The prices quoted in the press are usually based on the cost of an Air Force conventional take-off variant, the F-35A—the least expensive of the three variants. In addition, that cost figure is only an estimate of future costs, one that assumes everything will proceed perfectly for the F-35 from here on out—which is unlikely as the program enters its most technologically challenging test phase. As this latest DOT&E report shows, the program has a long way to go before the F-35 will be ready for combat.
The Joint Program Office recently claimed that the price for an F-35A went below $100 million each in the FY 2016 contract. Yet in its FY 2016 legislation, Congress appropriated $119.6 million per F-35A.
Even this amount doesn’t tell the whole story: it only covers the procurement cost , not what it will cost to bring F-35As up to the latest approved configuration, nor the additional Military Construction costs to house and operate F-35As. And of course, the $119.6 million price tag does not include any of the research and development costs to develop and test the F-35A. The 2016 production-only cost for the Marine Corps’ F-35B and the Navy’s F-35C is $166.4 million and $185.2 million per plane, respectively.
First, they don’t include how much it will cost to fix design flaws discovered in recent, current, and future testing—a not insubstantial amount of money. Nor do they include the costs of planned modernization efforts, such as for Block 4 of the aircraft, which will be incorporated into all F-35As in the future. The Government Accountability Office estimates the program will spend at least $3 billion on the modernization effort in the next six years. For example, modifications to fix just some of the problems identified up to now cost $426.7 million, according to the GAO. Each of these aircraft were already modified and they will require more in the future. The Air Force has already acknowledged it must retrofit all 108 of the F-35As delivered to it and in the operational fleet. These costs will continue to grow as known problems are fixed and new ones are discovered, and they are an integral part of the cost per airplane.
As the program moves out of the easy part of the testing—the development or laboratory testing—and into the critical combat (operational) testing period in the next few years, even more problems will be uncovered. A good example occurred in late 2016 when engineers discovered debris inside the fuel tank of an F-35. Upon closer inspection, they found that the insulation wrapped around coolant lines had disintegrated because a subcontractor failed to use the proper sealant. And, when the GAO estimated it would cost $426.7 million to fix some of the known problems in the F-35As already in depot, the coolant line insulation problem had not been discovered. Fixes to this and other problems will all have to be devised, tested, and implemented throughout the fleet of aircraft already produced and purchased.
Second, the incomplete unit cost estimates used by the JPO, Lockheed Martin, and the Pentagon in general—their so called “flyaway” unit costs—do not include the purchase of support equipment (tools, computers for ALIS, simulators for training, initial spare parts, and more) needed to enable the F-35A fleet to operate. Quite literally, the DoD’s “flyaway” cost does not buy a system capable of flight operations.
The Pentagon has already committed to purchasing 346 F-35s since the program entered into what DoD euphemistically calls “Low Rate Initial Production.” The 798 jets the services would have at the end of the block buy of about 450 from 2018 to 2021 would be nearly 33 percent of the total procurement…all before the program completes initial operational testing and has discovered what works as intended and what doesn’t. It is important to note that the real problem-discovery process will only begin when operational testing starts in 2019, as scheduled, or more likely in 2020 or 2021 when operational representative aircraft are actually ready to be tested. The 108 aircraft the Air Force has begun to modify are only the tip of the iceberg, and that number does not include the hundreds of Marine Corps and Navy aircraft to be similarly modified.
Would the Block Buy be consistent with the “fly before you buy” approach to acquisition advocated by the Administration, as well as with the rationale for the operational testing requirements specified in title 10, U.S. Code, or would it be considered a “full rate” decision before IOT&E is completed and reported to Congress, not consistent with the law?
Federal law allows multiple-year contracts to purchase government property so long as certain criteria have been met. Congress typically authorizes most weapons buying programs on a year-by-year basis to ensure proper oversight of the program and to maintain incentives for the contractor to satisfactorily perform. According to Title 10 U.S.C., Section 2306b , for a program to be eligible for multiyear procurement, the contract must promote national security, should result in substantial savings, have little chance of being reduced, and have a stable design. The F-35 seems to be failing at least two of the first three criteria and is most certainly failing the fourth.