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F-35 Cost Findings, Recommendations and More (Part 5 of 5)

The fifth (last) installment of my F-35 unit cost series is at TIME's Battleland and below.  At the end of part 5 are links to each of the previous parts, but Mark Thompson at Time has done such an excellent editing job here that this short summary, with graphs, will give you almost the entire picture.

Particularly important, I believe is the recommendation for a complete audit of the F-35 program: different DOD and GAO reports do not agree on the dollars spent, the number of aircraft delivered, or even the number of aircraft authorized to be produced.  It's quite a mess.  Note also that I recommend against that audit being performed by GAO, or at least its current management.
 
As this series was being written and published, there has been a significant set of F-35 events in the town of South Burlington, Vermont.  Citizens there have formed some serious opposition to the plan being imposed on the locale to base the ultra-noisy F-35 there, replacing an existing F-16 unit.  The plan was hatched and is being actively pursued by Vermont's senators, Patrick Leahy and Bernie Sanders. 
 
A Town Hall meeting was sponsored in Vermont to address the issues, and the local public access TV channel produced an extended interview of City Counselor Roseanne Greco and combat aviation designer Pierre Sprey.  I found it to be a fascinating interview.  In addition to the compelling noise and safety issues, Sprey started to address some of the fundamental design problems deep in the DNA of the F-35.  Greco addresses the very troubling local political issues; she is a very impressive elected official, the kind of politician we need many, many more of--and not just locally.  I urge any of you interested in such things to watch the 32 minute video
 
Also, author Andrew Cockburn looked deeply into the disturbing National Guard, local and national politics surrounding the South Burlington F-35 basing decision.  He wrote an excellent analysis for Harper's magazine, "Flight of the Discords."   See the link there for an excellent Bryan Bender article on how the data for the basing decision was cooked.
 
All of these issues surrounding from the F-35 are supremely important, and they reveal a political and military system that is sick in its core.
 
Read Part 1, Part 2, Part 3, Part 4, and Part 5.

 
The F-35 will be used in training all military branch F-35 pilots on the new software and sensors in the aircraft.(U.S. Air Force photo by Staff Sgt. Nicholas Egebrecht)
The F-35 will be used in training all military branch F-35 pilots on the new software and sensors in the aircraft.(U.S. Air Force photo by Staff Sgt. Nicholas Egebrecht)

On Final Approach to Fighter Fiscal Sanity

Part 5 of 5

Each year the Defense Department's comptroller, the Pentagon's chief financial officer, publishes a report: Program Acquisition Costs by Weapon System.

The public and Congress have a right to expect these annual reports to be complete and accurate. These reports have identified spending amounts for research and development and for procurement, plus annual production authorizations, for the F-35, since the public origins of the program in 1994.

These reports show a total of $87.5 billion will have been spent on the F-35 program by the end of 2014: $46.2 billion for R&D; $39.5 billion for Procurement, and $1.8 billion for initial spare parts, as detailed in this chart from my third post in this series:


 
Bar chart of the JAST/JSF/F-35 R&D, Procurement & Spares Spending

The reports also identify a total of 182 F-35 aircraft that will have been authorized for production by the end of fiscal year 2014, from this second chart in my third post:


 
This bar chart shows Congressionally Authorized F-35 Production, 2007-2014

The breakdown of each year's procurement spending and authorized production yields an annual F-35 unit production cost. For 2014, F-35As will cost $188.5 million each; F-35Bs and Cs will average $277.9 million each, and all F-35s will cost, on average, $219.3 million, as detailed in these two charts from posts three and four:


This bar chart shows the F-35A/B/C (All Variants) Procurement Unit Cost
 
 
Bar Graph showing the JSF/F-35 A&B/C (Air Force & Navy) Procurement Unit Cost 2008-2014

Claims by Defense Secretary Chuck Hagel and Air Force Lieut. General Christopher Bogdan, the F-35 program chief, that the F-35's per-plane cost is "coming down" and "continues to come down," respectively, are not accurate.

