On August 18 the State Department notified Congress of a HIMARS sale to Australia valued at US $975 million ($1.529 billion) for 22 launchers and associated rockets. The price of a similar package in May 2022 for 20 launchers was US $385 million ($604 million). Defence Industry Minister Pat Conroy has defended the new figure, saying it is because of the cost of additional additional rockets.
We have done the maths and it’s still not adding up. Working out the price of individual weapons is not easy because the US tends to bundle everything in together – vehicles, launching pods and rockets.
However, in February 2022, Finland bought 35 extended range GMLRS units with different warhead configurations for US $91.2 million, which is $2.6 million for a pod of 6, or around $4 million Australian. In our package we have 90 M31A2 ER pods for a price one would assume of $360 million, if we use the same formula as for Finland, or a unit figure of $666,000 per rocket.
As several readers have pointed out from the first version of the article, the number of rockets is greater than the first glimpse of the figures suggests because they come pre-packed in a disposable fibreglass container in bundles of six. As an astute person has pointed out – thank you – this equates to an order for 1,140 rockets. The order for 60, 40, 66 and 24 units of various variants respectively are orders for pods of 6 rockets, not individual rockets. This brings the total to 190 pods, equalling 1,140 individual rockets for 22 HIMARS systems.
However, the mystery remains because on April 27, Lockheed Martin were awarded a not to exceed US $4.79 billion contract for 2 years of full rate GMLRS production. Full rate production is 10,000 per year, which works out at an average of US $240,000 per rocket. If you multiply that by 1,140 it’s still only US $273.6 million, or AU $425 million.
This still leaves around $800 million to explain because the trucks and launchers are cheap. The former are standard Army issue 6 x 6 vehicles that have some cabin protection added and the launchers are cheap throwaway containers, of which the US still has many thousands remaining from the Cold War. At the very least it would suggest that rockets are being sold to Australia and other customers at grossly inflated prices – which might explain why some countries are ditching HIMARS in favour of systems from Israel and South Korea.
In the commercial world this would look like outrageous price gouging. If a European supplier tried to get away with even a 10% cost increase they would be threatened by the Defence Minister with contract termination, coupled with a vow that they would be banned from future bids. But because this is from the US, it looks like Defence has already gone along with what appears to be exceptionally poor value for money deal.
Readers can make up their own minds. The May 2022 announcement read:
“The Government of Australia has requested to buy twenty (20) M142 High Mobility Artillery Rocket Systems (HIMARS); thirty (30) M30A2 Guided Multiple Launch Rocket Systems (GMLRS); thirty (30) Alternative Warhead (AW) Pods with Insensitive Munitions Propulsion Systems (IMPS); thirty (30) M31A2 GMLRS Unitary (GMLRS-U) High Explosive Pods with IMPS; thirty (30) XM403 Extended Range (ER)-GMLRS AW Pods; thirty (30) EM404 ER GMLRS Unitary Pods; and ten (10) M57 Army Tactical Missile System (ATACMS). Also included are Reduced Range Practice Rocket Pods (RRPRP); Vehicular Intercom System (AN/VIC-3) 3-Station; radio communication mounts; machine gun mounts; battle management system vehicle integration kits; wheel guards; ruggedized laptops; training equipment publications; spare and repair parts; support equipment; tools; test equipment; technical data; U.S. Government and Contractor support; technical and logistical support services; and other related elements of program and logistic support. The total estimated program cost is $385 million.”
On the surface this looks like a not unreasonable package. However, the new notification to Congress states:
“The Government of Australia has requested to buy up to twenty-two (22) M142 High Mobility Artillery Rocket Systems (HIMARS); sixty (60) M30A1 Guided Multiple Launch Rocket System (GMLRS) Alternative Warhead (AW) Pods with Insensitive Munitions Propulsion System (IMPS); forty (40) M31A1 GMLRS Unitary (GMLRS-U) High Explosive (HE) Pods with IMPS; sixty-six (66) M30A2 Extended Range (ER)-GMLRS AW Pods; and twenty-four (24) M31A2 ER GMLRS Unitary (HE) Pods. Also included are Reduced Range Practice Rocket (RRPR) Pods; intercom systems to support the HIMARS Launcher; M1084A2 HIMARS Re-Supply Vehicles (RSV); trailers; 9300-SL60TN Forklift, Side Loader; radio/communication mounts; machine gun mounts; wheel guards; ruggedized laptops; training; training equipment; publications for HIMARS and its munitions, and spares; services; other support equipment; and other related elements of program and logistic support. The estimated total program cost is $975 million.”
