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The costing included weapons, upgrades, annual maintenance fees and the fuel that would be needed over the years of flying the aircraft

The PBO estimates a total life cycle cost of approximately $1.09 billion. This is some 22% higher than DND’s life cycle cost estimate of $895.5 million. The findings of the PBO report are as follows: “the risk-adjusted life cycle cost estimate of the Interim Fighter Capability Project is approximately $1.09 billion, with a low-end estimate of $1.08 billion and a high-end estimate of $1.15 billion. Breaking this down into the project’s phases, PBO has estimated a Development phase cost of $12.5 million, an Acquisition phase cost of $311.5 million, an Operations and Sustainment phase cost of $756.5 million, and a Disposal phase cost of $11 million.”

The main difference between the DND and PBO estimates is largely driven by costs in the operations and sustainment phase, according to the PBO. The PBO has estimated life extension and upgrade costs that are approximately $120 million higher than DND’s figure.

Here are some more details taken from the report:

Costs associated with the upgrade and ongoing improvement of the additional aircraft are rolled into the Operations and Sustainment phase.

The primary risks associated with the Operations and Sustainment phase are inflation risk and petroleum, oil and lubricant price risk. These are each modelled via simulation methods and the estimated exposures are internalized in the phase’s risk-adjusted cost estimate.

On a non-risk-adjusted basis, PBO has estimated that the cost of maintaining and providing munitions for the additional 18 aircraft throughout their remaining life is $422 million. Betterment costs, which largely reflect modifications and upgrades to extend the life of the aircraft, will cost $226 million. Petroleum, oil and lubricant costs are estimated at $102.5 million before accounting for price risk.

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