Lockheed’s Response to the F-35 Cost Growth Report (Updated)

F-35 Night Refueling

Here’s F-35 Joint Strike Figther-maker Lockheed Martin’s updated response to yesterday’s news that the cost to purchase and sustain the Pentagon’s fleet of 2,443 F-35 Joint Strike Fighters over the next five decades has grown to $1.45 trillion. It seems they got their dollar amounts wrong in the first response.

Today, the Office of the Secretary of Defense issued to Congress the 2011 F-35 Selected Acquisition Report (SAR).  It included estimates of the total cost to develop, build, operate, upgrade and maintain all aspects of the F-35 program and its military support infrastructure for the next 55 years. The total estimated cost, including adjustments for anticipated inflation—which represent more than one-third of the total—is $1.51 trillion.

 

The cost projections estimated in the SAR are based on a number of variables that are subject to considerable fluctuation over the next 55 years, making the estimate inherently imprecise.

 

For example, media reporting on the 2010 SAR estimate included only operations and support costs, while recent reports on the 2011 SAR estimate add the cost of acquisition and development which the U.S. government currently estimates at $396B. This results in the appearance of cost growth year over year.

 

The DOD’s decision to shift the delivery of 179 aircraft beyond 2020 also added cost growth.  This shift caused a $60 billion increase in operations and support costs due to inflation and the two-year program extension.  The SAR estimate also added four squadrons, grew staffing requirements and increased scope.  For example, the 2011 estimate added 2,650 personnel for maintenance and security for the U.S. Air Force at an additional cost of $24.3 billion. The government also included the cost of lifetime modernization to the aircraft to improve its capabilities — expenses that are not included in the cost projections for other aircraft.

 

Lockheed Martin remains confident that F-35 operations and support costs will be comparable to or lower than that of the seven legacy platforms that it will replace.  The F-35 also provides our Armed Forces and allies with the unprecedented 5th Generation fighter performance capabilities of radar-evading stealth, supersonic speed, agility and the most comprehensive integrated sensor package of any fighter aircraft.  The F-35 will achieve cost advantages over the platforms it will replace by leveraging economies of scale – gained through deployment by the three U.S. service branches and international partnerships – and a common logistics, maintenance, training and supply chain infrastructure.

 

The F-35 will also achieve lower or comparable operation and support costs than legacy systems while providing greater capabilities.

 

Lockheed Martin believes there are realistic opportunities to further reduce the cost of the F-35 through manpower adjustments based on the aircraft’s reliability and maintainability, planned support concepts and adjustments to basing. We are committed to working with our partners and customers to efficiently and effectively produce an affordable F-35 for our Armed Forces and allies.

 


 

Frequently Asked Questions:

 

Q1.      What costs are included in the SAR projection that estimates F-35 Operations & Support (O&S) costs will exceed $1 trillion?

 

A1.      Any estimate that projects costs for 55 years of operations of a 2,443 aircraft fleet is going to result in a large figure. In fact, more than one-third of the F-35 O&S cost projection is assumed inflation over the next half-century. What is important is that F-35 O&S costs will be comparable to or lower than that of the seven unique legacy platforms it will replace, while providing our Armed Forces and allies with unprecedented 5th Generation fighter performance capabilities, including radar-evading stealth, supersonic speed, agility and the most comprehensive integrated sensor package of any fighter aircraft ever. The F-35 achieves cost advantages over the platforms it will replace by leveraging the economies of scale – gained through deployment by the three U.S. service branches and international partnerships – and a common logistics, maintenance, training and supply chain infrastructure. Long-term projections like these are useful for identifying potential cost risk areas and in enabling the program to develop mitigation strategies for the next 50+ years, but they need to be viewed through that long lens. The entire Lockheed Martin and F-35 teams are continuously focused on further reducing overall cost.

 

Q2.      How has the recent program restructuring affected O&S costs?

 

A2.      The recent decision to delay production of 179 F-35s to beyond 2020 has resulted in a $60 billion increase in operations and support costs because these aircraft will now be delivered in later years when inflation is factored in at a higher rate. The delay also extended the program life cycle by two years.

 

Q3.      How was this estimate calculated?  

 

A3.      Never in the history of U.S. aviation has the Pentagon tried to project the cost of an aircraft program over a 55-year period. The F-35 is the first aircraft program to undergo this type of review.  The cost figures recently released for the F-35 represent projections for a half-century of supporting 2,443 aircraft within 111 squadrons at 49 bases around the world in future-year dollars. More than one-third of this estimate is assumed inflation. Because the F-35 is not yet fielded, a large percentage of the estimate is based on legacy historical costs—from other aircraft—and does not fully reflect design and maintenance attributes that were designed into the program from the start to reduce overall lifecycle costs. We expect to realize the benefits of these attributes as the program matures.  In fact, 50 percent of the design Key Performance Parameters—which we met—were associated with minimizing sustainment costs. Lockheed Martin is fully committed to fielding an F-35 that is both effective and affordable.

 

  • Xrayrick

    I’m still not buying that a F-35 can replace a A-10 and perform better.

    • Nick T.

      I say for replacing the A-10, keep the Equalizer and internal weapons bays, but build a plane with armor that can take a 14.5mm, more powerful engines, , redundant parts, (3 engines) and most importantly, a second seat for advanced in-field electronic warfare. Stealth in low altitude ground attack is almost pointless, and costs a whole lot if it gets even gets scratched.

    • retired462

      The A-10 has been used in places that would FOD out an F-35 engine in a heartbeat! Now is the time we should be saying “they should have built the night/adverse weather version of the A-10.

