25 January 2000

Cabinet papers show likely cost blowout for F16s

The Green Party today released cabinet papers showing a likely cost blowout if New Zealand proceeds with the purchase of 28 F-16 fighter planes.

The lease-to-buy scheme is already priced at over $700 million.

"The papers admit that the contract allows the American sellers to add costs at will," said Green Party Defence Spokesperson Keith Locke.

"In a paper submitted to Cabinet last July, then Defence Minister Max Bradford said that the pricing in the contract represents 'estimates only and as any ommissions or flaws are uncovered during contract execution any cost over-runs (or savings) are passed on to the buyer'. [page 2]

"Mr Bradford admits that the US Foreign Military Sales system 'has a poor reputation internationally' [page 3] and 'is well known throughout the world for incurring cost growth' [page 4]. Items 'missed or forgotten' [page 4] by the American contractor in the original document, when discovered later, have to be fully covered by New Zealand.

"The other area of cost escalation is in high tech electronic equipment for defending the planes from incoming missiles.

"Max Bradford refered to Electronic Counter Measure pods 'which will almost certainly be required' [page 10] but he excluded the cost of them from the $700 million capital plan approved by the government. [page 12].

"Precision guided munitions are including in the capital plan. But it is well-known that these are hugely expensive, so if the Air Force subsequently decided that several more guided missiles are required, there would be another cost blowout.

"The Green Party wants New Zealand to concentrate its defence spending on peacekeepers, not waste it on F-16 combat planes. The cabinet papers show these planes will be even more expensive than first thought," said Mr Locke.

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