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The Latest Word on F-35 Unit Cost

An F-35 Lightning II, marked AA-1, lands Oct. 23 at Edwards Air Force Base, Calif. The F-35 Integrated Test Force staff concluded an air-start test. U.S. Air Force photo/Senior Airman Julius Delos Reyes

An F-35 Lightning II lands at Edwards Air Force Base, Calif.

There have been some wild assertions about F-35 unit cost recently. See the Lockheed claims as reported in Breaking Defense, Defense News and others that we should expect F-35A costs to be $85 million in 2019. None of these articles acknowledged that there are ways to measure F-35 unit cost other than by mouthing Lockheed and/or Joint Program Office prognostications for the future. If you are interested in what they didn't report, see a five part analysis of F-35 costs in Time magazine from last June, summarized here.

However, as the great seer Yogi Berra said, "Predictions are hazardous, especially about the future." Lockheed-Martin predictions, especially without balance from the press, are more than hazardous; they are toxic, and they come with an agenda.

Try instead, empirical data from as recently as last month from sources that typically work hand-in-glove with the Pentagon. They would be the House and Senate Armed Services Committees. Their National Defense Authorization Act (NDAA) was squirted through the Senate and signed into law on December 26. On questions like funding for high priority weapons, like the F-35, they virtually never act without consulting closely with the Pentagon, even if they don't always cough up every penny requested. For their 2014 bill, they did indeed take a few nicks out of the F-35 program, but the numbers, released in their "Joint Explanatory Statement" for the 2014 NDAA, give a more revealing view of F-35 unit costs than what Lockheed and some uninquisitive articles asserted at the end of 2013.

The cost estimates in the NDAA for the cheapest version of the F-35, the Air Force's F-35A, are the following. (Note these costs as just for production and do not include R&D.)

The 2014 procurement cost for 19 F-35As will be $2.989 billion. However, we need to add to that the "long lead" money for the 2014 buy that was appropriated in 2013; that was $293 million, making a total of $3.282 billion for 19 aircraft in 2014. The math for unit cost comes to $172.7 million for each aircraft.

To be fully accurate, however, we should add the additional procurement money authorized for "modification of aircraft" for F-35As for 2014; that means $158 million more, bringing the total unit production cost to $181 million per copy.

None of that includes the 2014 R&D bill for the F-35A; that was $816 million; calculate that in if you want; I choose not to.

The Marine Corps and Navy versions are a little pricier.

For the Marines B, or STOVL, model, the authorized 2014 buy is six (6) aircraft for $1.267 billion in 2014 procurement, $106 million in 2013 long lead money, and $147 million in 2014 aircraft procurement modifications. That calculates to $252.3 million for each one.

For the Navy's C, carrier-capable (but not yet), model, we get four (4) aircraft for $1.135 billion, plus $32 million in long lead, plus $31 million in modifications. That means $299.5 million for each one.

Actual F-35 unit costs are today multiples of what Lockheed says they will be. If you think it is reasonable to expect them to plummet to the $85 million Lockheed glibly promises (thanks to the ubiquitous "learning curve" and other manipulations), please consider a somewhat different analysis, also in Time, available here.

The cost data from the 2014 NDAA is not the last word. Authorization bills actually have little to do with real money, but the House and Senate Armed Services Committees like to conform their bill to whatever the latest DOD data happens to be. Keep an eye out for the 2014 appropriations bill, due out as early as next week.  That is the real money bill, and it will contain not just the latest word on F-35 costs but all the money the 2014 F-35 program will see. My guess is that it will differ little from the NDAA, but if the numbers are different, they will likely show a cut to both total dollars and the number of aircraft bought. That is not good news for F-35 idolaters: cuts to the F-35 top line will almost surely mean deeper proportional cuts to the number bought, and the unit cost will go up.

Lockheed claims on F-35 unit costs are easy fodder for ridicule, but for some reason the press I have seen reporting on those claims did not report any data from an available alternate source. Because they didn't, I am. 

Keep an eye out for the actual F-35 costs in the 2014 appropriations bill and how the press reports on them. After that, keep an eye out for what DOD puts in its 2015 budget request for the F-35. It is a real question whether those data will calculate to a lower unit cost for the F-35 or a higher one, learning curve prognostications notwithstanding.

Treat Lockheed's predictions with all the respect they deserve. Consider similarly press reports on those predictions that do not give you more reliable data or any wider perspective.

