We now lament the termination of the F-22 program because
the supposed low cost alternative, the F-35, has turned out not to be low cost
and is many, many years behind schedule and is projected to cost trillions of
dollars in sustainment. Suddenly, that
F-22 that was too expensive is looking a whole lot better especially in light
of its vastly superior capabilities compared to the rather mundane combat
capabilities of the F-35.
The F-22 program was prematurely terminated, in large part,
because of its high costs. Let’s review
the F-22 program costs and see if we can get a better grasp of the cost issue.
To summarize the program, the F-22 was produced from 1996-2011with
a total of 195 aircraft built (8 test plus 187 operational). According to Wiki, the planned buy was 740
aircraft.(2) The first production lot
contract was awarded in Sep 2000.
From Wikipedia, we see the original funding vision,
The
USAF originally envisioned ordering 750 [F-22s] at a total program cost of
$44.3 billion and procurement cost of $26.2 billion in fiscal year
(FY) 1985 dollars. (2)
If realized, the procurement cost estimate of $26.2B for 750
aircraft would have put the procurement cost at $35M (FY85) per aircraft or
$85M (FY2021) – the exact cost of the cheapest variant of the F-35, today!
Note, also, the envisioned relative proportion of development
costs to production costs:
Development = $18.1B (41%)
Procurement = $26.2B
(59%)
One of the problems with modern aircraft (and ship!)
procurement programs is that the development costs have a tendency (absolute certainty!)
to balloon which takes an otherwise possibly acceptable program from reasonable
to unreasonable. We’ll circle back to
this, momentarily.
Of course, the original funding vision failed to materialize. Subsequent cost increases occurred and
production quantities were reduced,
The
1990 Major Aircraft Review led by Secretary of
Defense Dick Cheney reduced this to 648 aircraft beginning in 1996. By 1997, funding
instability had further cut the total to 339, which was again reduced to 277 by
2003. In 2004, the Department of
Defense (DoD) further
reduced this to 183 operational aircraft, despite the USAF's preference for
381. A multi-year procurement plan was
implemented in 2006 to save $15 billion, with total program cost projected
to be $62 billion for 183 F-22s distributed to seven combat squadrons. In
2008, Congress passed a defense spending bill that raised the total orders for
production aircraft to 187. (2)
And,
As
production wound down in 2011, the total program cost is estimated to be about
$67.3 billion, with $32.4 billion spent on Research, Development,
Test and Evaluation (RDT&E) and $34.9 billion on procurement and
military construction (MILCON) in then year dollars. The incremental
cost for an additional F-22 was estimated at
about $138 million in 2009.(2)
[emphasis added]
Note the change in the relative costs of development to procurement
from the original vision to the end of the program:
Development = $32.4B (48%)
Procurement = $34.9B (52%)
The development portion of the costs went from an
anticipated 41% of the total program cost to nearly half. Over the entire program, the production cost
was $179M (FY2011) per aircraft ($209M per aircraft FY2021).
More relevantly, the incremental cost in 2009 was $138M per
aircraft. This is more relevant because
it captures the economy of scale that had been achieved near the end of the
production run. Compare this to the
early F-35 production costs, at the same number of aircraft produced, which
were running $150M - $200M+, depending on variant and whose report you choose
to believe. This tells us that at
equivalent points in their production (around 150 aircraft produced), the F-22
and F-35 were in the same rough ballpark of production cost. More importantly, this demonstrates that the
F-22 would have continued to decrease in cost just as the F-35 has. In other words, there was no reason to have
terminated the F-22 program just based on production costs!
 |
| F-22 Production |
F-35 production started at $170M+ per aircraft and has now dropped to $85M per
aircraft, depending on variant. Apply
that same percentage drop to the F-22 price and you get a drop from $140M to
$66M per aircraft.
Costs are interesting but, ultimately, unimportant, in a
sense. What matters is combat
effectiveness. In that regard, the F-22
is several times more combat-effective than the F-35 and, therefore, represents
a much better value for the dollar. It
is this factor, combat value for the dollar that the decision makers failed to
consider when they reduced and then terminated the F-22 program. Even if the F-22 wound up costing twice the
F-35, it delivers several times the combat capability and that makes it a
bargain, in comparison.
Also, individual aircraft procurement cost, when amortized
over the life of the aircraft, is insignificant. For example, an F-22 costing $140M and
having, say, a 30 year service life, is only $4.7M/yr.
Let’s also bear in mind that the real cost of the F-35 is
not the supposed $80M in the most recent production lot. The real cost is the initial production cost
plus the cost to retrofit capabilities that are missing from the aircraft and
fixes for the various problems that the concurrency production scheme
imposed. So, that early aircraft that
cost $150M, or even the latest $80M aircraft, will have additional costs
imposed in order to bring them up to actual combat standards. In fact, hundreds of F-35s have already been
deemed either incapable of being brought up to standard or uneconomical to
bring them up to standard. The cost of
the hundreds of concurrency orphans has to be added to the overall program cost
to produce a lesser number of actual combat capable aircraft (actual usable
number of aircraft = total aircraft produced – concurrency orphans).
Conclusion
The F-22 was expensive, without a doubt. However, as we’ve seen, by looking only at
the cost early in the production run, the costs were exaggerated and
inappropriately skewed the termination decision. In contrast, the same kind of excessive costs
early in the F-35 program were accepted and the economy of scale price drops
eventually resulted in a production cost half or less of the initial cost. Had we let the F-22 production run continue,
there is every reason to believe that we would have seen the same percentage
decrease in cost.
The other overwhelming conclusion is that we terminated a
program that was delivering superb combat value for the dollar and that’s
always an unwise decision. This is not
to say that costs can be totally ignored but it clearly says that there is more
to production decisions than just cost. A
better route for the F-22 program might have been to impose a production hiatus
for a year or so and focus on the cost issues with the goal of resuming
production with lower costs.
It is also worth bearing in mind that the F-22 was the first
of its kind. No, it wasn’t the first
stealth aircraft but it was the first mass produced, front line stealth fighter
and, as such, incorporated many new technologies and production techniques - advances
that the F-35 design and production benefited from. Again, had we taken a hiatus and worked out
those firsts we could have resumed production with the production cost savings
that the F-35 ultimately benefited from.
This points out the problem of running a military by business
cases. Business cases tend to focus on
the short term cost and exclude consideration of long term costs and non-fiscal
factors such as combat effectiveness.
Finally, had F-22 production continued, the proposed naval
variant might have come to fruition and naval aviation would be immensely more
capable today.
____________________________________
(1)https://seekingalpha.com/article/43114-pentagon-awards-lockheed-martin-5b-fminus-22-contract
(2)Wikipedia, “Lockheed Martin F-22 Raptor”, retrieved
2-Apr-2021,
https://en.wikipedia.org/wiki/Lockheed_Martin_F-22_Raptor