To describe the $1.5 billion value of this second tranche as excessive is an understatement. We are forking out a large additional amount of cash for what appears to be a grossly inflated package, mainly because of the cost of the rockets.
It also looks like we are being charged twice for logistic support.
We have contacted the Department of Defence for an explanation of the cost increase and the chances of receiving any information are approximately zero. The taxpayers of Australia will once again be kept in the dark as to where all the extra money is going. For its part, the government says:
“The Albanese Government is accelerating Australia’s long-range precision strike capability, and will more than double the number of High Mobility Artillery Rocket System (HIMARS) launchers being acquired for the Australian Defence Force (ADF).
“To implement a key priority of the Defence Strategic Review the Government will invest $1.6 billion to expand and accelerate this acquisition, bringing the total number of HIMARS to 42.
“The land-based, long-range, surface-to-surface HIMARS and associated munitions and support systems will ensure the ADF is equipped to deter potential threats and keep Australians safe.
“The project is also scoped to procure the Precision Strike Missile (PrSM), which is expected to have a maximum range beyond 500km.”
The Netherlands recently purchased a Multiple Launch Rocket System (MLRS) from Israeli company Elbit that was said to be 10% of the cost of HIMARS. Initially that was a difficult figure to believe until this new quote for Australia appeared, which seems to show that someone, somewhere is doing very well from the sale. Spain and Norway are also buying the Israeli system, which includes local missile production.
As we have previously reported, the South Korean company Hanwha also makes an exceptionally advanced MLRS known as the K239 Chunmoo, not only in service domestically but it has been sold to the UAE and Saudi Arabia. It has also been ordered by Poland – a future HIMARS user – because it has an urgent operational need that can only be met by Korea.
Hanwha is well established in Australia having recently won the huge LAND 400 Phase 3 order for 129 Infantry Fighting Vehicles for the Army. This is in addition to an earlier contract for 155mm self-propelled howitzers (SPH) and resupply vehicles. It is well withing their capacity to also build K239s at their Geelong facility – with full IP transfer of everything, including the guided rockets, to Australia.
Rather than continuously forking out vast amounts of money to the US, the Department of Defence should immediately halt the purchase of the second batch of HIMARS – it’s presumably too late to do anything about the May 2022 order, unless a contract has not yet been signed – and instead ask Hanwha for an urgent quote.
The likelihood is that Australia would receive a more advanced MLRS built locally for about one third the cost.
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They’ve ordered 42 of them now so the cost increases is due to more rockets etc and the cost to bring the technology in to manufacture the rockets here in Australia not just assemble them. I take it you didn’t get the memo before posting this…?
If you were to read the actual notification to Congress – I included the entire paragraph – you will see that it doesn’t say anything about technology transfer for manufacturing in Australia. We will be paying separately for that. The small number of missiles in no way explains the additional $1 billion that we have agreed to pay.
It also says “estimated” Kym. You are making a mountain out of a mole hill.
Previous order was for 20 vehicles, 120 rocket pods, plus 10 ATACMs and a level of support.
New order is for 22 vehicles, 190 rocket pods including a lot more GMLRS extended range rockets, HIMARS resupply vehicles, HIMARS forklift loaders and an overall deeper level of support.
The 2 packages are significantly different. As is the cost.
I’m still not seeing anything like an extra $1 billion worth of value in any of that.
Well here we go again. Why do we get involved with US procurements? Maybe we owe them something as they supply a protective umbrella, we pay for it by handing over our economy to them
Well, try the South Koreans or the Germans. Personally, I’d never do business with Israel after the were caught spying on us
I have never been convinced that Israel was spying on us. I have uncovered zero evidence – and I’ve had a good look.
It’s why U.S. tax payers are spending $800 billion a year for a military that can only produce 14 thousand artillery shells a month. So much money is waisted or stolen that it’s a huge threat to national security.
we can’t afford this nonsense
There were some differences in the paragraphs you showed.
The main one I can see is the addition of M1084 re-supply vehicles which are not mentioned in the first order.
Maybe that includes extra vehicles to cover the first order as well.
