WASHINGTON – The cost to procure the F-35 joint strike fighter has dropped, but the total price to operate and support the fleet over its lifetime has risen – not because of problems with the program, but because the services plan to fly the fifth-generation fighter jet for six more years.
The good news for the program is the 2015 Selected Acquisition Report (SAR) shows the F-35 total acquisition cost decreased from $391 billion in 2014 to $379 billion in “then-year” dollars, or when adjusted for inflation. This is a drop of $12.1 billion, according to a Pentagon-issued summary.
Not counting inflation, this translates into a roughly $7 billion drop in base-year 2012 dollars, F-35 joint program office chief Lt. Gen. Christopher Bogdan told reporters March 24.
The SAR reflects the program’s total acquisition cost in then-year dollars to show what the actual cost will be in the out-years. The JPO generally uses base-year 2012 dollars in order to compare apples to apples.
But the SAR’s estimate for the cost to operate and support the F-35’s over its service life has increased by $107.3 billion in then-year dollars. The 2014 estimate for the 55 years of expected F-35 service to 2064 was $1.017 trillion; the now 60-year estimate to keep F-35s flying until 2070 is $1.124 trillion.
This cost increase is a direct result of the services’ decision to extend the life of the fleet by six years, or 1.6 million flight hours, Bogdan said.
The extension translated into $45 billion increase (in base-year dollars) for operating and support (O&S) costs in the 2015 estimate. But according to Bogdan, the real O&S costs of flying the airplane saw a 2 to 4 percent drop, depending on the variant. Without this extension, F-35 life cycle O&S costs would have decreased by about $22 billion from the 2014 estimate, he said.
"The JPO has no control over the beddown assumptions that the services make. What the JPO can control is the real O&S costs of this airplane and if you read the SAR the real O&S costs and cost per flying hour went down 2 to 4 percent just this year alone between 2014 and 2015," Bogdan said. "So to characterize that, 'it is a trillion dollars with money on top,' misses the point that the thing that we're really trying to control today in 2016 is the O&S cost of flying real airplanes, not how long an airplane may last in 2070."
The latest SAR also shows an increase of about $300 million in base-year dollars for research, development, test and evaluation (RDT&E), Bogdan said. However, this increase does not reflect “real” RDT&E costs, rather it shows the JPO’s transfer of funds from the procurement account to the RDT&E account to "more appropriately" fund operational test aircraft modifications, Bogdan said. This had “zero net impact” on program costs since there was a corresponding decrease in procurement funds captured in the SAR.
Real RDT&E costs held steady from 2014 to 2015, he noted.
Bogdan also touted savings in per-unit costs. Compared to the 2014 SAR, the cost of an Air Force F-35A variant dropped $1.8 million in base-year dollars per jet; Meanwhile the Marine Corps F-35B and Navy F-35C dropped by about $1 million per jet, Bogdan said.
The F-35 program continues to see cost reduction due to increasing quantities and improving manufacturing costs, Bogdan said.
The aircraft alone decreased by $5.7 billion, or 1.8 percent, from $324.1 billion to $318.4 billion, according to the SAR. The Pratt & Whitney F135 engine that powers the F-35 decreased $6.4 billion, or 9.5 percent, from $67 billion to $60.6 billion.
“We had real decreases in real costs this year,” Bogan told reporters March 24 at the Pentagon. “For a program that has had a tragic past that is not a bad report card from ‘14 to ‘15.”