MMRCA - has Rafale been illegally subsidised?

[Vnomad]

Can you please enlighten us and explain how a subsidy can be illegal in the defense sector.

I can't say how EU regulations govern them, but as far as the Indian contract is concerned, the only factor is distribution of risk.

If the Indian RFP states that the winning contractor picks up any escalation in unit price couple of years down the road, then there's nothing for the customer to be concerned about. But, if the cost escalations in the future are even partially offset to the customer, then obscurity in current costing becomes a matter of concern.

The defense sector is one of the few domains where WTO trade rules do not apply (as well as EU competition rule). As per WTO/GATT agreement:

Okaay.... why the big controversy over the USAF's refueler contract then?

[Vnomad]

It is clear that the rafale is cheaper and by a good margin. No need to argue about that. Look at rafale offer in India and switzerland. It was significantly cheaper. It is also cheaper to run as indian stated themselves.

As long as one specifies that its cheaper for export customers. The British govt. on the other hand arguably got a more economical ride vis a vis the French state as far as the programs that emerged out of the FEFA go. Even though the domestic media hounding would suggest otherwise.

[eagle1]

Okaay.... why the big controversy over the USAF's refueler contract then?

There was no case brought to the WTO here as this is out of its scope. And even more EADS did not made any claims in the US when the rules changed to fit the boeing option.

The controversy was purely political an intern to the US which is a different thing. South republican states supported airbus due to the new assembly line while north democrat states supported boeing.

[c-seven]

It's useless to discuss with Jakoniko.

It's written at least 4 times in the NAO repport that the total program cost will be 37bn£ and the 20bn on is the planed one which doesn't include T3 improvements (AESA, obsolescence, A2G, etc), nor even the 'austere' A2G capabilities (or very austere ones then...)

It's written once that the EF was designed as a pure A2A cold war interceptor and the multirole capabilities were added afterward.

It written at least 3 times that the 72 Saudi sales are taken into account so that you must divided by 160 to get the unit program cost and not 234.

That's why I've put the link to the raw material, so that anybody can make his mind.

But Jako count on the fact that few will read the full pdf repport and his aim is the reach as quickly as possible the famous "1000" figure when a repeated lie become a truth.

So it's useless to discuss because it'll just give him the opportunity to highher his counter to reach the 1000 number.

Again Jako: to test propa... "comunication" arguments on the internet before spread them more widely, why not, but nitpicking on Rafale costs when you are Eurofighter side is not a good idea. Seriously.

My recommandation: try something else.

Next.

[Lindermyer]

It's useless to discuss with Jakoniko.

It's written at least 4 times in the NAO repport that the total program cost will be 37bn£ and the 20bn on is the planed one which doesn't include T3 improvements (AESA, obsolescence, A2G, etc), nor even the 'austere' A2G capabilities (or very austere ones then...)

It's written once that the EF was designed as a pure A2A cold war interceptor and the multirole capabilities were added afterward.

If the above is written then it suggests,is implied in some circles that the NAO is not an impartial group and is often either badly informed or ignores inconvinient truths.

Once again for the audiance for emphasis

TYPHOON WAS DESIGNED TO REPLACE JAGUAR IN RAF SERVICE

JAGUAR IS A GROUND ATTACK AIRCRAFT,

TYPHOON WAS DESIGNED AS A MULTI ROLE AIRCRAFT FROM THE START

Note typhoon was not designed to conduct Interdiction penetration / deep strike pick term that was tonkas job.

I dont mean to be snippy but certain groups with a vested interest have (somewhat succsesfully) pushed the myth that the typhoon is a cold war a2a interceptor being foisted on our country by the evil RAF/ BAE (pick newspaper pick day). that is hogging all the funds as the raf try to make it relevant just so they can whiz around in the latest toy.

Insert CVF, Heavy Armour and apply same argument to the relevent service

It does amuse me hearing how we have paid millions for tanks that have sat in germany doing nothing since the end of the cold war, have no relevance in modern warfare and yet hide bound generals are so stuck in there ways they wont scrap them, conviniently forgetting the Gulf Kosavo the Gulf (again) Afghanistan (ok not UK).

There are many criticisms that can be levelled at the typhoon program, but very few of those relate to the aircraft.

[QuantumFX]

...

Are you are referring to this - PDF-1, Link-1???

