ThatвЂ™s partly due to the government increasing the defence budget (again, largely due to China), with much of that flowing into the acquisition budget. Now Defence has the opposite problem: itвЂ™s got too much cash. And with DefenceвЂ™s acquisition program historically oversubscribed, that would have had a ripple effect of further delays on other programs.

Buying a replacement for the MRH-90 would have meant deferring or cancelling another priority. Defence canвЂ™t do that each year it has to live within its means. A private company could manage that by borrowing and paying it back with the operating savings (or the revenue raised by operating the new asset). A key reason that the government and Defence hadnвЂ™t replaced the MRH-90 is that, even though there would have been long-term savings through the lower operating cost of the Black Hawk, there would have been a big short-term acquisition cost. The third way is that Defence is suddenly rich in cash-and thatвЂ™s also because of China.

The second way is that the new strategic climate means thereвЂ™s more willingness to accept the poor optics of retiring a $3.5 billion investment early-just as the government was willing to accept what will likely be a sunk cost of more than $3 billion once all is said and done in the cancelled Attack-class program.

Moneymoney mrh