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How the F-35 Nearly Doubled In Price (And Why You Didn’t Know)

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DoD photo / Senior Airman Julianne Showalter

An F-35 Lightning II over Florida's Eglin Air Force Base.

On June 14 — Flag Day, of all days — the Government Accountability Office released a new oversight report on the F-35: Joint Strike Fighter: DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks. As usual, it contained some important information on growing costs and other problems. Also as usual, the press covered the new report, albeit a bit sparsely.

Fresh bad news on the F-35 has apparently become so routine that the fundamental problems in the program are plowed right over. One gets the impression, especially from GAO’s own title to its report, that we should expect the bad news, make some minor adjustments, and then move on. But a deeper dive into the report offers more profound, and disturbing, bottom line.

Notorious for burying its more important findings in the body of a report — I know; I worked there for nearly a decade  — GAO understates its own results on acquisition cost growth in its one-page summary, which—sadly—is probably what most read to get what they think is the bottom line.

In that one-page summary, GAO states the F-35 program now projects “costs of $395.7 billion, an increase of $117.2 billion (42 percent) from the prior 2007 baseline.”  The much more complete story is in this table from the report:



 The summary uses the wrong baseline.  As F-35 observers know and as the table shows, the cost documentation of the F-35 program started in 2001, not 2007.  There has been a lot more cost growth than the “$117.2 billion (42 percent)” stated.

Set in 2001, the total acquisition cost of the F-35 was to be $233.0 billion. Compare that to the current estimate of $395.7 billion: cost growth has been $162.7 billion, or 70%: a lot more than what GAO stated in its summary.

However, the original $233 billion was supposed to buy 2,866 aircraft, not the 2,457 currently planned: making it $162 billion, or 70%, more for 409, or 14%, fewer aircraft. Adjusting for the shrinkage in the fleet, I calculate the cost growth for a fleet of 2,457 aircraft to be $190.8 billion, or 93%.

The cost of the program has almost doubled over the original baseline; it is not an increase of 42%.

Now, you know why DOD loves the rubber baseline. Reset the baseline, and you can pretend a catastrophe is half its actual size.

When assessing the other, even larger, “sustainability” cost implications of the F-35, GAO makes what I regard as a major methodological error.

On page 11, GAO cites DOD’s goal for the additional operating, logistics and support costs (“sustainment”) of the F-35. GAO focuses on the Air Force’s conventional take-off and landing (CTOL) variant and cites the new, March 2012 goal: $35,200 per flight hour, compared to $22,500 for the F-16. For years, DOD has cited the F-16 as the comparison aircraft for calculating costs to operate the F-35; now it is hoping the F-35 will be only 56% more than the cost to sustain the F-16.

GAO, quite properly, offers some skepticism that this goal can be met. It states that the CTOL version is not achieving its own criteria for meantime between failures, falling 30% short in 2011 (page 30); GAO reports that operational testers said “JSF is not on track to meet …operational suitability requirements” (page 17), and finally, GAO says the program is experiencing “excessive time for low observable repair and restoration, low reliability, and poor maintainability performance” (page 17).  After all that, GAO politely calls the sustainability cost goal “a significant challenge” (page 31).

GAO is also correct to point out DOD management’s declaration that the current F-35 operating cost estimate, “$1.1 Trillion for all three variants based on a 30-year service life,” (page 10) is “unaffordable and simply unacceptable in the current fiscal environment” (page 11).

However, comparing the F-35 to the F-16 is a major error; associating those two aircraft is simply implausible. The two have very, very little in common.  While they both are single engine aircraft that were planned to cost less than their contemporary higher cost complements (the F-15 and the F-22 respectively), the basic similarity stops there. The F-16 was conceived as a visual-range air to air fighter in the 1970s; it is a far, far more simple design, and it met its inherent affordability goal. The F-35A is a multi-role, multi-service design with stealth and many other highly complex (so-called “5th Generation”) attributes added in. It is a far, far more intricate aircraft and, as a result, failed to meet any affordability goal.

The F-35A has much more in common with its Lockheed stablemate, the F-22. While the F-22 may be more complex in some respects (twin-engine with divertible thrust; earlier generation stealth coatings); in other respects the F-35 is the more complex aircraft of the two (basic multi-role design woven into a STOVL-capable, multi-service airframe, even more complex communications, sensor and display systems, and much more software and complexity of system integration).