By: Winslow Wheeler
Director, Straus Military Reform Project, CDI at POGO, POGO

Winslow Wheeler, Director, Straus Military Reform Project, Center for Defense Information at the Project On Government Oversight Mr. Wheeler's areas of expertise include Congress, the Defense Budget, National Security, Pentagon Reform and Weapons Systems

Topics: National Security

Related Content: F-35, Defense

Authors: Winslow Wheeler

Submitted by revlis at: May 10, 2014
Scrap f35 and buy gripen
Submitted by Triggertried at: April 1, 2014
Just because the R&D now is expensive since it is still relatively new does not mean that once they have the kinks worked out that it will continue to cost that much. Also realize that the dollar has dropped significantly in value since 1970 when the F-15 was built. A dollar then is now an estimated 6-8 dollars now. If you want to blame high costs on something, blame it on inflation.
Submitted by Dfens at: January 16, 2014
TEXACA, certainly most of military spending has become corporate welfare, but this form of corporate welfare is legal and is accounted for, even if poorly. Throwing up your hands and saying "they are going to do what they are going to do" is not helpful. It's certainly not how a republic works. There are steps we should take. First, given that real procurement reform is not currently on the table, we need weapons. That means we cannot let defense contractors spend billions developing weapons only to shut down the program just as the weapon goes into production. Our soldiers can't fight with paper drawings. The defense contractors love the comparatively high profit rate they make off development rather than the lower rate they make during production, and POGO is consistently in their corner. I doubt that is coincidental. Secondly, we need real procurement reform. The military started paying contractors a profit on development in the early 90's. That's when development costs and duration started going through the roof. That shouldn't surprise anyone because it is quite obvious that when a company makes a profit on development, they make more profit the longer development takes and the more it costs. Granted, it is not going to be easy to get the kind of procurement reform we need, but at the very least we can and should expect organizations that claim to be taxpayer advocates to recognize what our interests actually are as taxpayers and what kinds of reform we want to see. This is as opposed to their usual "useful idiot" approach, which in reality benefits only the big defense corporations.
Submitted by Retired WW II pilot at: January 14, 2014
F-35 another Widow Maker, I have not seen anyone compare it with the Lockheed F-104 of the Cold War never in Combat in Europe yet killed 100's of pilots just flying in Europe and N. America.
Submitted by Tradition at: January 12, 2014
Our "ships of the air" deserve the same as our ships of the sea. I suggest a name be assigned to each Lightning II with members of Congress as source of possibilities. Example: USL Paul Ryan
Submitted by TEXACA@gmail at: January 11, 2014
Hey..."Dfens" It doesn't matter what it Costs, or which plane is promoted by who or whomever, its all BASED ON PHONY data and propaganda produced by the MILITARY INDUSTRIAL COMPLEX (MIC) -- (DWIGHT EISENHOWER, Republican President's quote). It was logical for POGO to support the F35 then, BUT NOT NOW... It was based ON FLAWED information, or as I call it propaganda, the the MIC. IT is an Overrated Bloated CORPORATE WELFARE project, You would get better Information, at looking at which Congressional Districts this "aircraft", and you would get a real Idea as to why so MUCH MONEY is being wasted and pumped into this Project. And, LOOK at who L/M is Contributing too, and lining which Politicians Pockets. This is NOT about Defense, IT IS about maintaining the Status Quo, and making sure Military Industrialists staying Rich and In POWER...!
Submitted by Scubadude at: January 11, 2014
Please clarify the unit cost measurements....I believe unit costs should include all R&D costs leading up to actual production. That is, the R&D costs should be prorated over the expected number of units that will be produced. (With some exceptions, notably Israel, that is how DoD is required to price units sold through the Foreign Military Sales program....not that DoD actually follows the law.)
Submitted by Dfens at: January 7, 2014
The funny thing is, back when the F-22 was being built for $180 million each, POGO was saying it should be cancelled so we can buy F-35's for $35 million each. Now it turns out the F-35's cost the same as the F-22, which doesn't surprise anyone who actually knows about airplanes because they are designed by the same people using the same processes, and POGO tells us we should cancel this program because even though there is not another fighter program on the horizon, they are sure the next one will be cheaper and better. I guess that game of stupid never gets old here, but it sure gets old with me. Here's the deal, we know the F-35 sucks. What people want to know is how to fix it, and most don't consider disarming to be an option.
Submitted by Grumble at: January 3, 2014
I love this article and the estimate of real unit costs. I love it so much I'd love to see similar analysis (in then-year dollars) for recent fiscal years. From that we can adjust for inflation and extrapolate future unit costs. Great article - thank you Mr. Wheeler and POGO!

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