In two hearings in the Senate and House Armed Services Committees, Under Secretary for Acquisition, Technology and Logistics Ashton Carter and his Director for Cost Assessment and Program Evaluation Christine Fox presented new unit cost estimates for the F-35. Those estimates are extremely optimistic (and very incomplete).
Incomplete because the $114 million to $135 million “Average Procurement Unit Cost” (APUC) Carter and Fox announced, in “then-year” dollars, to buy 2,443 aircraft does not include the research, development, test and evaluation for the F-35. Their current estimate of the additional development costs is about $60 billion (to add to the current estimate of $278 to $329 billion to produce 2,443 F -35s). Including development would add about $25 million to the cost of each aircraft, making the Carter-Fox total program unit cost vary from $139 million to $160 million.
It may be that Carter and Fox are unwilling to testify to a total program unit cost because they are unwilling to inflict further “sticker shock.” Presumably, the official, more complete numbers will be made available later in April when the Defense Department releases its new Selected Acquisition Report (SAR), now about 18 months overdue. What Carter and Fox thought they had to gain by delaying the more complete revelation does not merit speculation; their existing (and truncated) production unit cost estimates have little to do with unfolding realities.
The 2011 budget request for the F-35 plans to buy 43 aircraft for $8.654 billion in procurement funding. That makes for a production unit cost for the 2011 buy of $201 million per F-35. In his March 24 testimony to the House Armed Services Committee, Carter stated that the unit cost “will decrease significantly” from this level as purchases increase and production processes “optimize.” This is consistent with conventional wisdom that there exists a “learning curve” for aircraft production that progressively shrinks unit cost steadily as production proceeds. Thus, Carter and Fox argue, F-35 unit production costs will come down from the currently unsettlingly high number of $201 million each down to the $114 to $135 million band.
The last 50 years of actual DOD aircraft cost history, especially of “stealth” aircraft, do not treat the Carter-Fox estimates, and the prevailing conventional wisdom, very politely, however. The absence of any such progressive “learning curve” in unit cost has been thoroughly demonstrated by the analysis of Chuck Spinney, using actual procurement data. In the case of the F-35, we can test the likelihood and amount of “learning curve” reduction in the unit cost by comparing the F-35 at this point in its program history to its closest aircraft relative, the F-22.
F-35 unit cost, just for the procurement side of the ledger, is far more likely to stay around $200 million per copy, or go up, than it is to reduce to the not particularly affordable costs Carter and Fox now predict.
It also worth remembering that the $200-plus million unit cost anticipated here is incomplete. An accurate sticker price includes the total cost of development, testing, facilities and other factors amortized across the ultimate size of the fleet. With the fleet size shrinking by some currently unknown, but very substantial, factor, the unit cost for the total program is sure to grow to even more horrifying levels.
Whatever that final unit cost may ultimately be, to predict it now will surely be met with gales of derisive laughter from the advocates of this ongoing disaster -- gales that will last only until the actual bill arrives on their doorstep. (end of excerpt)
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