Initially, there were media reports, including from Swiss state broadcasters such as SRF Newswhich were based on statements by “army expert” Beni Gafner and SRF journalist Andy Müller. These in turn referred to “two confidential sources from the Federal Administration”.
The Department of Defense (DDPS) continues to emphasize that the Federal Council – i.e. the Swiss federal government – is of the opinion that a binding fixed price has been agreed with the US government for the F-35A procurement. But for the new Defense Minister Martin Pfister it will be a tough start: the 36 stealth fighter jets are now apparently set to become significantly more expensive.
Starting point
On September 19, 2022, Armaments Director Martin Sonderegger and Project Manager Darko Savić signed the government-to-government procurement contract with the US government at Armasuisse in Bern. This marked the procurement of the 36 F-35A was contractually sealed. Parliament had already approved the commitment credit on September 15. The aircraft are to be delivered between 2027 and 2030 and will replace the ageing fleet of F/A-18 Hornets and F-5 Tigers.
The US government under Joe Biden had promised Switzerland a fixed price in 2021 and emphasized that such promises had always been kept in the past. Lockheed Martin recently told Militär Aktuell that the supplier share amounts to around five billion Swiss francs (CHF, 5.34 billion euros). The difference to the total cost framework of CHF 6.035 billion (EUR 6.45 billion) approved by referendum (50.1 percent approval) corresponds to the “customer-side costs”.
Up to CHF 1.3 billion more?
However, it is now known that there have already been two confidential Federal Council meetings. In these meetings, the US side claimed a higher price with reference to increased production costs – understandable in view of Block 4 upgrades, the global situation, inflation and the unclear course under US President Donald Trump.
In the meetings, there was talk of CHF 600 million to 1.3 billion (640 million to 1.4 billion euros) in addition to the agreed fixed price. According to Gafner, several credible sources from various departments had confirmed: “The fixed price cannot be met.”
Andy Müller told SRF that, according to two internal sources, the USA argued that no fixed price had been negotiated. Recently, it was even explained that Switzerland had succumbed to a misunderstanding here – in view of global developments such as the Covid pandemic, rising commodity prices and energy costs.
What’s more, upgrading Swiss airfields will also be more expensive than planned (-> Switzerland adapts infrastructure for F-35). Instead of CHF 120 million (EUR 128 million), the costs for hangars, simulators and infrastructure are now estimated at CHF 180 million (EUR 192 million).
The Swiss Federal Audit Office (SFAO) had already stated in an investigation in 2021: “In the opinion of the SFAO, there is no legal certainty for a fixed price in the sense of a lump sum in accordance with Swiss case law for the procurement of the F-35A.”
Pfister with his back to the wall
Defense Minister Pfister must now find a diplomatic solution. Gafner also claims that Viola Amherd, the Minister of Defense when the F-35 deal was concluded, already knew about the additional costs in the summer of 2024, when she was President of the Federal Council, but only informed the full Federal Council in December.
Officially, the Federal Council and DDPS, now under the leadership of Martin Pfister, are sticking to the fixed price position. The explanation is brief: “The Federal Council is constantly reviewing the situation and would provide information in the event of a change.”
Pfister himself announced that he wanted to create transparency and “say what is going on”. Although he told the media that he would also consider pulling out of the contract if the worst came to the worst, this hardly seems realistic. Switzerland’s existing fighter jet fleet is already at the end of its service life – and a replacement procurement within the required timeframe would no longer be possible with European alternatives. Moreover, these would probably be even more expensive than the current budget.
Reducing costs by dispensing with offsets?
When Kaj-Gunnar Sievert, Head of Information at the Federal Office of Armaments (armasuisse), explains that it is being examined whether and to what extent funds earmarked for offset, for example, could contribute to covering these additional costs for the F-35, then it seems that the (bitter) reality has now also arrived at the official level.
Now that it has been acknowledged that the USA is demanding significantly higher payments, savings are apparently being examined, for example in the agreed offset volume, which is never free, on the contrary. Theoretically, more than half of the billions in additional costs demanded by Washington could be offset if Switzerland were to forego offset transactions altogether.
But here we come across a project close to RUAG’s heart: four of the total of 36 F-35s ordered are to be assembled in Switzerland, also in order to build up technical know-how with a view to future maintenance orders, which could then possibly be carried out in Switzerland.
According to a report by SRF, this offset project alone will add around 200 million Swiss francs (213 million euros) to the total price of the fighter jet package. The Department of Defense is now questioning the economic viability of this partial assembly, but RUAG spokeswoman Kirsten Hemmerich is being combative: “We are in daily contact with the manufacturer to further sharpen the business case.”
Key personnel no longer in office
A not insignificant side aspect: as the SP member of the Council of States Franziska Roth has noticed, many key people in the DDPS who once played a decisive role in the fighter jet evaluation and contract negotiations are no longer in office:
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Darko Savić, F-35 project manager, moved to Pilatus Flugzeugwerke
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Peter Winter, Program Manager “Air2030”, now heads the armasuisse office in Washington
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Peter Merz, previously head of the Swiss Air Force, will become CEO of the air navigation service provider Skyguide in the fall
Only chief test pilot Bernhard Berset is still in his post – as armasuisse confirmed on request.
New referendum?
In any case, the Swiss forums are seething. Less because of the cost explosion itself than because of the lack of transparency. One user sums it up succinctly: “The voting booklet said it should cost a maximum of 6 billion and that’s probably why I was one of those who narrowly voted yes. If this box costs even one franc more, a new vote MUST be held.”
Here for more news about the Swiss Armed Forces and here to further reports about Lockheed-Martin.