The Air Force's F-35A will have been increasing in unit cost over the past two years; the Navy's F-35B and C have been increasing in unit cost for the past three years, according to data from the Defense Department comptroller. (See Figure 4 above.) All F-35 variants, on average, have been increasing in unit cost since 2012 (or since 2011, if the comptroller's data are right).

F-35 unit costs are going up, not down.

Having been in production for eight years, it is reasonable to characterize the F-35 production line as reasonably mature for whatever components have not already required modification.

We can expect additional costs on the production line to address problems yet to be discovered in the 60% of developmental testing and 100% of operational testing yet to occur-particularly in view of the fact that future tests will be tougher than past tests.

Unit costs are also likely to be impacted-upwards-by improvements and other modifications not yet a part of the F-35's development. While some economies of scale may be achieved in larger production lots in the future, it is also reasonable to expect those economies to be offset, at a minimum, by additional disruptions and their resulting costs.

The huge procurement budgets slated for the F-35 in the future - as much as $16 billion in 2021 (an increase of almost $10 billion from the procurement budget for 2014) - call into question whether such sums will actually be available in an era of leaner military budgets.

 
Graph - GAO F-35 Acquisition Funding Requirements 2013-2037
 GAO

Reductions in future F-35 procurement budgets to adjust to overall budget realities, combined with pressures from other Air Force and Navy requirements, make even more likely retrenchment-and still higher F-35 unit costs. All this makes it unlikely that the goal of buying 2,443 operational F-35s will be attained.

It is not unreasonable to expect the cost of future F-35s to be about where they are today, averaging more than $200 million per aircraft. It is also reasonable to doubt that F-35 unit costs-for a complete, operable F-35 force-will decline significantly, especially to a point anywhere close to the amounts currently projected for 2018 and beyond, pegged by Bogdan at $85 million.

The history of combat-aircraft acquisition warns us that F-35 unit costs will be much higher than are currently projected by the Pentagon and Lockheed-Martin, and will remain well above what can be characterized as affordable.

The data reported to the public and Congress on F-35 costs and production, from the Defense Department's comptroller, do not conform to the data in other Pentagon reports. Even the number of F-35 units authorized to be produced, and the number to be delivered, are in dispute.

Without a complete and independent audit of the F-35 program, including any costs that may not now be a formal part of the program as reported in Selected Acquisition Reports, it is impossible to discern which F-35 cost reports, if any, are accurate, and precisely what F-35 costs are today and will be in the future.

The Defense Department's SAR, and its seeming wishful declaration of the F-35's total program costs coming down, should be audited by an independent and competent party. That GAO's latest report on the F-35 has sided so clearly with the new hopefulness of program advocates for the F-35 calls into serious question whether GAO, or rather its current management, should be the party to such an accounting.

American taxpayers, the U.S. military services, and foreign purchasers - all of whom have been promised F-35 aircraft for as little as $85 million each - are in for a rude awakening. When real F-35 purchase prices unfold in the future, they may be as much as they are today-averaging more than $200 million per aircraft.

It remains inevitable that as actual costs sink in, fewer aircraft will be purchased.

This toxic stew of the F-35's high cost, abetted by concurrent production, lagging performance and continuing design problems, has put U.S. and allied air power into a dive.

The dive will steepen so long as F-35 production at the currently-projected rates continues.

Part 1: The new era of F-35 good feelings

Part 2: Alphabet Soup: PAUCs, APUCs, URFs, Cost Variances and Other Pricing Dodges

Part 3: The deadly empirical data

Part 4: Different planes, common problems

Part 5: On final approach to fighter fiscal sanity


Read Time's Battleland here.

Winslow Wheeler, Director, Straus Military Reform Project, Center for Defense Information at the Project On Government Oversight

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

Mr. Wheeler's areas of expertise include Congress, the Defense Budget, National Security, Pentagon Reform and Weapons Systems

The goal of the Straus Military Reform Project is to secure far more effective military forces and much more ethical and professional military and civilian leadership at significantly lower budget levels.

We would like to thank Philip A. Straus Jr. and family for their generous support.

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