The Department of Defense has released its latest estimates of how much major weapons programs will cost to buy, and it says the price-tag for the biggest program of all is shrinking. The official estimate of the cost to buy 2,457 F-35 aircraft over three decades fell $4.94 billion (1.5 %) in the Selected Acquisition Report, which is the department’s most authoritative projection of program costs. This is the first time the Pentagon has reduced the cost estimate on the aircraft, and it attributes the change mainly to lower projected labor rates plus the inclusion of actual costs from initial low-rate production.
The projected cost of F-35 engines, which are managed separately from the airframe, rose $442 million (less than 1%) due mainly to changes in inflation estimates. The cost of buying all 2,457 aircraft for three services through 2032 is now expected to total $327 billion, while the cost of the engines is expected to total $64 billion. Lockheed Martin, prime contractor for the aircraft, has predicted that the price-tag for an Air Force variant of the single-engine F-35 will be roughly equal by the end of the decade to what a legacy F-16 sells for today. Getting the cost down is crucial to maximizing overseas sales.
The government’s latest estimates are consistent with contractor predictions of moderating costs as production ramps up. Aircraft programs typically exhibit declining unit costs as they enter serial production due to economies of scale and improved understanding of manufacturing processes. Although current estimates are still based partly on guesswork, they are increasingly informed by actual experience in building the aircraft. Thus far, the price-tag for successive lots of production F-35s has been below what the government expected, with the average cost of a plane declining in each new lot.
A similar pattern is likely to unfold in the cost of sustaining F-35s once they are operational. The government currently estimates it will cost over a trillion “then-year” dollars to keep the planes flying and up-to-date for 50 years, or about half that amount in today’s dollars (meaning without inflation). However, the military has little experience sustaining F-35, and there is no way of knowing what things will cost 20 or 30 years from today. F-35 is the only weapons program other than aircraft carriers for which the government has calculated 50-year life cycle costs, which has the effect of making total program costs look quite imposing. However, alternative approaches to tactical-aircraft modernization would likely cost more.
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