What’s wrong with this picture? Last year Congress approved tough acquisition reform legislation with the support of top defense authorizers in both chambers. To enforce greater realism in projecting weapons costs, the legislation directed policymakers to rely on estimates provided by the Pentagon’s supposedly impartial, rigorous Cost Assessment and Program Evaluation (CAPE) shop. So what is the reaction of the same legislators when they receive estimates from CAPE that they don’t like about the cost of the alternate engine for the F-35 fighter? They call the estimates “short sighted,” and inadequate.
Are the legislators being hypocritical, or did they misjudge how impartial and rigorous CAPE’s cost estimates are? If they’re just being two-faced, then this must set some sort of new land-speed record for how fast acquisition reform initiatives come unraveled. On the other hand, if they sincerely believe that CAPE got the estimates wrong on the F-35 fighter’s alternate engine, then what does that say about the same organization’s estimates of future costs for the fighter itself?
The alarming estimates that CAPE produced of cost growth in the fighter led to a restructuring of the program last year, and now those same estimates are leading insiders to predict a breach of Nunn-McCurdy thresholds on cost overruns. As I said when the leaks of cost growth out of CAPE first appeared at insidedefense.com, there is good reason to believe that the estimates are much too pessimistic. The estimates were assembled in a few weeks by a few people relying on historical information from other programs — most notably F-22 — as if the contractor and services had learned nothing from past mistakes.
Granted, some of the cost increase arises from a legitimate difference of opinion between the Bush and Obama administrations about how much up-front testing of the fighter is required. But the crux of the controversy over F-35 development costs centers on whether CAPE has done a “capable” (no pun intended) job of projecting costs. The legislators who doubt its projections of cost growth in the alternate engine seem to be raising the possibility that it might have gotten F-35 cost estimates wrong too. I’m told the organization put more effort into figuring out the engine numbers than the estimates for the fighter, so if it still got the engine wrong, then maybe the fighter calculations are incorrect also.
The Cost Assessment and Program Evaluation office provides a valuable sanity check on the pretensions of program offices and contractors. But if legislators want to enshrine CAPE as the touchstone of all that is honest and professional in projecting weapons costs, then maybe they better make sure that office is up to the task. Having now questioned its analysis of alternate engine costs, perhaps the time has come for authorizers to hold a hearing on whether CAPE got the fighter costs right. If they didn’t, we’re sure wasting a lot of time and effort on a non-existent problem.
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