[c-seven]

I dont mean to be snippy but certain groups with a vested interest have (somewhat succsesfully) pushed the myth that the typhoon is a cold war a2a interceptor being foisted on our country by the evil RAF/ BAE (pick newspaper pick day). that is hogging all the funds as the raf try to make it relevant just so they can whiz around in the latest toy.

Insert CVF, Heavy Armour and apply same argument to the relevent service

It does amuse me hearing how we have paid millions for tanks that have sat in germany doing nothing since the end of the cold war, have no relevance in modern warfare and yet hide bound generals are so stuck in there ways they wont scrap them, conviniently forgetting the Gulf Kosavo the Gulf (again) Afghanistan (ok not UK).

There are many criticisms that can be levelled at the typhoon program, but very few of those relate to the aircraft.

Are you are referring to this - PDF-1, Link-1???

Yes

Simple reshersh on "cold war" words

Page 5

Typhoon was conceived in the 1980s during the Cold War, mainly for use as an air-to-air fighter and the aircraft is highly capable in this role. But the operational environment has changed significantly, making the ground attack role more important and so the Department is upgrading Typhoon to become a fully multi-role aircraft which can conduct both air-to-air and ground attack missions.

Page 11

Typhoon was conceived in the 1980s during the Cold War as a collaborative project with Germany, Italy and Spain. Primarily intended to operate as an air-to-air fighter, around 70 Typhoons are already in service, as at December 2010, and are mainly used for this role, protecting the air space around the United Kingdom and the Falkland Islands. As Figure 2 on page 14 shows, sufficient Typhoons are now routinely available to meet these tasks and undertake the required pilot training. Our consultants assessed the relative quality of the current Typhoon aircraft compared to other air-to-air combat aircraft. Their analysis shows that Typhoon compares well with its peers in its air defence roles.

Make a reshersh on '37' or 'saudi', it's interesting. All like this.

[Lindermyer]

Typhoon was conceived in the 1980s during the Cold War, mainly for use as an air-to-air fighter and the aircraft is highly capable in this role.

Note mainly for A2A note solely or only

We all acknowledge that A2A was the optimisation

But the operational environment has changed significantly, making the ground attack role more important and so the Department is upgrading Typhoon to become a fully multi-role aircraft which can conduct both air-to-air and ground attack missions.

Stood alonne this paragraph does imply that A2G was an afterthought

Taken together it implies that the A2G became more of a priority so the RAF wanted to bring funding forwards.
Page 11

Quote:
Typhoon was conceived in the 1980s during the Cold War as a collaborative project with Germany, Italy and Spain. Primarily intended to operate as an air-to-air fighter, around 70 Typhoons are already in service, as at December 2010, and are mainly used for this role, protecting the air space around the United Kingdom and the Falkland Islands. As Figure 2 on page 14 shows, sufficient Typhoons are now routinely available to meet these tasks and undertake the required pilot training. Our consultants assessed the relative quality of the current Typhoon aircraft compared to other air-to-air combat aircraft. Their analysis shows that Typhoon compares well with its peers in its air defence roles

Again primarily as an A2A fighter, but this isnt denied.


Nowhere does it say that typhoon was designed foe A2A only, perhaps a small translation issue.

[Jackonicko]

£37 Bn is a total through life cost - 60% is the programme cost (INCLUDING upgrades), the rest being support costs.

Through life support costs are not included in the Rafale costs quoted by the National Assembly and Cour des Comptes, so the lower £20.2 Bn figure is the appropriate one to use.

In any case, the global Tranche 2 production contract is unarguable - and gives us an absolutely accurate Unit Production Cost (the marginal cost of actually making another Typhoon, without RAB, without any R&D elements) of €55 m per aircraft (£37 m). That's cheaper than equivalent, contemporary Rafale UPCs.

There's not much in it, and the point is a simple one. Rafale fans have claimed for a decade that Rafale is significantly cheaper than Typhoon, and it isn't. In fact it's marginally more expensive (10% on a unit programme basis, rather more on a unit production basis).

As to the tired old fiction about Typhoon having been designed purely as a 'Cold War interceptor', well, in short, it's a great steaming pile of horse manure. Utter bolly-hocks. What is true is that introduction in the air-to-air role was prioritised, and that the decision was taken that the air-to-ground role would be added later, after FOC.

