Pentagon Caused Most Of The Increases In F-35 Costs, So It Can Fix Them
During his confirmation hearing before the Senate Armed Services Committee on September 13, deputy defense secretary-designate Ashton Carter assured legislators that the Pentagon is working real hard to reduce a trillion-dollar bill for sustaining the F-35 fighter over its 50-year operational lifetime. That's good news, since in his previous capacity as the Pentagon's acquisition chief, he presided over an office that has done just about everything possible to drive those costs up.
Not the actual costs, that is -- those haven't risen much over the last decade. But the Pentagon's estimates have gone through the ceiling, mainly because it keeps expanding the range of items included in calculations. No kidding: 70-80 percent of all the increases in the cost to keep the F-35 flying are a consequence of changes in the way the Pentagon tracks and manages the program. This is one program where the customer has become the biggest threat to success. Let's take a look at how it has undercut support for the fighter.
First of all, estimators decided to increase many of the quantitative parameters on future operations. Instead of the 33 bases where the original 2002 sustainment estimate said the planes would operate, officials decided 49 was the right number. Instead of a 30-year lifespan, they decided it should be 50 years (without any increase in flight hours, making the whole program intrinsically less efficient). Instead of 253 major items of support equipment, they decided 525 would be needed. They also doubled the number of squadron logistics kits and quadrupled the number of initial training sites. Amazingly enough, estimated sustainment costs went up.
Another thing they decided to do was express long-term sustainment costs in "then-year" dollars, meaning dollars that include inflation. The only problem with that is no one has the foggiest idea what inflation rates are likely to be between now and 2065, the span of time covered by the estimates. So they made them up. Rather than reporting the cost of sustainment in today's dollars -- which would be about $500 billion over 50 years -- they quoted an utterly unprovable price-tag of $1.069 trillion. Needless to say, the latter number increased congressional concerns about affordability.
But the bean-counters didn't stop there. They neglected to mention to Congress in reporting F-35 sustainment costs that the existing fleet of tactical aircraft already costs about 20 percent more to sustain each year than they estimate the F-35 will ($12 billion versus $10.6 billion annually). They also failed to mention how the cost of sustaining the current tactical fleet will escalate using the same counting rules applied to F-35 as cold-war planes grow increasingly decrepit. If that information had been reported, it would have been apparent that the yearly cost of keeping all those ancient fighters flying will be nearly twice the estimated cost of F-35 sustainment by 2020. Follow that same trend-line out 50 years, and the legacy fleet costs four trillion dollars to keep flying, versus barely a quarter of that for F-35.
I could go on. Pentagon estimators ignored the various design features built into F-35 that will mitigate sustainment costs encountered in previous generations of fighters. They burdened F-35 sustainment with costs not attributed to legacy planes, like mid-life capability upgrades. The list of measures biasing F-35 sustainment estimates towards the most inflated number possible just goes on and on. But let's look at the bright side: since the Pentagon caused most of the problem with F-35 sustainment costs, it can fix the problem. All it has to do is start using more realistic assumptions in its estimates.