Deceptive Pentagon Math In $89.2 Million F-35 Fighter Price

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(Photo: DoD / Staff Sgt. Devin Doskey, U.S. Air Force)

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)

This figure is the unit recurring flyaway cost—the price tag for just the aircraft and engine, which by themselves do not make a fully functioning weapon system.

That $89.2 million does not include procurement funds spent on initial spare parts, flight training simulators, the expensive – and poorly performing – ALIS support system, and more, all unique to the F-35.

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“Pentagon leaders are likely reveling in the news that they have negotiated an agreement with Lockheed Martin that they claim drives down the unit cost of the F-35 joint strike fighter to below $80 million in the next few years. While any reduction in costs for the most expensive weapons program in history is an improvement, all is not as it appears in the industry trade press. A quick perusal of publicly available Pentagon budget documents shows the real cost of the F-35 to be above $100 million per copy for the fiscal year 2020 buy. Given the work that remains, and the way the Pentagon has surrendered many key responsibilities to the manufacturer, the price is likely to be at least that amount or higher for the foreseeable future.

The most commonly mentioned figure is for the F-35A, the Air Force’s conventional takeoff variant and the least expensive model. The current estimate for the lot of aircraft currently in production is $89.2 million apiece. This figure is the unit recurring flyaway cost—the price tag for just the aircraft and engine, which by themselves do not make a fully functioning weapon system.

When we also consider the future modifications necessary to correct both the known and potential design flaws and the aircraft’s $44,000 per-flight-hour cost, it is easy to see why the F-35 program is the most expensive in history.

A handy tool for anyone interested in knowing more about actual costs of military programs and weapons is readily available online. The Pentagon posts budget materials for each fiscal year on the comptroller’s webpage. Included are budget estimates and the justification documents containing more charts and figures than any reasonable person would care to view.

The Air Force’s fiscal year 2020 budget pays for the 48 F-35As in Lot 11. The current $89.2 million dollar price the Pentagon uses is calculated by separating out just the costs for the airframe and the engine from the larger total procurement cost that includes ALIS, simulators, initial spare parts, and more to get to the artificially low $89.2 million. That is far from the whole story.

The Pentagon’s own budget documents list the FY 2020 procurement cost for those 48 aircraft as more than $101 million, nearly $12 million more than the figure rolled out for press reports. Using the Navy’s charts and the same math shows that the real costs for each F-35C is more than $123 million, while each F-35B costs in excess of $166 million. But even that figure doesn’t tell the whole story.

None of this factors in the research and development costs of the program. Ellen Lord, the Pentagon’s acquisition chief, announced on October 29 that the program needs more money to complete the developmental and testing phase of the program. The latest publicly available figures show that taxpayers will have spent approximately $55.5 billion for F-35 research and development. If the Pentagon purchases all 2,470 F-35s in the current plan, the true cost of each aircraft goes up by nearly $22.5 million. Program officials had expected to complete development and operational testing by December 2019. But designers and engineers have struggled to complete the Joint Simulation Environment, a highly accurate simulator necessary to complete operational testing. The troubles stem from programming flight data and aircraft performance data gathered during real-world flights into the simulation software. The Joint Strike Fighter program will run out of development money before the simulator and the subsequent operational testing can be completed. The Pentagon expects to announce before the end of 2019 just how much more money beyond the program’s current $406.4 billion budget will be needed to complete this phase of the program.

No matter how the production costs are calculated, that money alone will not buy you a fully functional F-35. Engineers were not able to complete all of the combat capabilities that were supposed to be included as part of the original development phase of the program. This incomplete work, which taxpayers have already paid for, will now be completed in a new development phase and called “follow-on modernization.” Only time will tell how much will ultimately be spent in this effort, but taxpayers are already on the hook for $10.5 billion.

There is also the matter of the cost of maintenance and ownership. Lockheed Martin stands to make most of its money from the F-35 program in annual non-competitive sustainment contracts. As POGO has reported before, the services can’t independently perform many of the most basic maintenance functions on the F-35 and must instead rely on civilian contractors. Lockheed Martin currently receives $2 billion a year to keep the fleet of approximately 400 aircraft flying, meaning the annual operating cost for each F-35 is $5 million.

Pentagon officials had expected to make the long-anticipated full-rate production decision for the F-35 program before the end of this year. Also known as a Milestone C decision, the program must complete all the steps, including operational testing, as required by federal law. No one appears to be letting such trifling details stand in their way, however. The recent cost estimates emerged as part of the announcement of a $34 billion deal for three years’ worth of F-35 production—478 aircraft for the U.S. services and international customers—beginning in 2020. Officials continue to call this “low-rate initial production,” but this is essentially full-rate production in everything but name. The announced 169 F-35s for Lot 14 is the full-rate production figure for the program.

The public shouldn’t fall for the gimmicks the Defense Department constantly uses on aircraft unit cost, but the press, amazingly, seems to fall for it every time. Congress shouldn’t buy these phony cost projections and compound the program’s problems, based on a phony buy-in price by buying more F-35s before testing is complete.”

https://www.pogo.org/analysis/2019/11/deceptive-pentagon-math-tries-to-obscure-100-million-price-tag-for-f-35/

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