Note that the NAO's description of Typhoon is based on current use ("mainly used for this role, protecting the air space around the United Kingdom and the Falkland Islands"). The NAO is not a specialist defence organisation, and its descriptions of background history are not necessarily as rigorous as its financial analysis. They are often wrong.

Even so, the NAO description says only that Typhoon was 'primarily' (note: Not exclusively) intended to operate as an air-to-air fighter.

But actually this is wrong, as the original requirement documents show.

Furthermore, you don't have to look far to find descriptions of CP193/Austere air to ground (launched in 2006) whose intention was to bring forward the already planned air-to-ground capability.

Lindermyer's comments in red are absolutely correct.

I believe that the Luftwaffe also always had a long term aspiration for Typhoon to replace Tornado, and were also committed to a multi-role Typhoon. I think that the Spanish did, too.

Nor are Saudi receipts included in the figure, while the UK share of Saudi production costs is included. I have a nice FOIA response from the MoD confirming this. Vnomad's distinction between cost to the MoD and cost to the exchequer/taxpayer is well made.

[Vnomad]

There was no case brought to the WTO here as this is out of its scope. And even more EADS did not made any claims in the US when the rules changed to fit the boeing option.

If a European government's underwriting of costs in a competition is acceptable, why shouldn't the US govt. change the rules as well, to fit the domestically developed Boeing option?

The controversy was purely political an intern to the US which is a different thing. South republican states supported airbus due to the new assembly line while north democrat states supported boeing.

You mean criticism regarding the decision was purely internal to the US and the Europe was ambiguous in its response to an arguably unfair decision process?

[Vnomad]

It's written once that the EF was designed as a pure A2A cold war interceptor and the multirole capabilities were added afterward.

It doesn't say it was designed as a 'pure interceptor'. It said it was 'mainly for use as an air to air fighter'. The distinction is small but important.

The Mirage 2000C and F-15 were primarily interceptors as well. Yet the F-15E and Mirage 2000-5 despite retaining the same design, are somehow immune to this 'Cold War interceptor' label.

That said, the EF consortium was rather lax in its attitude towards exports. Had it been more proactive, it'd have moved up the upgrade schedule and pursued an aggressive exports policy rather than fumbling when the recession arrived.

[TooCool_12f]

@ Vnomad: about tankers deal

thing is, if you make a competition, you set up the rules from the beginning.

if you change the rules during the competition, to favor one of the competitors, you can be sued (and rightfully so)

EADS made one mistake, once the rules had been changed to, obviously, make sure that boeing win, they should not have bidded, saying, basically, to the US DoD: "ok, you wanna play like that? they pay the price" leaving boeing alone to bid (and, obviously, inflate the price to a much higher level than when having EADS in the competition)

what's more, that may just as well invalidate the whole process, as for a competition to take place (legal obligation) you need two competitors

In any case, that has little to do with what's being talked about here: there was no illegal subsidies to the rafale to gain the market, and wanting to claim otherwise is just spinning of the truth, period.

Edit: one funny thought just crossed my mind... should the F-35 with all its cost overruns that are paid for by the US tax payer, be considered as "illegally subsidised"?

[Spitfire9]

IMO where a buyer undertakes to pay all the design and development costs of a product, he is free to do so. Were the French/UK/German/US/whatever government simply to hand a company funds to develop a military aircraft that would be a subsidy. Where a government wants to buy a product whose development a manufacturer is not prepared to finance on the basis of receiving payment on delivery of the finished product, that government has to abandon the idea of buying that product or to agree to finance its development. Is that a subsidy?

Anyway, Dassault agreed to fund a proportion of Rafale development costs. Did Eurofighter? Did LM with the F-35? If not, why point a finger at Dassault. They seem to have sinned less than the other sinners.

[Scorpion82]

I believe that the Luftwaffe also always had a long term aspiration for Typhoon to replace Tornado, and were also committed to a multi-role Typhoon. I think that the Spanish did, too.