The F-35’s fundamentally complicated (“5th generation”) design makes its comparison to the F-16 inappropriate in any effort to understand F-35 operating costs. It should be compared to the F-22 where the similarities abound, for the most part. To better predict unknown F-35 costs, we should start with known F-22 operating costs.

The Air Force has been recording costs per flying hour for the F-22 since 2003. Six years after 2005 when the Air Force declared “initial operating capability” (IOC or the presumed ability to deploy and fight) for the F-22, the Air Force officially calculated an “ownership” cost per-flying-hour for the F-22 at $128,389 [best to download this with Google's Chrome browser]. That amount, however, is an outlier: the F-22 was grounded for more than four months that year, thereby distorting upwards the per-flying-hour cost.

There were no F-22 groundings or other significant flight limitations in 2010; the data for that year reflect known sustainment costs, per hour, after five years of deployability, thereby reflecting any learning curve in F-22 maintenance and support.  The Air Force’s “ownership” cost per flying hour for the F-22 in 2010 was $63,929: half the 2011 cost.

It is that amount that should serve as the starting point for considering plausible F-35 operating costs. Optimistically speaking, a downward adjustment can be made for the F-35: Lockheed is attempting to reduce the cost and maintenance hours needed for the F-35’s version of stealth coatings, which comprises a large portion of F-22 operating costs, and an allowance should also be made for the single engine design of the F-35.

However, it is currently unknowable whether the lesser stealth cost goal will be achieved (as noted above, GAO found the F-35 is encountering problems), and it is also unknowable if the single engine design compensates, or not, for the added operating costs for the more complex communications, sensors, displays and software integration. While highly optimistic, perhaps a 20% improvement over the F-22 can be analytically useful.

Assuming that 20% cost per-flying-hour improvement over the F-22, the F-35 would cost $51,143 per hour to fly. Rather than an F-35A operating cost that is 56% more than the non-analogous F-16; it is more plausible, and analytically conservative, to calculate an operating cost that is 80% less than the highly comparable F-22—even if the improvement has not yet been demonstrated.  The question should not be whether the F-35 can achieve 156% of the operating cost of the F-16; it should be whether it can achieve 80% of the operating costs of the F-22.

Posing the question in that manner, however, presents a serious dilemma: if the currently projected estimate of operating costs for the complete fleet of all three F-35 variants of $1.1 trillion is “unaffordable and simply unacceptable,” what is the meaning of a plausible—even if optimistic—operating cost that is well above that unsustainable $1.1 trillion?

During the nine years I worked in GAO’s methodology division, specializing in national-security evaluations, we took very seriously the selection of reasonable criteria for the purposes of comparing DOD systems. When DOD’s criteria were biased, we selected more appropriate ones. In this recent report, GAO failed to take that step.

We also used to joke in the cafeteria about the tepid titles senior management would give the reports we wrote. This new GAO report, Joint Strike Fighter: DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks is very unfortunate example: it does not simply understate the message the data convey; it misstates what the data say. The cost growth inherent in the F-35 program is huge and still growing:  far more than to “enhance restructuring” and “address affordability” is needed.

The F-35 should now be officially called “unaffordable and simply unacceptable.” All that is lacking is a management that will accept — and act — on that finding.

39 comments
tmphoto2
tmphoto2

I love all the comments about how one military program is over run that actually produces some thing but never about the massive welfare handouts in the USA.  Total yearly welfare spending (not counting spending on the elderly) is over 1 Trillion in the USA (combined state and federal spending).  The federal govt's on accounting agency (GAO) released report that in 2013 the government made about $100 billion in payments last year to people who may not have been entitled to receive them -- tax credits to families that didn't qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary.  To top it off, in the last 5 years 1 Trillion in improper payments were made.

So get off you high horses, at least this country gets something for the money its spending.  One final thing, "we Don't need Advance Weapons" - well that's pure idiotic, that kinda of thinking we should just only equip our military with spears and swords.  There will always be an enemy to the USA with advance weapons, we just always had a policy of having the best and use Quality over Quantity to keep the peace. Therefore, we didn't require everyone to join the military when they turned 19.

CafferyTim
CafferyTim

Oh, and to prove I am just as guilty as all of you, my fellow Americans, lets talk about anything but soldier suicides and internal violence (i.e. sexual assault, racism, bullying). Lets pretend that the +8,000 soldier suicides since 2001 aren't connected to the 7,000 KIA. Like Obama in his May 23, 2013 speech.

