Legislators say submarines too dear

Legislators from across party lines yesterday said the Ministry of National Defense's proposed budget for the purchase of eight diesel-electric submarines from the US was too high, with one lawmaker leaving the vice minister embarrassed after disputing figures the ministry provided.

"It makes no sense for the country to procure a diesel submarine at a price of two to 2.5 times that of a regular diesel submarine sold in the international arms market," Democratic Progressive Party (DPP) Legislator Lee Wen-chung (李文忠) said in the legislature yesterday.

US estimate

Vice Minister of National Defense Hou Shou-yeh (霍守業) said that the submarine budget had been set up by the US Navy through an independent cost estimate (ICE) system in January 2003. The US estimated that each submarine would cost US$657 million.

Hou said that after including training and logistic costs, the purchase of weapons systems and factoring in estimated inflation, the ministry had proposed a budget of NT$288 billion (US$8.65 billion) for the eight submarines.

The figure works out to about US$1.08 billion per vessel.

Hou also provided examples of other countries' submarine procurement contracts and said that submarine costs fluctuate.

Hou said that Malaysia, India and Chile have all purchased French-built Scorpene class submarines, but because of differences ranging from the vessels' tonnage, power systems, weapons systems and when the contract was signed, their prices differed.

Hou added that according to Jane's Defence Weekly, while France had sold Chile Scorpene-class submarines for US$250 million it had charged India US$540 million each and Malaysia had paid US$580 million for the sub.

However, People First Party (PFP) Legislator Lin Yu-fang (林郁方) said the ministry's data was outdated and wrong.

Details

Lin said regarding India, the ministry had quoted a Jane's Defence Weekly article that was published on Aug. 17, but the article also said the US$580 million price included a penalty fee that the two countries had agreed to negotiate on that the ministry had purposely failed to mention.

In addition, Lin said, according to the Sept. 23 edition of Jane's Navy International, France has agreed to waive the fee, so the submarine's price will be US$400 million.

Lin also said that under its contract with Malaysia, France sold the country two Scorpene-class submarines for US$580 million each, but had also offered an Agosta-class submarine for training for free.

Lin said that the ministry had purposely concealed the information to promote its proposed budget for the submarines.

An embarrassed Hou acknowledged that the ministry's data was outdated.

"The ministry made a mistake and it should have offered new data," he said.

The submarine procurement deal has long been stymied. The budget for the subs is included as part of the special arms budget bill, which has been blocked 30 times in the legislature.