The Luftwaffe had no aspiration to replace the Tornado with the Eurofighter before 1996. However the Eurofighter was always meant to replace the F-4 and the Luftwaffe purchased some 88 RF-4E and 175 F-4F which were operated by two reconnaissance, fighter and fighter-bomber wings respectively. Only 1/3 of the Luftwaffe F-4s were employed in the air defence role, the rest were employed in recce and attack missions. In 1990 the Luftwaffe cancelled the planned employment of the Eurofighter in the AG role due to costs and afterwards the reduced need for offensive strike/attack capabilities. Employing the Eurofighter in the AG role was reconsidered by the Luftwaffe in 1996 and is planned ever since with increasing importance.

[Loke]

It is clear that the rafale is cheaper and by a good margin. No need to argue about that. Look at rafale offer in India and switzerland. It was significantly cheaper. It is also cheaper to run as indian stated themselves.

For India yes it seems cheaper.

Do you have any sources that says Rafale was cheaper than Typhoon in Switzerland? The Defence minister recently said both were roughly 1 billion CHF more expensive than Gripen; however he did not indicate which was cheaper of the two, just that they were in the same price range.

[glitter]

(In any event, the point is that the home nation price of Rafale is more expensive, the whole point of this thread is that the more expensive aircraft seems to have been able to underbid the notionally cheaper.

http://www.assemblee-nationale.fr/12...6/a2572-08.asp

En 2004, le montant de la commande de 59 Rafales F3 s'élève à 3,114 millions d'euros.

Less than 53 millions of euros per Rafale F3.

[eagle1]

I refered to avianews from switzerland who was one of the first source to inform about details of the evaluation long before the leak :

combat Aircraft: manufacturers under pressure!
Avia News , Nov 4



Switzerland will choose its new fighter before the end of the year, I propose a final section about the progress of the competition. Prices fell and political-industrial interest resurface! Politicians succeed in Bern to explain the benefits of the aircraft they defend, Swedish followed by the French Defense Minister Gerard Longuet followed next Tuesday by German Thomas de Maizière.

Competition played a role:

The strategy implemented by the DDPS and Armasuisse worked very well and the crisis of the European currency is providing the icing on the cake! Remember, there was talk of a purchase about 5 billion [francs], but last week Ueli Maurer (Head of the DDPS [M.O.D.]) was very proud to announce that the updated offers will not exceed 4 billion for the highest ! The decline of the euro, combined with the competitive strategy have forced the three manufacturers to revise their price.
Saab, Dassault Aviation and Cassidian (EADS) must sell and had to bring on the table a draft budget which corresponds to the finances of Switzerland, lest simply be discarded.
The Gripen is the less expensive plane with an offer around 3 billion, while the Eurofighter is around 4 billion. The Rafale is between the two.

The situation of three competitors:

The French aircraft is undoubtedly the favorite with a price that is perfectly in the line with the imposed budget. Best in tests with 95% success, the Rafale is also available with a full industrial partnership that affects not only the entire plane itself but also the whole range of business jets "Falcon", the engine manufacturer SNECMA / CFM International and all related manufacturers.
Was the best aircraft overtaken by its competitors? The answer is no, the Rafale is immediately proposed with an electronic scanning antenna (AESA) and some second generation items, that were tested, like the front sector optronic(OSF) and the electronic architecture.
The weak point? The French aircraft found so far no customers abroad, and in some way there is a risk for our country to become entirely dependent on french future choices. Yes, except that the Rafale will probably be sold in the UAE and is also well-positioned in India and Brazil, so the situation could evolve.

The Swedish aircraft remains the cheapest and can play on the effect of the price. But the arguments of Sweden will also play on the fact that the Gripen demonstrator has evolved through the NG (Next Generation Gripen). The proposed version to Switzerland will be remotorizéd (General Electric F414-) and therefore more powerful , the electronic architecture is more recent and by 2016 it will be possible to install the Ericsson RAVEN ES-05 with electronically scanned antenna (AESA) . But beware, the plane is the smallest, experience shows that it is always more complex to modernize an aircraft with little free space.
Saab offers a collaborative effort to update the entire fleet of Gripen in the world and this in full collaboration with the Swedish aviation. The offer is attractive to the condition that all customers of Gripen, want such a modernization. However, there is an unknown : SAAB manufacturer viability in the long run!