CafferyTim
CafferyTim

This is the weapons manufacturing employees raping their fellow citizens. They can sit and watch their fellow citizens collapse in financial depravity, which seems awkwardly enough to further motivate them, to exploit American patriotism too even greater depths. This is institutionalized fascism, an entire class, we all serve. While this article questions, it doesn't expose anything. Why not, American patriotism prohibits such reasoning.

LenSimpson
LenSimpson

The military brain has never varied in it's quest for MORE.

Ike warned us.

shapiro.len
shapiro.len

 this is not a war weapon. this is a political weapon weilded by McCain and his cabal on behalf of the defense industry. McCain lost the election but still has enough power to keep screwing America out of a decent,moral society. McCain is a bottom feeder,like all Republicans and war mongers. He does his best work looking up at the human race, wondering what it's like to be a human being.

RichardC
RichardC

I was told there would be no math.

LouAZ
LouAZ

This fella wants a blue suit, turn on the blue light.

ks1234
ks1234

The F35 will probably never be used in actual combat. It is useless against the Taliban, al Queda and other Islamic terroriist groups. We have enough misslies to take care of any threat from China or Russia or even N. Korea. The GOP always talks about the national deficit and do all they can to cut spending for programs that benefit the middle class and the poor such as healthcare, social security, medicare, education etc.  They will not even allow a little raise in the Minimum Wage. Yet they never talk about the need for cuts to our bloated defense expenditure. We are led to believe that this type of wasteful spending "creates jobs".

Jimmers74
Jimmers74

Sadly, most of our military minds spend their time planning to fight the last war, and pay precious little attention to what is coming with regard to armed conflict.  Combine that with manufacturers that spread their plants around the country, putting well paying jobs in many Congressional districts, and we have a recipe for continuing funding, even when we know it is wasted.  No member of Congress wants to be labeled as a "job killer".  Pilots pooh pooh drones for air combat because they want to be there in person.  Air combat is done at long range with many fire control systems.  Why not have that on the ground, and not worry about losing a pilot?  Somewhere in all of this, a rational mind(s) must come to the conclusion that we can't afford it.  I hope that is sooner than later.

johnkrats
johnkrats

Who cares?  President Obama will fire up the printing presses and get more Monopoly money for it.  The Pentagon cannot find its own posterior on any bright sunny day.

The US Armed Forces, winning every battle and losing every war since 1945.

Infantry, Mountain, Airborne, OEF, retired...

Swiftright Right
Swiftright Right

The sad thing is we could have had the f-15 reworked into a gen4.5 fighter for about 1/3 the def cost and 1/2 the cost per new plane. The F-15 SE2 would have allowed us to field twice as many fighters for less money. 

PeterNY1
PeterNY1

These types of overruns in government programs are the norm and not the exception. GAO

reports help shed light on these issues, which is valuable, but it doesn't help solve them.  

 

The key to preventing these issues is proactive monitoring, transparency on performance, and automatically-triggered reviews in the event of exceptions. These are addressed

at www.dofr.org through Law-LEG for proactive monitoring and Law-DASH for

transparency.

Heterotic
Heterotic

 To claim that the fair comparison for the F35 is the grossly over-priced F22 and not the earlier generation F16 is wrong, it misses the entire point of out of control defense spending on big ticket items full of high technology that will likely never be used. The U.S. is essentially broke na yet continues to police the entire world.

brownj00
brownj00

Well written and informative.  Two comments.  Most military aircraft designs start out with MANY issues.  For example, the B-52 was terrible to start out with (a "death trap" according to an old friend who flew them in the beginning, and narrowly missed dying with his whole crew because he'd been grounded for illness), but the military tinkers and modifies the systems until they improve enough to be effective or acceptable.  Over years and decades.  Or they retire them early.  So the issues with F-22 and F-35 are not signs of a new paradigm but rather par for this kind of course (albiet an expensive round- but the other question of is that approach simply too expensive to do any longer). 

 

Second, I see common themes in private business projects and other public projects like roads.  If the true costs can be estimated early - well, nobody likes to hear that and the decision will invariably be that "it costs too much" and the project is never approved.  As a result, the estimates are sculpted to fit a preferred result.  The scope can be minimized (narrowly include certain things and exclude or "assume out" others) to bring the costs into a desired range.  Then "changes" that will be necessary to achieve the real goals will come later.  Often out of a different budget bucket. 

 

The challenges in estimating, approving, budgeting,  risk management, cost control etc. on big projects are universal.  So are the games people (and organizations) will play to deal with it.  People who "blow the whistle" and try and point out the real costs get fired, dismissed, or pilloried by the powers that be.  In many places, you don't talk about real long term costs if you want to keep getting paid.

