Fraser and her team identified it in the report's paragraph 6.67:
The thing is, the media doesn't like to report "DND TO DELIVER HELICOPTERS FOR 2 BILLION LESS THAN THEY ASKED FOR."
Now, to be totally accurate with an analysis of the total project costing, one can't say that DND saved $2 billion -- one must also ask themselves what DND's Personnel and Operating costs would be during the in-service period of the Chinook - remember, they were also 'not included' in the original 'preliminary project approval' document. DND has lots of room for its operating costs to end up being lower than its original estimates -- $2 billion (the difference between the $6.9B estimate and the $4.9B acquisition and maintenance costs) over 20 years is $100 million annually for salaries and fuel for the Chinook fleet.
Rough order-of-magnitude costing would look at say, 500 personnel directly or indirectly involved in Chinook operations. I don't know how much a DND average per person cost is, but let's use a conservative average of $100,000 to include salary, pension, administration, HR cots, etc... so that's 500 x $100,000 = $50 million annually for the "P" of P, O & M. Now how about the Operations? Let's say the fleet will fly a per aircraft yearly flying rate (YFR) similar to the Griffons. Prorated for the 15 Chinooks, that would be between 5000 and 7000 hours annually. Let's be conservative, and take the larger number, so 7000 hours flown, multiplied by 1,400 L/hr burned by a Chinook, multiplied by a conservative $1.50/L for kerosene = $14,700,000 annually. So...we add $50 million for people and $14.7 million for direct operating costs, add on say $5 million a year to run the squadron facility...that puts us at $69.7 million annually, compared to DND's original estimate of $100 million annually for P&O costs.
Thus, over 20 years, it's reasonable to estimate that the pers and operating costs would be 20 x 69.7M = $1.394 billion.
Add that figure to the $4.886 billion figure for capital acquisition and in-service support costs and we have:
$4.886B + $1.394B = $6.280B
So, in 2005, DND estimated the Chinook would cost $6.9B over a 20-year service life. Using approved budgets and some rough estimation, it is entirely reasonable that DND would actually spend $6.3B. That actually looks like a projected savings over the Chinooks's service life of $600 million from the original estimate...or $30 million / year underspent.
My :2c:
Regards
G2G
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Colin Parkinson
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I can see the RCAF aircrew in their new Chinook mooning the Seaking aircrews when they fly past them.
OldSolduer
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She's a beauty! ;D
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Sweet...a procurement process that's actually working!
Oldgateboatdriver
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Nice, Kirkhill.
But I think the Army will want them only when these little buzzers can start to deliver M777 Howitzers to them in the field.
But I think the Army will want them only when these little buzzers can start to deliver M777 Howitzers to them in the field.
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Some great articles on the past, present and future of Army/RCAF Air in the current edition of the "Air Force" magazine. Vol.36/NO.2.
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OldSolduer
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Fraz said:
We should have never let the original ones go.....
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Canadian Skies contributing editor Ken Pole was on the scene when the first of 15 new Boeing CH-147F Chinooks arrived in Ottawa just a short while ago. Here, a groundcrew member gives the shiny new Chinook a thumbs up as it is rolled into the hangar minutes after arriving. The helicopter was flown to Canada by a Boeing crew, and will officially be handed over to the Royal Canadian Air Force on June 27, after which it will be flown to its home at Canadian Forces Base Petawawa, Ont. Ken Pole Photo
;D ;D
;D ;D
Colin Parkinson
Army.ca Myth
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How to run a procurement program.......Funny things seem to work when the Liberals have not been involved.
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Colin P said:
I'm sorry, you cannot blame it all on the Liberals.
Things began to get difficult around 1960 ~ the costs of modern, sophisticated military equipment (ships, weapons and electronics, armoured vehicles and, especially, aircraft) rose at rates which were far, far in excess of either a) the general rate of inflation or b) the rates at which government revenues increased. Both the Diefenbaker and Pearson governments wrestled with the problem; Mr. Hellyer's unification/integration experiment was just one attempt at finding ways to get "more bang for the buck." M. Trudeau addressed the issue quite simply: he slashed and burned. Mr Mulroney expressed sympathy and support but he was unable to find more, new money for defence and he was disinclined to cut other programmes to fund the military. M. Chrétien didn't like the military any more than M. Trudeau had but events forced his hand. Mr Haprer may like the military but he, like Mr Mulroney faces a bare fiscal cupboard.
One area where all PMs, all the way back to St Laurent, have tried to get more value is in procurement. First, in the 1950s (St Laurent) it involved building ships (the St Laurent class) and aircraft (CF-86 Sabres and CF-100 Canucks) in Canada then, in the 1960s (Diefenbaker and Pearson) it was shared, multi-national programmes, and then 1970s (Trudeau) it was industrial benefits or offsets. In the 1980s (Trudeau and Mulroney) it was fudged requirements and delayed deliveries to "lowball" budgets and stretch payments over longer and longer times. Neither M. Chrétien nor Mr Harper have tackled the inherent dishonesty and waste in the Trudeau/Mulroney approach. Why not? Because it "works" from a purely political perspective ~ new military hardware is announced, over and over and over again, but few dollars are ever spent.
Colin Parkinson
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I was thinking about the last Liberal era. Ok lets look at who had the most successful procurement programs record?
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