The preparations of the HX Fighter and Squadron 2020 projects have been thorough. However, the estimated total costs of the projects could be more transparent.
The strategic capability projects of the Finnish Defence Forces are significant for central government finances. In the defence review for 2017, the value of the HX procurement was estimated to be EUR 7–10 billion. In October 2019, before the specified Request for Quotation was issued, the Ministerial Committee on Economic Policy specified the procurement budget to be EUR 10 billion. At the same time, the operating and maintenance costs were capped at 10 per cent of the annual military defence expenses.
Information related to the lifecycle costs is specified only in the final tenders and may remain uncertain even thereafter. This poses a challenge for the preparations and decision-making in the HX Fighter project. As the costs of the HX procurement are significant, it has an impact on compliance with fiscal rules. Because of the rules linked with the National Accounts, a greater impact of the procurement will be seen only when the deliveries start.
The total lifecycle costs of the Squadron 2020 procurement are estimated to amount to about EUR 3 billion in total. The total costs of the project do not include all separately purchased subsystems, which is not transparent.
The purpose of the audit was to provide information on the long-term cost impacts and risks of the strategic capability projects to support the decision-making related to these projects. The main part of the audit report will be kept secret.
Read a more extensive description of the public parts of the audit: Expenses of and funding for the strategic capability projects of the Finnish Defence Forces
More information:
Matti Okko
Director
Management, Monitoring and Oversight