Tuesday, December 11, 2007

Keeping Talk of JSF "Costs" Real

Note: this is a cross-post of a comment I made over at Defensetech.org . I'm doing it here only because I can add links to the words in case anyone wants to explore the subject a little further.

Let’s talk apples and apples for a bit (and for a change).

Assuming the reference (see comments to original post at Defensetech) to $122M per JSF is from yet another limp-wristed GAO report (another thread for another time), perhaps even Table 3 of 'nearly useless' GAO-07-415, that ‘$122M’ number is unit “Acquisition Cost” which includes all the development, tooling, and everything else to mature the technology and put it in production, amortized over a planned production period and set quantity. It possibly includes other non-recurring costs, such as ‘facilities costs’ incurred when fielding the F-35. But without a deep dive into the analysis and background you couldn’t tell, doesn’t add very much to the discussion.

GAO-07-415 is only 'nearly useless' because it also provides us with some close-to-equivalent numbers for the F-18E/F, the Navy’s ersatz ‘risk reduction’ project (in case the JSF did not materialize). Using the same timeframe (through 2013), with a single bit of math we also see in the same Table 3 that the unit Acquisition Cost for the F-18E/F is a little more than $96M. So there appears to be a net $26M difference in unit Acquisition Cost. Some of that difference can be accounted for simply by when the dollars are spent within the time period. Obviously, the F-18E/F development dollars are behind it for the most part and are sunk cost, while a good chunk of the F-35’s development dollars are future dollars and yet to be spent. Therefore, some of the difference can be simply attributed to ‘different-year’ dollars.

But the driver behind the bulk of the dollar difference isn’t found in the calendar: we must factor in what those dollars buy the taxpayer in each option. Most of the technology and manufacturing infrastructure for the F-18E/F is only evolutionary vis-à-vis the F-18C/D generation. This includes any increases in capability and survivability. Just based upon what is publically acknowledged about the F-35 means it will be FAR more technically advanced and survivable than any F-18 – or any other predecessor aircraft. The powers-that-be have decided that the capability is worth the increase in unit Acquisition Cost, which isn’t surprising because it is by design.

More Costs
Unit Acquisition Cost is definitely NOT what just one F-35 costs or what it would cost to build one more, or to replace one that is lost. That number is much, much lower and known as unit Fly Away Cost. The F-35, by all accounts, is STILL within its target average flyaway cost range: early units will cost more (low-rate production) and later units will cost less. Go figure.

If Congress whacks the numbers bought, the target cost range will have to be adjusted, and then we will be working within a new reality with new numbers to befuddle the masses.

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