Tom Durkin
Tom Durkin

And hasn't the F 35 failed all of its tests--except for the ones the Pentagon rigged?  Isn't this a version of No Plane Left Behind?

bc
bc

This is as fair a piece on F-35 procurement issues as any recently published, and that says a lot considering much of the breathless hyperbole out there today.  W. Wheeler highlights some good points about the GAO reports and has a basis in experience from which to do so, unlike so many others out there. The GAO reports serve their purpose (and their masters); some are good, some are questionable. Wheeler calls this one like he sees it.  Would've been nice to see concurrency tied in, but that may have obscured his message. Not sure I agree with the closer though.  "Unaffordable" is a relative term, and it's all relative. "Simply Unacceptable" sounds like a Robert Palmer tune.

BjammindD
BjammindD

Fools, don't you know contracts are for plebians?

The military-industrial machine will charge what it damn well wants to charge and your going to like it.

Christopher Kidwell
Christopher Kidwell

Bottom line in the world today is that if you have nukes, you are golden. NO other country in the world is going to try to invade your country with the threat of M.A.D. hanging over their heads.

Kevin Brent
Kevin Brent

This story does a good job of explaining 'how' the numbers are fudged, but it still does not tell the 'why'. And, the why is Lock-Mart's Union Thuggery. Costs a lot of money to pay some imbecile $30 per hour with full benefits and a parking space to sweep the floor of the factory.

ranger99
ranger99

Why do we need these?  No F-15 has ever been shot down in combat.  Our Air Force is so utterly dominant already that nobody has dared challenge it in my lifetime.  

Besides, why are we bothering to produce a manned fighter anyway?  Everyone knows that the future of air combat lies with unmanned drones.  We'd be much better off spending that trillion dollars perfecting that technology and keeping our service-people out of harm's way.

Michael Jones
Michael Jones

The chart posted here is misleading in that one would logically compare the $233 billion to the the $395.7 billion figure and conclude that costs had nearly doubled, as you did. However, this would be incorrect since each column is in *then year dollars*. It's comparing apples to oranges. If, however, you calculate the real dollars cost here by using say, http://www.usinflationcalculat... , you would find the figure for the initial estimate in 2012 dollars is $302.5 billion. Given that, you would find that the initial year total acquisition cost per airframe is $105.5 million in 2012 dollars. The new acquisition cost is $161.1 million per airframe or a 52.6% increase per airframe.

tl;dr Real figure is cost growth from $302.5 billion to 395.7 billion, a 30.8% increase. NOT DOUBLE.

LaLapinNoir
LaLapinNoir

@ks1234 We really need to stop thinking about the "next big weapon" in our eternal quest to continue global wars against anyone. Time to grow up DOD and move on!

LaLapinNoir
LaLapinNoir

@Swiftright Right You are MUCH too smart for the way the DOD thinks unfortunately!

Swiftright Right
Swiftright Right

Yes, unions are all to blame for the f-35 boondanngle. 

Only a "imbecil.. floor sweeper" could master mind such an evil plot.  

Starshiprarity
Starshiprarity

Oh yes, lets blame the unions instead of the inherent corruption of the military industrial complex.

actions.junkmail
actions.junkmail

@ranger99 The JSF is a strike aircraft. We will be able to send 20 of these guys into an area with heavy air defense and blow up a bunch of stuff...Places we would never dare send an F-15 or F-16. 

WillLeach
WillLeach

Here is an older piece you might find interesting.

http://www.theamericanconserva...

Basically it explores the idea that while drones may appear a strategic gain from some perspectives they appear to have serious drawbacks when looked at from different angles. The verdict is still out on drones. Despite a debatable amount of tactical success drones have not yet reliably proven that they can lead to positive strategic outcomes. It is this same focus on material dominance at the tactical level that has led programs like the F-35, expensive progams that fail at the operational and strategic levels even when they are tactically adventgeouas. These programs are so expensive because of the erroneous belief that you can get a certain amount of innovation for every dollar Uncle Sam spends. While drones have no air to air combat bona fides (and it would take some major leaps for them to) they would still be faced with the downfalls of our current too big to fail procurement model.

Robert Salva
Robert Salva

Pentagon is using a blank check that was given to fight "war on terrorism".