Depending on how technical these are, I would suggest they could cost a bit and if the ratio used is like the AS9-AS10 then that would be some 21 vehicles in its own right, plus the forklift and something called a ‘side loader’. Though they’d want to be pretty wiz bang to cause that much increase.
Also the 1st time we ordered 150 odd missile pods (+10 atacms) this time we’ve ordered 190 missile pods. This might account for some of the difference as well.
Just a thought.
You are correct about all of those differences, but they do not seem to account for even a fraction of the additional $1 billion we are paying. I have asked Defence for an explanation. I very much doubt that I will receive a reply.
At a guess I would suggest that the increase in price is to compensate for the cancellation of several European Countries cancelling their HIMARS deals. Again the Government seems hell bent on throwing money at the U.S. for equipment that it is having trouble supplying its own Forces but whose delivery seems to be somewhere in the distant future. The reasons given publicly by the DoD of alternative systems not having the range, the inability of alternative systems being transportable by current RAAF Aircraft are not supported by fact. The oft mentioned 500km range of HIMARS is with the,as not yet exisiting PrSM (which Sth Korea is also developing) and as for the transportability they all (with the exception of the Chunmoo which is on an 8×8 truck) seem to be around the same size . As you say the first contract may well have to be honoured but subsequent buys cancelled , unless a Guarantee that the price remains the same as previously, an Australian Manufacturer is found (or at least a very high Australian content Which is what we would get from Sth Korea.)I’m not really sure whether the decision makers are naive , uninformed , incompetent or just plain stupid.
Agree with all of that. The Chunmoo configuration could be altered to suit the vehicle. The Koreans chose that layout because for their requirements they don’t need to be moved around by a C-130 – they just drive along a road.
Another thought is, I wonder if it’s not just paying to have our order bumped up the order book to get them sooner, given dsr recommendations. (questionable if is)
I also agree about the chunmoo launcher from Korea. We could put them on armoured HX 8×8 trucks and modify them to use GMLRS and later add PRSM (I suspect they might even be GMLRS compatible anyway, given the large similarities to HIMARS and common alliance).
So we’d have best of all possibilities, making them here (gives army independence in artillery), save money (per unit) and double the fire power of each launcher to boot.
(The only downside potentially is would they fit in the Hercules?. Is this why they weren’t looked at?)
There’s not a lot of technology in the launchers – they are just tubes to hold the rockets – and they could be configured to suit whatever vehicles the ADF wanted to us. Hanwha has already offered local manufacture with full technology transfer but Defence and the current Ministers simply can’t be bothered looking at anything other than yet another overpriced FMS sale.
Hardly surprising.
Once again our main “ally” rips us off and we just lap it up.
The Chunmoo is the obvious choice as it comes cheaper, quicker and with technology transfer but that’s far too sensible for our DoD
Also government re announced tomahawk cruise missle order that they’ve announced at least 6 times since 2020, only difference is they reduced number of missles from 220 to 200 and we get to pay higher price and thats in USD
Also the Alternate Warhead of 180,000 tungsten pellets was adopted for a religious reason (cluster munitions were a hate subject 20 years ago) and is only one quarter as effective as cluster.
The order is for 900 rockets, the number 30 is referencing a pod of rockets, 1 pod = 6 rockets. So buying 30 pods totals 180 rockets. We bought 6 lots of 30 pods, each with different warheads and 1 extended range variant. The government purchased 180 pods, totalling 900 rockets for 20 HIMARS systems.
Ahhhh! Well done! That actually makes more sense – but only slightly. On April 27, Lockheed Martin were awarded a not to exceed US $4.79 billion contract for 2 years of full rate GMLRS production. Full rate production is 10,000 per year, which works out at an average of $240,000 per rocket. If you multiply that by 900 it’s still only US $216 million, or AU $337 million. Even allowing for normal commercial margins and various markups I’m still getting nowhere near the $1.5 billion.
The Federal Government tends to bundle the total cost of the system based on what it will cost to procure the systems and associated parts and training along with the total costs associated with keeping the system in service for a predetermined amount of time. So maintenance, transport, logistics, storage etc. as was the case with the recent purchase of 20 C-130J Super Hercules. At first glance it seems an exorbitant price, but that was for the aircraft and also included was the estimated total cost of the capability over its service life.