The Eurofighter is most expensive but still falls in the numbers. The European consortium offers an improved aircraft with a more powerful CAPTOR-M radar version . This version of the radar is part of the 3A tranche, which prepares the arrival in 2016 of the CAPTOR-E with electronic scanning antenna that can be installed as a retrofit. Cassidian provides a strong partnership with companies such as Airbus, Eurocopter, CASA and the equipment manufacturers of the group.
Yet there is a risk in terms of collaboration because of the complexity of the consortium whose procedures are slowed due to the outsourcing of the assembly lines to the 4 producing countries.
[...]

http://psk.blog.24heures.ch/archive/...-pression.html

Yet again the rafale was cheaper which is logic as all accounts tell it is cheaper than the typhoon by a good margin. Especially as it offer already more (versatility + naval variant).

[Nicolas10]

£37 Bn is a total through life cost - 60% is the programme cost (INCLUDING upgrades), the rest being support costs.

Through life support costs are not included in the Rafale costs quoted by the National Assembly and Cour des Comptes, so the lower £20.2 Bn figure is the appropriate one to use.

Stop lying: The 40,6 billion € is the TOTAL cost of the Rafale programme for the french state. It includes support.

And besides it includes the development of functions that aren't in the Typhoon programme, ex a nuclear strike capability and a carrier version.

Rapport de la cour des comptes, page 51 & 68. It's written in the text in the beginning that programme costs include support.
http://www.ccomptes.fr/fr/CC/documen...nnuel-2010.pdf

Site of the french senate: Le cout total du programme pour l'état = The total cost of the programme for the state.
http://www.senat.fr/rap/a08-102-5/a0...16.html#toc236

Nic

[eagle1]

He is obviously trying to invent a new angle of attack to support the typhoon cause... Like each time there is an important positive outcome for the rafale he is working hard to find an excuse.

The truth is that he has no clues of what he really compares and try to make from a superficial and inaccurate analysis something that could be credible enough for the general opinion to support his agenda. Unless you can have access to the raw numbers to reach the quoted figure in the NAO and cours des comptes you cannot conclude anything seriously.

Also the typhoon does not replace the tornado while the rafale is meant to replace all types in service for the french armed forces. So one should add the F35 costs in a way.

[Scorpion82]

Also the typhoon does not replace the tornado while the rafale is meant to replace all types in service for the french armed forces. So one should add the F35 costs in a way.

At least in the Luftwaffe the Typhoon will replace the Tornado IDS in most roles and it's possible that this extends to all roles spare the nuclear strike.

[eagle1]

I know I spoke for the UK here (and italy).

[Lindermyer]

[QUOTE=eagle1;1859064
Also the typhoon does not replace the tornado while the rafale is meant to replace all types in service for the french armed forces. So one should add the F35 costs in a way.[/QUOTE]

But if Typhoon was replacing Tornado you would have more airframes to spread the development cost over - swings and roundabouts.

I do not find it unfeasible that developing the typhoon cost the uk less than rafale cost france. But at the same time the rafale could have a lower unit cost particuarly where exports are concerned - duplication of assembly line efforts can only reduce the benifits of economies of scale.

[glitter]

In any case, the global Tranche 2 production contract is unarguable - and gives us an absolutely accurate Unit Production Cost (the marginal cost of actually making another Typhoon, without RAB, without any R&D elements) of €55 m per aircraft (£37 m). That's cheaper than equivalent, contemporary Rafale UPCs.

There's not much in it, and the point is a simple one. Rafale fans have claimed for a decade that Rafale is significantly cheaper than Typhoon, and it isn't. In fact it's marginally more expensive (10% on a unit programme basis, rather more on a unit production basis).

55 millions for the Eurofighter
53 millions for the Rafale.
You're right, we claimed for a decade that the fly-away cost is much lower than the Eurofighter, while it's just a bit cheaper.

[swerve]

The 40,6 billion € is the TOTAL cost of the Rafale programme for the french state. It includes support.

And besides it includes the development of functions that aren't in the Typhoon programme, ex a nuclear strike capability and a carrier version.

Rapport de la cour des comptes, page 51 & 68. It's written in the text in the beginning that programme costs include support.
http://www.ccomptes.fr/fr/CC/documen...nnuel-2010.pdf

Site of the french senate: Le cout total du programme pour l'état = The total cost of the programme for the state.
http://www.senat.fr/rap/a08-102-5/a0...16.html#toc236

Nic

Where does it say that the cost includes operating costs? I can't find it.

Total programme cost is often (usually, in fact) used to mean total procurement cost, not total lifetime cost.

