Davis says these seemingly runaway profits have been seen in programs such as munitions, which often have very long production runs, and, in some cases, in multiyear programs. Late in a production run, contractors often benefit from a learning curve, when processes and personnel are operating most efficiently.
And the service is now focusing on the operations and sustainment world, where contractors earn billions maintaining aircraft fleets. In sustainment, Davis says,“I don't think we have gone to the same level of sophistication of these contracts as we need to.”
The cost of maintaining weapon systems is increasing year over year, he says, in part because the fleet is aging more rapidly than it can be replaced. But the service is studying a peculiar trend it has discovered: The cost of maintaining weapon systems through contractor logistics support—maintenance done by a company—is increasing faster than the cost of maintaining them through the government's own depot system. “We are just trying to [get] at what are the true costs of sustainment,” says Davis.
This review is especially important as the Pentagon struggles to determine the forthcoming expense of maintaining and operating the F-35 fleet. The Air Force has not reduced its planned buy of 1,763 aircraft, despite the funding crunch. Last year, Naval Air Systems Command arrived at a sustainment figure exceeding $1 trillion for 50 years of service, stunning Pentagon officials and lawmakers. The services are now refining those numbers.
But, according to some Pentagon officials, just as important as the cost of maintenance is implementing contracts that can manage the government's exposure. While near-term work to better understand contractor logistics support and the depot maintenance costs will impact programs on the books today, they are sure to be a training ground for the F-35 maintenance plan.
The F-35 Joint Program Office held an industry day last year to explore various ideas for maintaining the massive fleet, though no results have been released by program officials.