Why does DSCA make aircraft prices so confusing?



The Indian press says New Delhi is holding up a blockbuster deal for 10 Boeing C-17s. There’s apparently some concerns about the bill, which the US Defense Security and Cooperation Agency (DSCA) estimates could cost as much as $5.8 billion. Ouch! That’s worth as much as $580 million per aircraft.

This raises one of my frequent gripes about DSCA’s mandatory notifications to Congress. In short, they make no sense.

According to DSCA, the same aircraft with nearly identical equipment and extra features will result in a wild range of costs, depending on which country is buying. It’s not unreasonable for some countries to think they’re getting a bad deal if all they’re reading are the DSCA notifications.

Consider four recent sales announcements by the DSCA. If you go by these numbers, Australia is buying its latest C-17 ($300 million) for nearly half the price of India’s deal ($580 million each) despite ordering superior equipment, such as the large aircraft infrared countermeasures system (LAIRCM). Similarly, NATO is buying two C-17s for nearly the same price ($700 million) that Kuwait is buying only one ($693 million).  

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5 Responses to Why does DSCA make aircraft prices so confusing?

  1. Aussie Digger 30 March, 2011 at 7:45 am #

    Australia isn’t buying the capability from scratch. We are buying simulators, support/test equipment etc this time around. We did all that in our original 4 aircraft purchase.

    The cost of our original package was $2b for 4x aircraft in 2006.

    http://www.dsca.osd.mil/PressReleases/36-b/2006/Australia_06-22.pdf

    A follow-on support package was also ordered by Australia for an extra $300m in 2009.

    http://www.dsca.osd.mil/PressReleases/36-b/2009/Australia%20_09-36v2.pdf

    It seems a bit hard to judge the packages, especially when the fine detail of what they contain isn’t published.

    Regards,

    AD

  2. jetcal1 30 March, 2011 at 3:05 pm #

    Are the price disparities due to differing requirements for:
    1. Training/training infrastructure
    2. Back shop maintenance facilities and tooling/test benches
    3. Ground Support Equipment
    4. Spares packages
    5. Technical Support (Translating manuals)
    6. Field Service Technicians
    This would certainly drive units costs up for smaller buys.

  3. Royce 30 March, 2011 at 6:36 pm #

    I read DSCA announcements as notices of a possible deal, terms to be finalized later. A lot can happen between the notice and a signed contract. Plus, it is extremely difficult to compare packages across countries. The cost breakdown of a deal into its component parts aren’t available to the public (so far as I know). If they are, someone post a link. Because that would be useful.

  4. jetcal1 30 March, 2011 at 9:32 pm #

    Royce,
    Your best bet would be fedbizops and reviewing the solicitation CLIN line by line.

    (Assuming it gets posted on bizops.)

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