[Nicolas10]

Where does it say that the cost includes operating costs? I can't find it.

Total programme cost is often (usually, in fact) used to mean total procurement cost, not total lifetime cost.

Page 60 you will find this. It relates to new procedures, not just to the Rafale program from what I can understand.

L’amélioration de la conduite des programmes d’armement.
Le ministère de la défense met actuellement en oeuvre plusieurs
actions destinées à favoriser leur déroulement, en particulier des équipes
de programme intégrées et un coût global de possession mieux pris en
compte.
C’est ainsi qu’un nouveau découpage est mis en place en six
stades du cycle de vie des opérations d’armement afin de favoriser la
coordination des différents acteurs. Pour les stades de conception et de
réalisation, la direction est désormais conjointe en équipe de programme
intégrée (EDPI) entre le directeur de programme et l’officier de
programme.
Le coût global de possession est dorénavant pris en compte
ab initio.
L’acquisition d’équipements de sécurité engage l’Etat sur le long
terme et les coûts supportés doivent tous être intégrés, comme le coût
d’exploitation, le coût de soutien en service, le coût de mise à niveau et
de modernisation de l’équipement ou le coût de son démantèlement.
La maîtrise du coût de possession nécessite que la conception du
matériel soit ainsi optimisée.
Le coût de possession sera donc désormais présenté et actualisé
régulièrement dans les documents de programme, au-delà de la seule
part d’acquisition.

[Nicolas10]

Quote from the assemblée nationale website in a 2006 report:

En 2004, le montant de la commande de 59 Rafales F3 s'élève à 3,114 millions d'euros

This put the Rafale fly away cost at 52 million € apiece.

Source: http://www.assemblee-nationale.fr/12...asp#P409_12225

To the lies about the Rafale costing around 80 million apiece fly away for the french government is utter bull****.

What we have here is Mister Jon Lake trying to start new internet rumors.

Nic

[OPIT]

This put the Rafale fly away cost at 52 million € apiece.

Including VAT...

[Nicolas10]

Although the cost went up afterwards because of the lower production rates. This problem should be solved partly thanks to the Indian order, and even more so if the UAE and Brazil actually purchase it.

Nic

[Nicolas10]

By the way I think the 52 million € fly away cost doesn't include the OSF kits.

Oh and here's a nice summary of the evolution of the Rafale programme costs:

http://rafale.freeforums.org/a-topic...-costs-t7.html

They include spares and simulators and maintain means.

Nic

[matt]

What is the OSF?

Does the Rafale have a infrared sensor at the front?

Never mind found a link on google..
http://www.electronicaviation.com/ai...ult_Rafale/819

The Rafale is an almost unparallelled achievement for a single nation, as equivalent fighter programmes have been undertaken by much larger companies or collaboratively by several nations. As an aircraft to meet French requirements (combining a robust carrier capability and good air-to-ground potential) Rafale could not be bettered, while the programme's unilateral nature afforded great focus, and protected it from many of the political factors which have so dogged the rival Eurofighter. Any problems (and those listed here are disputed) should be viewed in this light.

There have, however, been increasingly critical comments about Rafale from members of the National Assembly's Finance and Defence Commissions, and there have been reports of disagreements between Dassault and DGA about cost increases and obsolescence. According to Defence Analysis (p.17, Vol 8.No.12 December 2005) Dassault have called the RBE2 radar 'fatally flawed' alleging that its range was "inadequate" and averring that the Rafale therefore relied on AWACS support to overcome this. The DGA also described Rafale's OSF ("Optronique Secteur Frontal") as "obsolescent" and production has been cut back to just 48 units, rather than the planned number, which was to have been sufficient to equip all F1 and F2 versions.

While UK and German newspapers have been energetic in their criticism of Typhoon, Rafale has enjoyed a much gentler ride, and many of Rafale's problems (which have been similar in nature, scope and extent to those suffered by the rival Eurofighter) have seldom emerged until long after they were solved, or remain unsubstantiated rumour, though there have been exceptions. According to Defense News, Air Force Gen. Eric Rouzaud revealed that early deliveries of the Rafale were prone to a software glitch that cut out part of the flight system, requiring the pilot to hit the reset button. The fault has been fixed, Rouzaud said.

Was the Rafale really supposed to super cruise with the M-88E engines? what is being offered to India?