Before you read any further, do yourself a favor and go get some aspirin. If you don’t have a headache now, you will. Time website has a 5-part article (1) analyzing the cost of the F-35 program. It’s not pretty! Here’s some notable points from the article:
-Costs are reported various ways which can make the costs seem higher or lower. The article does a nice job of describing the reporting methods. The most relevant seems to be the Average Procurement Unit Cost (APUC) which considers only the actual purchase costs over the entire buy. R&D costs are omitted.
-The article points out that the Selected Acquisition Report (SAR) and other documents which are the best source of information are only reporting the cost of the plane without an engine. The engine costs were broken out as a separate program with separate costs.
-APUC costs for an F-35 with an engine are $104.8M per plane in base year (2012) costs and $135.7M per plane in current year costs. These are average costs over the entire buy and do break out the various models.
-The author points out that the costs are obtained by dividing the costs by the number of airframes. However, the number of airframes has been decreased almost every year and will undoubtedly be reduced further, probably significantly. This will push the average cost figures higher.
-The article debunks the myth of serial production savings resulting in any significant lowering of costs.
-Unit Recurring Flyaway (URF) costs are also debunked with the article pointing out that the plane can’t actually fly, let alone engage in combat, with the limitations imposed by the URF method of accounting. The URF excludes support, training, spare parts, fuel, technical documents, or the inevitable upgrades and fixes that will ultimately be applied to make the plane flyable.
-Actual appropriated procurement costs rather than estimated APUCs show an average procurement cost from 2008 through 2014 of around $210M per plane with the 2014 production run costing $219M each. Yikes!!!! Also, that figure is rising for last several years, not falling as serial production efficiencies should be kicking in.
-The true cost impact of the F-35 program must include the large sums paid to upgrade various legacy aircraft due to the F-35’s excessive delays. Those costs are not accounted for in conventional analysis.
These costs are eye opening to say the least. The most important point is that all the estimates depend on the current planned number of aircraft actually being built and that is 100% certain not to happen. The total buy will be significantly reduced as costs continue to rise and as the buy is reduced the costs will further increase. That’s the definition of a vicious circle.
For the F-35 fanboys among you, if you’d like to dispute the costs you’d better back it up with some pretty accurate and specific data. This is the most comprehensive and best cost analysis I’ve seen of the program. If you want to dispute it, do so with facts!
Also, bear in mind that I'm reporting on the article. If you want to argue, you'll be arguing with the author of the article, not me. Personally, I see nothing in the analysis that I greatly disagree with but I have not checked out the numbers for myself.
This program is killing the military and the Navy in particular. The Navy is going to be saddled with a generation of aircraft it doesn't really want and that offers little improvement over existing Super Hornets. Very disappointing.
(1) http://nation.time.com/2013/06/03/the-new-era-of-good-f-35-feelings/ , Winslow Wheeler,