    • michael

      hey, u’d be right if your talking about close air support right now but remember: the f-35 has stealth and thrust vectoring so it can kick ass in a Dogfight as well as provide close air support. If an a-10 finds itself in a dogfight, forget it. any 4th gen fighter could kill it. also, you might say that stealth is pointless in close air support, and u’d be right, but think in the future! we might be fighting russia or china, both have good radar. they’d be able to kill an a-10 alot sooner than an f-35 because they’d see the a-10 on radar even before they’d see or hear it. they could then launch long rang missles to take it out.

  • Justin H

    Lockheed should be barred from the next big aircraft competition, seriously.

  • Weaponhead

    Looks just like the Loren Thompson article some how.

    If the program was anywhere near the maturity is was supposed to have after 10+ years of SDD, they wouldn’t have had to cut the buys. Somehow that is conveniently forgotten when Lockheed blames the Government. And all the modeling and simulation was supposed to mean the flight testing was redundant and no problems would be found…

    BTW keep sending the $Bs by the truckload and you may have something in 2020+.

  • Yo Yo

    Just to put things in perspective:

    $1,450,000,000,000 / 2443 planes / 55 years = $10,791,500 per plane per year…

    So… It’s like leasing an F-35 A/B/C at the cost of $10,8 million/year.

    If you want to own/operate an F-35 A/B/C for 20 years, that comes to about:
    $216 millions… parts and maintenance included.

    Don’t know about you, but it seems like a better deal than paying $200 million/piec up front.

  • John Moore

    1.113 trillion they rack that up in debt ever single year so no worries according to our Government.

  • Lance

    Not surprised this whole program is bungled. Should dump it for more F-22s and F-15SEs.

  • Haters gona hate. But Lockheed delivered before and im sure it’s gona deliver with f 35.

    • mpower6428

      it only takes one unmitigated disaster, ask “northrop”.

    • My .02

      Hey, I’m a fan of a lot of what Lockheed did in the past but the days of Kelly Johnson and Ben Rich delivering U-2s/A-11s/F-117s ahead of schedule and under budget are sadly long gone. The teams that developed those aircraft would puke at the lack of integrity in the current procurement system.

  • Failed Mission

    LM should do the honorable thing, and sell their over priced, under performing plane to the taxpayers for free. The DoD can just pay for engines and radar. The DoD must have the worst negotiators. I would make example out of them for the rest of industry.

  • Dfens

    You pay Lockheed more to drag out programs and jack up the costs, then you complain when they do just that. So go to Boeing next time. Hell, find some contractor in China to design your airplanes under the same kind of contract. As long as you pay them a profit incentive to drag things out and screw them up, that’s what you’re going to get. If you want results, pay for results. If you want someone to f you, then you’re doing it perfectly right now.

  • Nick

    Should have just bought F-22’s, economy of scale probably would have made prices about the same, but then you only have one type of aircraft to manage

  • tee

    LM is running scared it sounds like. As P–s Off as Congress is at the Pentagon for Lying to them and fudging the numbers of this Monstrosity so that Congress won’t cancel it. The PR department is at it again. But you can’t hide that so far it has passed a Whopping 4% of the Required Operational Requirements, Cost 3-4 times what they were told it was going to cost ($60 Million ea ) and years behind schedule.

    • Dfens

      Yeah, because they’ve only made billion of dollars in profit so far. So cancel F-35 and they’ll cry all the way to the bank and you’ll get nothing. Big victory for the US taxpayer. Or continue to pay them more to jack up the costs, and they’ll still laugh all the way to the bank. Idiots.

  • mpower6428

    Lockeed will soon join the defense industry wall of shame. they’ll be just below northrop.

  • Pat

    The only branch that really needs this is the marine with the F-35b, cause harriers aren’t gonna do anything air to air anymore…

  • SJE

    I get the point that there are variables that make budget predictions difficult, but when was the last time that LM came in under budget? Variables go both ways

  • ltfunk

    Of course Lockheed refuses to release it’s own estimate of the costs because it is much higher.

  • anantoniusbauwens

    45% higher then expected but they”ve been bought and Lockheed Will deliver,with todays electronica we should have expected that,and we have to stay in top gun position with,top gear!!

  • Hunter78

    Figuring 15 yr/generation, that puts the F-35 two generations down half way through this 55 yr timeline. That’s like an F-86 versus an F-4 with its AAMs.

    • Ben

      I’m not so sure we’ll ever see 15 year generation intervals again. Technology is getting more costly and less timely to develope and integrate, for a variety of reasons. You’ll probably see countries using aircraft for much longer as generations move forward.

      In other words, the comparison you’re making is highly presumptuous, whether you like the F-35 or not.

  • Hunter78

    Or that that same F-4 is competitive with the F-35.

  • Tim UK

    By the time this pile of junk is operational in decent numbers it will be half obsolete . A joke that will be the ruination of Western Air Power .

  • Tad

    On a positive note, the money supply is being increased so dramatically that $1.51 trillion will be chump change pretty soon.

  • Dfens

    The reason they won’t release their own estimate is because it is not a technical estimate. What the F-35 costs is determined by what the US taxpayer will pay. It will cost whatever we will pay, and not a cent less. If the federal government gave you a contract to develop the next great weapon and the terms were they would pay you $1.10 for every $1.00 you spent on that weapon, what would it cost?

  • Matt Holzmann

    I’m going to bet their numbers are taking the recent QE programs and huge debt into their equations.

  • mpower6428

    cancel it…. forthwith (right f***** now).

  • bart

    take delivery of the planes then default.

  • Rohan

    I just love this aeroplane !!!

  • Sgt_Buffy

    Great Picture.

    • It worked well this year. My betrhor (south Florida) took his battery operated hand-held fan to the beach and cut it loose blowing toward Mexico. He may be onto something.

  • duuude

    “When America can’t build a decent flying death machine, it’s all over.”

    Lockheed is going to do to Uncle Sam what the arms race did to the Soviet Union.