And the semi-criminal Congress is still  wasting our money on that dud. F35 is clearly a flop - to this day they cannot make this disaster to fly properly:

The F-35C's arresting hook does not work.Classified "survivability issues", which have been speculated to be about stealth.The airframe is unlikely to last through the required lifespan.The software development is behind schedule.The aircraft is in danger of going overweightThere are multiple thermal management problems.The automated logistics information system is not developed.

Gary B
Gary B

You're right. "We" don't need them but politicians who rely on votes from defense industry constituencies do because the game in town is to stay in office, and the only way the criminal politicians can do that is to appease special interests. 

freefallingbomb
freefallingbomb

 Are you from Barsoom? The U.S. Armed Forces weren't made to resist foreign challengers, they were made to challenge foreigners.

I think you U.S. Americans call that “Defense”.

BraxtonLeeAndersonIII
BraxtonLeeAndersonIII

@actions.junkmail There is no place we wouldn't send a F-15/F-16/F-18 right now.  Only Great Britain has an Air Defense System that could slow us down.  And they have it because we DEVELOPED IT TOGETHER.  So why do we need a new Techno Terror when the world has yet to catch up to the Techno Terrors we built in the late 60's to early 70's.  America just finished putting the last Nimitz Class Carrier to sea and already working on her replacement? The first of the Nimitz Class the Nimitz and Eisenhower both just completed their FIRST REFITS and REFUELS.  Enterprise the Carrier in a Class all by herself ACTUALLY HAS enough fuel in her current rods to go to BATTLE one more time.  

So we need a new fangle techno terror fighter because?  All the money that has went into building one for all could have went to IMPROVING the F-22, and allowing the NAVY and Corps to field their own 5th Generation Fighter Mission Specific to their needs. Instead we have SUNK the future of our Air Power in one gizmo that has yet to launch a sidewinder.  Which takes us here, if Air to Air Missiles haven't been revolutionized as of yet.  Why are the planes which carry them being designed beyond the current armament systems?  

Fatesrider
Fatesrider

The point of views are self-serving and quite short-sighted in the article.  Achieving positive strategic outcomes has failed so far with both manned and unmanned aircraft.  Strategy isn't implemented by soldiers, sailors, airmen and Marines.  Nor is it implemented by hardware such as ships, aircraft and tanks.  Strategy is implemented by planners in rooms no one else gets into.

TACTICS is the implementation of strategy.  Tactically, drones have done more to defeat the "enemy" than all the other forms of aircraft combined in the last twelve years.  They account for more than 70% of enemy dead today in precision aerial strikes taken by people with their feet on the ground making informed decisions instead of by an exhausted pilot under combat conditions concerned about being shot down by ground or aerial fire.  Rather more telling is the fact the number of "friendly fire" incidents in drone strikes is astonishingly low - for the aforementioned reasons.

Finally, strategic planing has NEVER TAKEN INTO ACCOUNT THE TRUE CAPABILITIES OF DRONE AIRCRAFT.  A drone fighter doesn't exist today.  Drones have frequently, consistently and reliably delivered ordinance on ground targets, but have yet to be seen in aerial combat (the primary purpose for a "fighter" aircraft be it multi-role or not).  But we have the technology to build a drone stealth fighter that can pull 30 G inverted loops at mach 4 loops with thrust vectoring that will dominate anything manned and flying without once putting a pilot in harm's way.  All without the weight and expense of life-support systems and with the ability to control another drone if one is out for maintenance.  If you did that with a living pilot, you'd have to scrape them off the canopy.

That kind of capability has never been factored into strategic planning - ever.  So while the conservatives would love to see sexy fighters as long as the defense industry continues to fund their campaigns, to truly be "cutting edge" and get the job done better, faster, stronger and - above all - more cost effectively,  then drones are definitely where the strategic planners of the future should be looking.

Fatesrider
Fatesrider

It has nothing to do with defense industry constituents.  It has everything to do with defense industry donations.

Swiftright Right
Swiftright Right

Barsoom? nice.

I would guess not, nothing he said would leave me to believe he is a follower of the god of war.

disguss3
disguss3

"

we have the technology to build a drone stealth fighter that can pull 30 G inverted loops at mach 4 loops with thrust vectoring that will dominate anything manned and flying"

How could you possibly know that?  Even if that were possible, it's going to have to have serious new hardware to deploy weapons and fire them accurately while doing such maneuvers.

Even if that were possible, I have serious questions about a remote operator having the ability to respond quickly enough at those speeds to simultaneously fight and avoid hazards.