JSF - SAR Discloses Another Three-Year Slip
1:17 PM on Apr 03, 2012
I spent some time this weekend on the latest Selected Acquisition Report (SAR) for the Joint Strike Fighter. It was an old-school job with a highlighter, yellow Post-Its, pencil and ultrafine rollerball. It hurt my head, but I am in good company: the Center for Strategic and Budgetary Assessments’ budget expert, Todd Harrison, calls it “incredibly dense and frustrating to read.”
Lockheed Martin and its consultants are upset by the $1.5 trillion dollar figure for the program’s life-cycle cost. That's ironic, because the first person to talk about JSF being a trillion-dollar program was Micky Blackwell, in 1996, and he was president of a major company aeronautics sector located not a million miles from Fort Worth.
Other details in the document are more interesting.
There have been rumblings over the past year about another “SDD replan”, and here it is: Another three-year slip to initial operational test and evaluation, the culmination of system development and demonstration, which now is due to be complete in 2019 – the target date is February but the threshold date is October.
The program has not made progress, it’s gone backwards: completion of IOT&E is farther off than it was two years ago. In the early 2010 restructuring, IOT&E was expected to be complete in April 2016. The services are not going to announce initial operational capability dates until next year, according to the SAR.
From a Reuters report last Friday, it appears that the main culprit is software and hardware, mainly in terms of the integration functions – sensor fusion and emission control – that take place in the fighter’s main processor banks.
Completion of IOT&E should be followed by a Milestone C full-rate production decision in April or October 2019 – but this is a misnomer, because the plans call for the program to be most of the way to full rate in the 2018 buy year. The FY18 budget is planned to fund the F-35B and C at their full 50/year rate, and the USAF will buy 60 F-35As, against an FRP level of 80. And that means committing to those 110 jets in early 2016, three years before MS-C, to get advance procurement funds into the 2017 budget.
As for the normal ten percent limit on low-rate initial production (as a fraction of total buy) the program has not merely driven a coach and horses through it, but the entire Wells Fargo Stagecoach Company. By the time the Milestone C decision is taken, 695 aircraft will be on the ramp, in production or fully funded in budgets submitted to Congress.
The financial details in the SAR are not made any clearer by two changes versus the 2010 edition: a change in the base year from 2002 (program start) to 2012, and the splitting of airframe and engine costs. On the other hand, the base-year 2012 numbers are no longer unrealistically low, and using the base-year numbers takes arguments about future inflation and the effects of delays out of the picture.
In what follows, I’m going to use average procurement unit cost (APUC) because I am a taxpayer and that’s the bottom line (literally) in procurement budgets. Unit recurring flyaway is the lowest cost, but neither the US nor anyone else can put an aircraft on the ramp for that money. And all numbers are base-2012 unless otherwise indicated.
Some findings: One of my contacts predicted in 2010 that it would be 2015 (buy year) before the F-35A cost less than the last F-22s. Shacked! The APUC for the F-35A in 2013-14 is $184-$188 million, versus $177m (2009 dollars) for the last F-22s. And that is at a much higher production rate, when F-35Bs and Cs are included.
And let's kill the "same price as an F-16 in FRP" meme. If all goes perfectly according to plan, an F-35A delivered eleven years hence, at full rate, will have an APUC tag of $89 million. A Super Hornet today is $81 million, and it's a 50 percent larger airplane than an F-16.
What about the frugal, do-more-with-less Marines? At full rate, the F-35B costs $138 million in 2018, versus $117 million for the F-35C. That’s nearly 80 percent of the price of the last batch of F-22s – you remember, that extravagantly expensive toy for the white-scarf air force – but coming off a 110-per-year line. What would have been the F-22 price at 40 per year, rather than 20?
Finally, all the kerfuffle around the $1.5 trillion program life-cycle obscures the central component of that calculation, which is cost per flying hour. Although the basis of the numbers has been changed, the SAR still compares the F-35A with the F-16, and shows that the estimated CPFH for the F-35A has gone from 1.22 F-16s in the 2010 SAR to 1.42 today – versus 0.8 F-16s, which was being claimed a few years ago. Where is that operations and support money going to come from?
The SAR predictions also rest on several big assumptions.
The first is that the F-35 procurement program will grow from $7.6 billion in FY15 to $13.1 billion in FY21, increasing by $950 million per year. In view of the US fiscal climate, the fact that Obama is still likely to be writing the FY16 and FY17 budgets (the latter including advance procurement for FY18), the USAF tanker and bomber programs and the reorientation towards Asia, this assumption is, to say the least, a little rosy in its tint.
Second, if you look at the forecast changes in F-35A unit costs, there is a 22 percent drop in APUC between FY16 (48 USAF jets) and FY18 (60 USAF jets) although the buy goes up by a quarter. But between FY18 and FY21 the USAF buy increases by one-third -- and the unit cost comes down by less than 8 percent. The explanation, almost certainly, is that the plan assumes large volume partner buys by FY17/18.
Finally, everything in the SAR rests on "if everything goes to plan from now on", which, so far, it hasn’t.
ar99, jsf, tacair