I take that point but these are rockets sitting in a warehouse. I don’t think the 6×6 trucks would need much support but with Defence costings, who knows?
Agreed, defence costings are always rather ambiguous, too ambiguous in a time of budget constraints and inflation.
Thanks for your input, Kym!
*Amended*
The new notice to congress details orders of different amounts, however they are still for pods, not individual rockets. 190 pods containing 1,140 individual rockets for 22 HIMARS systems.
Got it. But see my comment about the Lockheed Martin contract – someone is making enormous money.
Thank the Gods Australia is a close and favourable No 1 Ally of the U.S. Imagine how much we’d have to pay if they didn’t like us.
all this more reason we have to manufacture all our kit, or as much as possible as the French do
Excellent work Kym, keep it up!
The Military Industral Complex has industry capture at the moment.
60 Minutes US did an excellent piece a few months ago about how defense contractors are taking advantage of the US tax payer to the tune of billions and billions of dollars.
One of the worst examples they presented was the Stinger MAPAD missile has gone from 25,000 from the last order to 400,000 with no real change to the missile itself.
In order to fix this competition must be increased in the defense industry and defense personnal need to be barred from going to work at defense contractors straight after leaving the service, needs to be a restraint of trade period probably measured in years not months.
Thanks. I need to update the article but the markups and profit margins appear to be truly astronomical.
found an interesting article on gov def news site ‘Missiles to power up ADF’s range which under the section titled Range and mobility states in part “About $1.6B will be spent on expanding and accelerating the acquisition of the HIMARS and associated munitions and support systems.”
The next paragraph is the interesting one
“THE PROJECT ALSO INCLUDES THE PRECISION STRIKE MISSILE (PrSM)….”
I know I am probably being overly optimistic but do you think it could be an initial purchase of these with this second order, as LM apparently started making them this year, and not just referring to the long term GWEO ‘wish list’.
That would be nice – and I will do my best to check. I’m not holding my breath because to date Defence refuses to say a word about what our initial contribution of $70 million to PrSM buys. It’s not any local content that I’m aware of.
42 systems, up from the earlier 20 systems?
Correct. 20 + 22.
At the end of the day, the war is all about the money, that’s the only real.reason their having it so I dont understand complaimts about ” lack.of value”?
Waste of Money I just returned from Germany and Poland on 17 August 2023
In my opinion NATO will never send infantry to
Ukraine
If Russians kill President Z there is no Ukrainian leader to take his place!!
I’m reluctantly letting this comment through on free speech grounds. NATO has never had any plans to send infantry to Ukraine – and I can assure readers that there is plenty of political and military talent in the leadership of the country starting with Defence Minister Oleksii Resnikov, a force of nature.
can you clarify for me, claims have been made elsewhere the 2nd HIMARS order is enough for a 2nd regiment. I thought this second buy was to fill out the 1st reg only?
Isn’t a full Art reg 36 launch vehicles in 6 batteries of 6 launch vehicles?
With this whole price issue I don’t know what to think, because I can’t believe the price for WHAT WE ARE TOLD IS BEING BOUGHT, compared to last year’s buy, but at the same time I can’t see the American gov etc ripping us off like that (their expensive but not insultingly criminal in their pricings.) I reckon there must be something in it we’re not being told, BUT WHAT?
To be honest, I have no idea how the Army plans to organise themselves when it comes to rocket artillery. A conventional battery is 6 howitzers – and they now have 42 rocket launchers so the maths looks easy, but really who knows?
Your second point about who is doing the ripping off has a complicated answer. Australia is meant to receive a similar price as the US via FMS – but there is a rich history of the US military agreeing to enormously profitable contracts with their own companies, meaning in many cases we are paying way more than if we bought the same product from another supplier, or made it locally. There are other purchases where gaps emerge in US production runs and we are lent on to place an order as a favor, sometimes to our disadvantage. One such case was Aegis for the Air Warfare Destroyers, which was ordered in 2005 and the radar hardware sat in a warehouse at Osbourne for almost a decade before being installed. And there are other examples where Australia is sold an under performing system such as the Classic F/A-18 Hornets and we spent billions of dollars and a couple of decades getting them to the C/D configuration that was in US service.
