What’s the Latest Word on F-35 Unit Cost?

An F-35 Lightning II assigned to the 61st Fighter Squadron at Luke Air Force Base. (U.S. Air Force photo/Staff Sgt. Staci Miller/Released)

By Winslow T. Wheeler

The 2014 “Omnibus” appropriations act, now signed into law, gives us further insights into the unit cost of the F-35. The fine print in the “Omnibus,” or actually in its “Joint Explanatory Statement,” also suggests the possibility of turbulence in the F-35 program beneath the successful, affordable exterior advocates would have us believe. Other recently available information, including new DOD documents, reinforce that it’s not efficiencies but more cost and delay that are likely to occur.

The F-35-specific data in the Omnibus’ Joint Explanatory Statement (JES) calculate to a unit cost for a generic F-35 (only counting procurement costs, not research and development) at $185 million each. The Air Force’s F-35As are $159 million each; the Marines’ F-35Bs are $214 million each, and the Navy’s F-35Cs are $264 million each. But none of that is the whole story; these calculations may well be undercounts of what F-35s will cost in fiscal year 2014.

The table below shows all the F-35 program actions the Omnibus revealed in its “Joint Explanatory Statement.” Several things are salient:

• Congress reduced F-35 procurement in 2014 by a total of $652 million from the $6.014 billion requested (These amounts include money for “modification of aircraft,” a subaccount in procurement).

• Despite the eleven percent reduction, not a single aircraft was removed from planned 2014 procurement.

• “Long Lead,” or advance procurement (AP), funding for 2015 was reduced $40 million (7 percent), and the number of 2015 aircraft was reduced by three aircraft (7 percent) from the 42 planned.

• Overall Research and Development (R&D) funding for system development (such as for software and testing) was reduced by $408 million (22 percent) from the $1.896 billion requested.

See the details in the table below.

AccountRequestOmnibusDifferenceQuantityComment
PROCUREMENT     
Air Force (2014)
3.061
2.889-0.1721919 requested
AP (2015)0.3640.340-0.02428– 2 from the 30 requested
Navy (2014)1.3501.028-0.32244 requested
AP (2015)0.0950.079-0.0165-1 from the requested
Marines (2014) 1.267 1.176 -0.0916 6 requested
AP (2015) 0.103 0.103 —6 6 requested
Modification of Aircraft     
 Air Force 0.158 0.129 -0.029  
 Navy 0.031 0.029 -0.002  
 Marines 0.147 0.111 -0.036  
 Subtotal (Proc.)     
 2014 6.014 5.362 -0.652 29 $632 million less buys the same 29 aircraft requested.  (N.B.: 24% decrease in F-35C procurement has no effect on the number bought.)
 20150.5620.522-0.040 3942 requested, an increase of 10 over 2014 is funded: 9 of them in AF.
 R&D     
 Air Force0.8160.628-0.188  
 F-35 Sqdns0.0330.003-0.030  
 Subtotal AF0.8490.631-0.218  
Navy/MC EMD0.5130.416-0.097  
Navy/MC0.5340.441-0.093  Omnibus JES does not distinguish between Navy and USMC R&D
Subtotal N/MC
1.047 0.857-0.190 Omnibus JES does not distinguish between Navy and USMC R&D
 Subtotal (R&D) 1.896 1.488 -0.408  
 GRAND TOTAL     
20147.910 6.850-1.060 29 
20150.5620.522-0.040 39 3 Aircraft Reduced from 2015 Request

Except for some obtuse phrases (such as describing the various reductions as money being requested “ahead of need,” cuts due to “cost growth,” and “program decrease for forward financing”), the JES is silent on the meaning and impact of these reductions.

Accepting, for the moment, the premise that the full request of 29 F-35s can and will be bought for $652 million less than the $6.0 billion requested for procurement, we have a new unit production cost of a generic F-35 at $185 million: F-35As are $159 million each; F-35Bs are $214 million each, and F-35Cs are $264 million each. This new calculation compares to the absurd $75 million per unit cost that a senior Lockheed Martin manager recently asserted. Real world costs for a useable airplane are literally multiples of that.

It is not plausible that a $1.1 billion (13 percent) cut in an $8.4 billion program will not have an impact.

The $652 million reduction in the $6.0 billion request, just for procurement, is a good place to start wondering what is actually going on.

When we see the 29 aircraft produced and delivered for the reduced amount of $5.4 billion (not the $6.0 requested), we can accept the possibility that due to the hard driving, cost conscious approach of F-35 program managers and the Lockheed-Martin Corporation, the unit costs of generic F-35s (and of each individual model) are indeed coming down from the amount originally requested for 2014. There has been rhetoric about that; the data could bear it out, if that is actually the case. We shall see.

There are also other possibilities. There may be a reduction in the numbers to be produced that we have not yet been informed of. Something similar may have already happened in 2013: sequestration and congressional cuts took over $1 billion out of the 2013 program. DOD took actions to restore some amount of that money, but we have not seen what the final, actual dollar amounts are for 2103, and we have not seen exactly how many aircraft will actually be bought with that: the press reported speculation inside DOD that five aircraft might fall out of the 2013 buy.

That speculation might be cleared up in the 2015 DOD budget, when we see it in March. The new budget’s justification materials will include data for 2013 and 2014 (in addition to 2015); we should see more up to date numbers for 2013 and presumably 2014. On the other hand, because these production authorizations take up to three years to result in delivered aircraft, it may be that we get the revised spending amounts only, not yet the numbers of the aircraft to actually be delivered. The number authorized and the number to be delivered could turn out to be different. The data in the 2015 budget request may clear things up, or they may not.

