The latest cost report shows that after years of study, the Pentagon is seemingly no closer to clarifying the expense of operating and sustaining the stealthy new F-35 fighter, or reducing its staggering $1 trillion, 50-year life-cycle cost.
According to the 92-page F-35 selected acquisition report (SAR), the estimated cost of using the F-35 remains just as high as it was a year ago, although the difference between operating it and the legacy fleet has been diminished. Pentagon cost estimators inflated the cost per flying hour (CPFH) of the F-16C/D, the largest legacy fleet to be replaced by the F-35A, in calculating the operating cost difference between theand F-35.
As Air Force Chief of Staff Gen. Mark Welsh put it, the service needs an “apples-to-apples” comparison with the cost to operate its legacy fleet. And program officials and users in each of the U.S. services have been studying not only how to lower the F-35 CPFH but also reduce the total life-cycle cost. The CPFH can fluctuate with maintainers' skill levels and prices of parts and fuel, for example.
The SAR has provided a new methodology for comparing the F-16C/D and F-35A CPFH by “normalizing,” or effectively inflating, operations costs of the legacy fleet. One defense official familiar with cost-estimating practices says it is highly unusual to “tinker with actuals,” or numbers derived from real operations. The F-16C/D fleet has decades of data on which to rely, while the production version of the F-35 has only been flying for four years.
“The F-16C/D costs were developed in a joint effort with the Air Force Cost Analysis Agency and have been normalized for comparison to the F-35 estimate,” the SAR says. “In order to make the comparison more relevant, the actual F-16C/D CPFH was adjusted to reflect the cost of fuel and number of flight hours assumed by F-35A. The F-16C/D was also increased to include costs that F-16 shares with other Air Force platforms: Systems Engineering/Program Management, maintenance training costs, certain software development efforts and information systems.”
Moreover, the design and operation of the F-16C/D and F-35 belong to different eras. The F-35, for example, will be managed by a sweeping data-handling system called the Autonomic Information Logistics System (ALIS) that will include such tasks as aircraft diagnostics, parts supply and mission planning. No such system exists for the F-16, leaving cost estimators unsure about how to account for ALIS in projecting flying-hour costs in an “apples-to-apples” comparison of the two fighters.
The total F-16 CPFH is now estimated to be $24,899 (78% of the F-35's), up from $22,470 last year (70% of the F-35's). This year's F-16 cost includes actual data reported from squadrons as well as the other factors listed above.
The 50-year life-cycle cost of the F-35A is still more than $1.1 trillion, despite the kickoff of a series of F-35 sustainment “deep dive” reviews two years ago by then-Program Executive Officer (PEO) Vice Adm. David Venlet. He acknowledged that “the service chiefs look at the estimates of the maintenance and it makes their knees go weak” (AW&ST June 20, 2011, p. 116).
Recently, the U.S. Air Force, by far the largest F-35 operator with a planned buy of 1,763 F-35As, has focused on the CPFH. “We've normalized to a couple of numbers now, about $25,000 per flying hour for the F-16 C/D model and about $32,000 roughly for the F-35,” Welsh said last month. “That number may continue to adjust itself slightly, as we decide what factors are in or not, but that gives us an idea now” of comparing the two.
The SAR numbers do not, however, quell concerns that the F-35 may be unaffordable for some customers.
The current most forgiving estimate from PEO Lt. Gen. Christopher Bogdan on the new aircraft's CPFH is $24,000. Bogdan provided this figure to Dutch lawmakers in March based on assumptions of how the Dutch would operate and maintain the aircraft. His projection was not, however, backed by the SAR or by Pentagon procurement chief Frank Kendall, who said in April that the F-35A CPFH is “going to come down this year,” adding, “I don't think that it is going to come down as much as Chris Bogdan indicated.”
Neither Bogdan's nor Kendall's predictions have been accurate. Pentagon cost estimators opted to keep the F-35 CPFH steady at $31,923, the same value provided to Congress a year ago.
During his last planned press briefing as Air Force secretary, Michael Donley said last week, “We continue to work on [operating and sustainment] cost and efficiencies in the program. . . . It is an ongoing discussion inside the department.” But the service has yet to outline any changes it could make in its maintenance processes or training that could actually reduce its sustainment price.
The SAR to Congress reflects work of the Office of the Secretary of Defense's Cost Analysis and Program Evaluation (CAPE) group. The F-35 Joint Program Office plans to present its numbers—lower than those in the SAR—to Kendall in the fall, and it would like them to be adopted by the CAPE and codified in the next SAR that will go to Congress in the spring of 2014.
The total price to develop and buy the F-35 is estimated at $391 billion for the U.S., roughly the same as it was a year ago. The cost of designing and purchasing 2,443 platforms dropped by 1.5% since then, largely due to lower labor rates, the report says.
The price of the Pratt & Whitneyengine increased by about $442 million to $64,299 million because of adjustments in the inflation estimates (see article below).