Despite all of this history – and a need to be cautious about FMS – Australia now seems almost desperate to make even greater use of it, driving a final nail in the coffin of local industry.
beware of the export version of anything
they rip us off with damn near every purchase
Two points of contention I feel that need to be addressed. With the commitment from HANWAH to Land 400, would it not be far more prudent to do the same testing as the HIMARS with a commitment from HANWAR to produce locally. The Korean product being localised would decentralise their manufacture more making it a better local supply partner.
Secondly, pricing from American primes seems on the surface very expensive, primarily the exchange rate murders our budgets. When are we going to take this into consideration in ongoing commitments?
Yes, I agree about Hanwha and the possible local manufacture of HIMARS. Before selecting either the Boxer or Redback vehicles, we had exhaustive testing of both under Australian conditions – but for HIMARS no one seems at all interested, I guess because it comes from the US and therefore in the minds of Defence is automatically superior to everything else.
On exchange rates, you bet the US/AU ratio really hurts – but Defence is compensated by Finance for any variations so they simply don’t care. This has the perverse effect of giving Defence an even further incentive to import US products because they don’t have to worry about pesky problems such as the Australian rate of inflation, for which there is no compensation or adjustment. That’s at the heart of the current squeeze – Defence have based all of their financial planning on a 3% rate of inflation and for the last 12 months it’s been more like 7% and will only gradually return to the target zone.
Thanks for the update Kym.
Reading through some of the comments I’m confused as to why people aren’t concerned about how their tax payers funds are being spent.
Even if it is all above board and the figures add up, in the functioning democracy one would expect the people spending tax payers money would respond to journalist requests to clarify whether there is discrepancy, and if so why there is one.
It’s extremely concerning that “We have contacted the Department of Defence for an explanation of the cost increase and the chances of receiving any information are approximately zero.”
Defence now seem to have a culture of not explaining anything, or even trying to correct material in the public domain. On Tuesday afternoon I received a link to a transcript of some comments that Pat Conroy had made the day before where he claimed – in my opinion inaccurately – that buying a few extra missiles had led to the extra $1 billion.
The ministers (or their staff) don’t fact check anything. They just get told what to sprout and trust Defence to advise them correctly. By the time it’s been passed through PAOs, it’s a polished turd.
Correct. I remember an effort by Richard Marles on Insiders months ago to repeatedly dodge the question of how much a Virginia class submarine costs. He refused to answer 5 times. Hilarious. You can look it up on the internet because the US runs a fairly open and transparent government, quite unlike ours. It’s about AU $6.7 billion, give or take depending on the configuration. The reason for the evasion undoubtedly was because some departmental drone had asserted untruthfully that anything to do with submarines is Top Secret and Must Never Be Spoken Of.
This morning another ‘outlet’ was claiming an update on the HIMARS 2nd sale, which was, that the sale totaled 212 assorted missiles (I am assuming pods still) and an initial small batch of PrSM. No corroborating info from anyone else yet. But thought it was worth a mention.
Thanks. I am grateful for any information – even rumors will do – about how the extraordinary price for Australia has been reached. However, I am doubtful that any PrSMs would be part of the deal. They have only just entered Low Rate Initial Production of 10 per year and it is highly likely that they will all be earmarked for the US – so what we are getting for our $70 million contribution to that program remains unknown because Defence simply refuses to say.
Hi Kym
I would say Australia and other potential HIMARS customers are being asked by the US to pay hugely inflated prices to CROSS SUBSIDISE THE HIMARS THE US IS GIFTING TO UKRAINE.
In support of this Ukraine has about 50 HIMARS systems [1] that would have fired about 15,000 HIMARS rockets since February 2022 [2].
The US would be frustrated Australia has “only” been sending Bushmasters to Ukraine and sending Australian trainers to the UK to train Ukrainian Army recruits.
In view of that raising, the price of US weapons amounts to a useful UNDECLARED WAY that Australia can fund US arms being given for free to Ukraine.
[1] https://edition.cnn.com/2023/05/05/politics/russia-jamming-himars-rockets-ukraine/index.html#:~:text=Ukraine%20has%20received%2018%20American,according%20to%20the%20State%20Department.
[2] https://en.wikipedia.org/wiki/M142_HIMARS#Ukraine “As of February 2023, CNN reported that Ukraine had expended approximately 9,500 HIMARS rockets” + an estimated 5,500 additional rockets for the addditional 6 months to late August 2023.
Regards Pete
Thanks – interesting theory.