We can get further insight into what is actually happening in the F-35 program by also looking at the cuts Congress exacted out of the R&D portions of the F-35 program for 2014. Total R&D was reduced from $1.896 billion to $1.488 billion, a $408 million (21 percent) reduction. One source explained to me that the Joint Program Office (JPO) is rolling expenses out of 2014 into subsequent fiscal years: System development is behind schedule, and costs (and delays) are being rolled forward–rather than efficiencies allowing the costs to come down.

There is independent documentation to substantiate that characterization. The Navy’s COMNAVAIRFOR recently sent a message to the Chief of Naval Operations in the context of the Navy’s 2016 budget preparations. Among various program issues, the F-35C was described to be “severely underfunded” for “simulator operations, depot overhauls, engineering, maintenance, ALIS support, etc.” If “the current shortfall” is not funded to minimum levels, testing and other activities will fall behind and “the planned IOC will become unexecutable.” That shortfall was estimated at $96 million in 2016 and at $1.2 billion over the next five years in the Future Year Defense Program (FYDP). Given that the data in the message preceded the reductions extracted from Navy R&D in the Omnibus (a reduction of $190 million to a request of $1.0 billion, or 18 percent less), the delays and cost increases in future years for the F-35C can only be exacerbated.

Moreover, new DOD information leaked to Reuters indicates that progress for the Marines F-35B is also behind schedule and presumably will need more funding, not less, to get back on track-if it can.

In sum, the information coming out of the Pentagon on the F-35 program would seem to indicate that it’s not efficiencies that are occurring in the program, but alterations that can only have the impact of further delays and cost increases. The reductions Congress exacted from the program in 2014 will surely have an effect, but in the absence of more details and actual events, it is unwise to assume that the trend is toward less cost, or a fulfilled schedule.

The unit costs that one can currently calculate from Congress’ 2014 “Omnibus” (namely, $185 million each across all three models; $159 million for an F-35A; $214 million for an F-35B, and $264 million for an F-35C) are clearly unrealistic – unrealistically low.
__________________
Winslow T. Wheeler
Director
Straus Military Reform Project
Project On Government Oversight

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7 Comments

  1. Conner the F-35 has yet to fly in combat – or even drop a bomb in testing – which will be occurring in the next 15 months – AWST Dec 30 2013 – Jan 6th 2014 pg58 says its the worlds leading combat aircraft – in the same article the F-35 is the ‘slowest’ – Aviation Weekly editions show it having acceleration and range of the aircraft are deficient compared to other current models – the one thing the F-35 is hands down winner at is COST. And you are correct it’s still experimental and it’s progress.. fix this fix that – even the heads up fancy pilot helmet is not yet ready for prime time – nor is the fancy ‘support and supply system’ to maintain this aircraft. Countries are starting to wonder about their orders and looking to alternatives… and your again correct Conner – all this is fixable – but at what cost sir? That is in “FACT” the object of the current report in which they still can’t quite get a number on it… This aircraft is not scheduled to enter service, depending on which one your talking about till mid 2016 for the Air Force and up to 2019 for the Navy – so this is indeed a ‘ways off’ and this is not cast in stone – so that “FIX IT” list must be quite a list. – Sure lost of fancy stuff – AESA – non-kinetics effects -etc. but it’s taking a long time… perhaps to long – the F-18 Super and Growlers are up and running ‘right now’ and getting more face lifts.. making their potential perhaps more effective ‘right now’ – look at where the bombs come from in Afghanistan today – Marine Hornets – We are on the same side Conner – I do like the A-10 with it’s 30 trigger runs vs. the 3 or so available for the F-35 and the A-10’s are recently refitted with new wings and avionics that allow smart weapons use right now – my point is I think the F-35 is a dooodoo bird.. and yeah I think its’ ugly.

  2. This is not putting down the A-10. The A-10 is perfect. Two different fighters! I could spew all the good things about the F-35 but I would want to note facts. I’m simply noting the concept of it because it’s still experimental in it’s progress. OBTW, ugly in this discussion is not a bad thing. i.e. the WART HOG. Nothing today can come close to the A-10. We’re on the same side Billy. All you list is fixible. Maybe read before you turn on thr sarcasim.

  3. BTW – what happen to the F-22 – oh it became fantastic – but done – and we don’t have them in sufficient numbers to amount to anything effective – but it is truly a remarkable aircraft

  4. the F-35 is an awesome fighter – that is slower than current fighters – accelerates slower than current fighters – does not carry the weapons loads of current fighter / bombers – is not as sustainable as current fighter / bomber / strike aircraft – is supposed to be the wonder plane that replaces all planes does everything in exceptional manner and is cheaper – I don’t believe it will be ; and it’s not yet DROPPED A BOMB even in testing – it does look great landing on the ship; it can do some amazing maneuvers with it’s nozzle air – but it can’t linger on target and has on three trigger runs vs. the A-10 30 trigger runs – so even as a ground support weapon it does not meet current needs. Its supposed to be the new F-16 on steroids… from the cost and development it looks like its on steroids for medical purposes to stay alive…

  5. This story reads like a one sided long winded government report. The F-35 is an awesome fighter. No good points mentioned here. The governmenst inefficiency of how the plane gets built from start to finish is one thing. The completed product once the bugs are worked out is another.

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