by Dan Darling, International Military Markets Analyst, Forecast International.
Denmark’s headline military procurement project – the replacement of the Royal Danish Air Force (RDAF) fleet of F-16s – faces a potential delay in the selection timeline laid out by the country’s minority government. The Danish Ministry of Defense is currently examining a short list of future fighter alternatives that include the Lockheed Martin F-35A Lightning II, the Eurofighter Typhoon, and the Boeing F/A-18 Super Hornet.
One looming hurdle to meeting the 2016 selection target date involves financing the project. With a cross-party funding agreement required in order to move forward with the program, the underlying issue becomes defining the exact number of fighters to procure.
The Danish MoD’s Project Office has already laid out several options, including procurements of 24, 30, and 36 fighters – each proposal representing a drop from the original 2005 requirement calling for 48 new fighters. That figure was ultimately amended downward in March 2010 in the face of dwindling financial resources and shifting operational goals and requirements.
Two leftist political parties – the Social Liberal Party (SLP) and Socialist People’s Party (SPP) – favor purchasing the fewest number of fighters deemed necessary to conduct Denmark’s airspace defense and international security mission requirements. The problem is that the figure they have targeted is just 18 fighters, six fewer than the minimum proposal request.
The SLP-SPP preference diverges from those of the other main political parties, including the minority governing Liberals, the Social Democrats, and the Conservatives, each of whom prefers the 30-36 unit purchase option.
The unit total preferences threaten to be an unbridgeable divide for a fighter program carrying a price tag estimated at between $2.8 billion and $4.5 billion, depending on the number of aircraft purchased. Swallowing such a significant price tag is made all the more politically difficult by the straitened finances of the MoD, whose budget declined by more than 7 percent year-on-year in 2015 and is unlikely to expand much under the next five-year defense spending agreement (the current plan expires in 2017). Adding to the price of the purchase are the long-term operating and maintenance costs over the life of the aircraft – estimated to be between $10-$13 billion across a 30-40-year period.
Furthermore, many opposition parties are adamantly opposed to using sources outside the national budget, such as international loans, in order to finance the procurement, meaning whatever funding is required must come from a Danish national budget carefully managed over the past three fiscal years to avoid exceeding the European Union’s deficit threshold of 3 percent of GDP.
Public spending cuts and a listless economy have shrunk the political appetite for a large fighter purchase, particularly among the left-leaning parties like the SPP, who see large, expensive military projects as draining limited government resources better allocated toward health care, child care, education, and public transportation. At a time when funding pressures are placing all government ministries in a financial straightjacket, these parties contend that resources are better allocated internally and that the armed forces’ missions abroad should be curtailed. Rather than participating in every EU- or NATO-led peacekeeping mission, they argue, the military should focus more on homeland defense, which would lessen the need for a larger number of new fighters.
The argument over financing looms larger when juxtaposed with concerns that the military budget may get overwhelmed by the fighter purchase, particularly at a time when the defense force hopes to upgrade its armored vehicle and artillery capabilities.
Because of the sensitive issue of ensuring that Denmark’s defense force has sufficient funds in future procurement budgets, the likelihood is that the final agreed-upon number of fighters to be procured will total 24 combat aircraft. Any additional RDAF capability requirements would then be met via drone acquisitions. This seems all the more logical considering the suspected favored platform, the Lockheed Martin F-35, will carry with it an estimated unit cost of at least $85-$95 million per aircraft by the time Denmark would be ready to ink a contract.
Besides funding, political stability has been an issue for Denmark as it seeks to nudge the fighter replacement program forward. A series of ministerial shuffling that has seen the MoD headed by three different ministers in just over two years has done little to help the decision-making process.
Adding to this is the precarious position of the minority government of Prime Minister Lars Lokke Rasmussen, which barely survived in February when the Conservatives threatened to withhold support and force a snap election unless Environment and Food Minister Eva Kjer Hansen was dismissed. Rasmussen refused to remove his Cabinet member, who had come under fire over agricultural reforms, but the threat to the government passed when Hansen voluntarily stepped down.
Defense Minister Peter Christensen has stated to the Parliamentary Defense Committee that a fighter selection will not be revealed until all funding issues are resolved and an all-party financial plan is in place. But besides cost and performance, another concern for Christensen and the government is the selected vendor’s long-term support and industrial cooperation plans for Denmark. Danish officials hope these will result in spin-off jobs and capital investments in Danish industry, as well as maintenance and servicing guarantees for the duration of the new fighters’ service lives.
Denmark is a Tier-3 partner in the Lockheed Martin-led F-35 Joint Strike Fighter program and has invested an estimated $291 million in the project to date. Many still believe that the fighter remains the favorite to replace the Danish F-16s. Yet, a decision by Christensen late last year to decline providing the Parliamentary Defense Committee with specifics regarding technical issues concerning the F-35 raised in the Director, Operational Test, and Evaluation Office report for the U.S. Secretary of Defense was not well received.
While Denmark’s preference is likely a U.S.-derived solution, an F-35 selection would certainly raise questions that the defense minister and government would not be able to evade. But until the financials are worked out, it is a worry they can continue pushing into the future – just not too far into the future, as the RDAF plans to begin phasing the F-16 fleet out of service between 2020 and 2024.
So, chalk up yet another issue confronting the Danish Defense Ministry as it seeks to finally nail down a selection – a selection originally planned for April 2009 that has been delayed five times, with the very real possibility that a sixth delay awaits.
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