Pentagon Issues Inflated Cost Estimate For F-35 Fighter
(Source: Lexington Institute; issued March 29, 2012)
(© Lexington Institute; reproduced by permission)
The Department of Defense has completed its latest wildly inaccurate estimate of how much it will cost to build and operate the F-35 fighter over fifty years. The F-35 is the Pentagon's biggest weapon program and it's the first military aircraft for which 50-year costs have been calculated, so the number is predictably huge: $1.45 trillion according to Reuters.

However, before everybody goes ape about the new price-tag, there's a few facts they ought to keep in mind. First, the estimate is stated in "then-year" dollars, meaning with inflation included. Since the department's assumptions about future inflation rates for labor, fuel and other inputs are unprovable and probably wrong, they shouldn't be taken seriously. If you take out the effects of inflation and express the 50-year cost in today's dollars, it's less than a trillion dollars.

Second, most of the recent cost increases in the program were caused by government management decisions rather than contractor actions. For instance, when the program began costs were estimated over a 30-year period for a plane deployed at 33 bases; now the costs are estimated over a 50-year period for a plane deployed at 49 bases, so of course the planes look pricier. The government has made so many changes to the scope and methods of its cost estimates that they account for three-quarters of all the recent increases in costs.

Third, some of the assumptions underpinning the cost estimates are really shaky. For example, a major component of F-35 future costs is capability upgrades that haven't even been invented yet. Pentagon analysts managed to come up with a number for how much those upgrades will cost, but how can anybody believe them? Maybe that's why such costs aren't even included in the estimates for other planes. Like the $60 billion increase in long-term support costs caused by the recent decision to slow production, the projected price of future upgrades is total fiction.

Perhaps what politicians and policymakers should be focusing on is the cost of losing a war because the Pentagon failed to modernize U.S. air power in a timely fashion. The Obama Administration seems to be in no rush to field the F-35 despite the increasingly decrepit state of U.S. air fleets, as if that poses no problem for future administrations. But losing a war for lack of adequate air power could cost taxpayers a lot more than the price-tag of the F-35, and the way the Pentagon calculates F-35 costs there's no reason to take the new estimates seriously anyway.


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