Response of 11 May 2012 Provided to David Ellery, The Canberra Times
(Source: Australian Department of Defense; issued May 11, 2012)
Australia’s selection of the C-27J medium transport aircraft, at a cost of $1.4 billion for 10 aircraft, has attracted substantial criticism because of its cost and the way the acquisition was decided. Airbus the losing competitor, has issued a statement saying it could have supplied the aircraft earlier and at much lower cost. Below are the Australian Defense Minister’s answers to related questions asked by The Canberra Times:
Q: In view of the Airbus Statement does the Minister stand by his assertion that there was a “competition”?
Yes. A competitive down select to the C-27J was made following an exhaustive assessment by Defence, the DMO and Air Force of information provided by the manufacturers of the aircrafts, including Airbus Military and the C-295.
Can he specificy the nature of that competition? When was it called? How was it conducted? Who was specifically asked to participate?
Information was sought from various suppliers throughout 2011.
Alenia, Airbus Military, Raytheon and the US FMS Office were asked to participate in the process.
Each was asked to provide information on the performance of their aircraft, as well as costing data, in order to enable Defence, DMO and Air Force to conduct a comparative assessment of each aircraft/performance/configuration.
This competitive, comprehensive and comparative analysis of the attributes of each aircraft against the ADF’s mission requirements was conducted by Defence, the DMO and Air Force.
Defence seeks to acquire the solution that best meets the operational requirements of the ADF.
The C-27J flies higher, further, faster and can access more airfields in our area of interest.
The C-295 is unable to carry some of the equipment that is vital to support ADF military and Humanitarian Assistance and Disaster Relief operations.
Can the Minister/Defence provide written documentation, including communications with Airbus Military, to confirm that a formal competition process was conducted and that Airbus Military was given the same opportunity to put its case as Alenia?
An equal and same opportunity was given to both Airbus Military and Alenia.
Correspondence exchanges between respective suppliers and Defence are commercial-in-confidence.
While I realise that is an unusual request we have the interesting situation where a major – and reputable – military contractor appears to be calling the Australian Defence Minister a liar.
That is not a characterisation the Minister places on Airbus Military’s Press Release.
The most favourable interpretation that could be placed on their remarks is that the Minister was poorly briefed and does not have a clear understanding of what is happening in his own department. Could you comment on which of these scenarios is the most accurate?
Again, that is not a characterisation the Minister places on Airbus Military’s Press Release.
A competitive down select to the C-27J was made following an exhaustive assessment by Defence, the DMO and Airforce of information provided by the manufacturers of the aircraft. The decision to acquire the C-27J was made by the National Security Committee of Cabinet on the recommendation of the Department of Defence, the DMO and Air Force, together with advice from central line agencies including Treasury and Finance.
SUPPLEMENTARY QUESTIONS FROM DAVID ELLERY, THE CANBERRA TIMES, 1:50PM 11 MAY 2012
The Minister’s press release says the 10 C27Js will cost $1.4 billion (at a per unit price isn’t that close to/even more than the cost of a JSF?) What is the actual unit cost per plane and what is the support/spare parts/roof racks/hub caps and fox tail aerial decoration component?
Nine of these aircraft will be ones that the US is no longer taking. I understand the US price was around $30 – $31 million per unit – why are they costing us so much?
Airbus Military could have sold us 10 C295s for about $35 million per unit (representing a savings to the taxpayer of $1 billion). Is the additional capability alluded to by the Minister really worth three times as much?
The costs of $1.4 billion include the acquisition cost of the aircraft, modifications to the aircraft for equipment needed for specific ADF roles, initial logistics support (including spare parts, training, materiel handling equipment, technical data, management fees) testing and certification, and facilities. These costs are be applied to any aircraft platform chosen. The aircraft being acquired by Australia are new build aircraft.
The costs quoted by Airbus Military refer only to the cost of aircraft and do not account for these essential additional costs.
Airbus would be aware of these essential program costs being included in Defence projects through its own experience with the KC-30A Multi-Role Tanker Transport aircraft project.
Defence seeks to acquire the solution that best meets the operational requirements of the ADF. The C-27J flies higher, further, faster and can access more airfields in our area of interest and was chosen for performance, configuration and suitability.
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