On page 6, it is stated that the F-35s cost has increased by 7,4 billion USD, which is in direct contradiction to statements that the F-35s costs are decreasing. It should be noted that increases due to reduced production rate only account for 5% of the figure, and probably less. Life clycle costs are said to be decreased, but that is in the rank of glass ball prophecies.
On page 18, total acquisition cost for the F-35 is stated to be 398.584.600.000 USD.
On page 75, it is again clearly stated that unit cost has increased by 6,68%. From data on page 92, cost per aircraft can be calculated as 162 million USD.
This is in direct contrast to GAOs report stating that the F-35s costs are falling, and was based on two years old data. DoD countered by publishing a new, reduced estimate of F-35s lifecycle costs, by 96,8 billion USD. However, that estimate is also bogus. This document clearly states (pg 95) that costs to repair and maintain the F-35 have gone up by 15 billion USD. However, it also states that “legacy aircraft data” were used whenever F-35-specific data was not avaliable (pg 93). As a result, estimates are unrealistically low, as the F-35s costs are going to be closer to the F-22s costs than the far lower costs of “legacy” aircraft. Further, there were savings through “updated learning rates”, less labor resources, more cost effective skill mix and reduced flying hours (pg 87). All except last are certain to be too optimistic. On pg 96, 54 billion USD cost reduction is achieved through updated spare parts unit database, and 10,61 billion USD reduction by asusming lower labor costs. Thus more likely O&S cost estimate is well above 669.593.653.000 USD, as labor costs are unpredictable even few months on (and are likely to increase long-term), and spare parts requirements are certian to be higher, not lower, as is the fuel price.
And as discussed by Wheeler here, F-35s unit procurement cost is 148 million USD for the F-35A, 251 million USD for the F-35B and 337 million USD for the F-35C, and average unit cost of 178 million USD – nowhere close to the Lockheed Martin’s PR statements about 75 million USD. Even recent reductions in procurement costs might turn out to be due to less aircraft bought as opposed to reduced unit costs. Further, comparing to previous values – 159 million USD for the F-35A, 214 million USD for the F-35B and 264 million USD for the F-35C, with 185 million USD average cost – it is entirely possible that a lot of the F-35As reduction in cost is due to “book cooking”, that is shifting the F-35As cost to the F-35C. And these costs are only production costs – R&D is not included. As a result, 2014 appropriations costs – 174 million USD for F-35A, 232 million USD for F-35B and 273 million USD for F-35C – might be closest to the truth.
Quite a few tricks are used to hide the actual cost. 98 million USD figure mentioned was for the F-35A – without engine, and even that cost was not actually correct. And while the F-35s estimated program cost has decreased in 2013, decrease has been achieved by massaging the numbers in the same way as described previously: through predicting lower labor costs, lower spare requirements, all despite successive increases in LRIP costs in all areas. USAF predicts that the F-35As cost will eventually be reduced to 107 million USD per aircraft – but that has no basis in reality.
What about the fabled learning curve? As can be seen from graphs here and here, F-35s costs are going up, not down. And after eight years in production, design should already be mature, meaning that no major cost reductions are likely to occur in the future – especially since major production lots – costing 16 billion USD in 2021 at least – are going to be cut to conform to budget realities. Design of military aircraft never actually stabilizes either, since it is constantly fixed or upgraded. As a result, there is simply no time for the learning curve to set in. Proclamations about a major reduction in unit cost are based on comparing unit costs of production aircraft to those of prototypes – each of two prototypes cost 406,8 million USD to produce (in FY2007? USD).
In the end, total lifecycle costs are likely to be quite high. Total program costs are estimated at 410,99 billion USD: 67,31 billion USD in research and development (55,18 billion USD airframes and 12,13 billion USD engines), 4,42 billion USD in military construction, 339,26 billion USD for aircraft procurement (282,77 billion USD for airframes and 56,49 billion USD for engines). At 2.443 aircraft this gives an average of 168 million USD per aircraft, or 141 million USD without R&D. Further, F-35 is estimated to cost 32.000 USD to operate per hour (total costs). At 180 hours per year per aircraft and 2.443 aircraft, operating costs will be 14.071.680.000 USD per year. If the F-35 remains in service for 30 years, this gives total lifetime cost of 605.610.000.000, for a total of 1.016.600.000.000; that is, over 1 trillion USD or 416 million USD per aircraft.
However, these are likely underestimates. Using 180 million USD average procurement cost gives 439,74 billion USD for all 2.443 aircraft. Additional 4,42 billion USD for military construction will remain same. R&D cost will be increased by 30% (based on the F-22s overruns), leading to total R&D cost of 87,5 billion USD. This gives total procurement costs of 531,66 billion USD, or 218 million USD per aircraft. Further, going by the F-22 example, US F-35 buy will likely be cut from initially planned 2.853 aircraft to 820 aircraft, leading to 147,6 billion USD procurement cost and 239,52 billion USD total, for per-aircraft cost of 292 million USD (note that this is a fairly optimistic prediction, assuming no production cost growth; on the other hand, reduction in number of aircraft bought is also likely to be smaller).
And as this graph shows, F-35s unit cost growth is only starting.
But all this money will be worth it, right? Well, no. The F-35s operational testing and evaluation will start in 2016, and until then we will have only used car salesman’s promises and preliminary assessments based on known characteristics.