A flight through time: SAI' s and the F16

• Replacing the Starfighter
• Not-to-exceed price
• Memorandum of Understanding
• SAI's five participating countries
• Financial implications F16 project

Replacing the Starfighter

In the Netherlands, the government led by Prime Minister Den Uyl had safely guided through parliament a defence white paper entitled 'The safety of life'. The Starfighter, fast as it was, was no longer sufficiently versatile for the new doctrine. It needed to be replaced by a more modern all-rounder that would be better able to support the Dutch role in NATO. The need to replace the Starfighter formed the subject of intense parliamentary debate and party political argument, as did the choice of its successor. There were three alternatives from which to choose: two existing European aircraft and a new US model, of which only a prototype version had actually taken to the air. The then Minister of Defence, Mr H. Vredeling, cut short the controversy in the main government party by pronouncing that 'party conferences don't buy aircraft' and joined three other European NATO countries in opting for the American F-16.

Up

Not-to-exceed price

'A further inducement to the European governments to select the F-16 was the ability of the US to offer a "not-to-exceed price" of about USD 6 million that would give the Europeans some protection against the wild cost growth commonly experienced in major weapon systems procurements.'

Up

Memorandum of Understanding

On 10 June 1975, the five participating countries signed a Memorandum of Understanding (MoU), which laid the foundations for a co-production programme. Together with Vredeling, ministers Vanden Boeynants (Belgium), Møller (Denmark), Fostervoll (Norway) and Schlesinger (US) pledged to jointly design and construct 998 F-16 aircraft, the first of which was planned to take to the skies in 1979. It was a project costing billions of dollars, extremely complex in organisational terms, and without any precedent to fall back on.

Up

SAI's five participating countries

The F-16 project was primarily a military programme aimed at enhancing the partners' air power. At the same time, economic interests and employment considerations also played a key role. A great deal has already been said and written about these subjects and the results that were achieved in this connection. The main concern of this publication is the history of financial management and the role played by the supreme audit institutions (SAIs) in the five participating countries.

Around 1975, the Dutch government had only a limited range of instruments at its disposal for conducting the financial management of a long-term undertaking such as the F-16 project. The same was true of the three other European participants in the project. The Americans were already some way ahead in refining their financial management systems, so it came as no surprise when it was decided to model the accounting systems and procedures on American lines, particularly as the Americans were also taking the largest financial stake in the project and were acting as the pilot nation. The Europeans made use of specialist US government agencies.

In the same period, the Netherlands Court of Audit was in the process of adapting its remit and working procedures to the contents of the new Government Accounts Act 1976. The new Act replaced the first one, which dated back to 1927, and opened up the path to more modern and systematic procedures for conducting financial and performance audits, as well as other investigations targeted at companies with financial links with the central government.

The Government Accounts Act 1976 also provided a framework for improving the management of public finances. Nonetheless, it offered little in the way of support for managing large-scale projects covering a period of many years. The computerisation of government accounting procedures was still in an embryonic stage, and financial control was not a highly professionalised discipline. Indeed, there were cases of backlogs of up to six years in the approval of central government accounts!

Up

Financial implications F16 project

It was some considerable time before the financial implications of the F-16 project started to register with the SAIs in the European countries involved in the project. Even when they sank in, however, no one actually realised that this project would be occupying them for the next 25 years. The F-16 project is by far the longest lasting project on the books of the Court of Audit. The archives contain over one hundred memos and reports on the subject. All these papers paint a fairly consistent picture and confirm that the Court of Audit kept its finger firmly on the pulse.

Up