How to waste an afternoon looking at the Deal of the Century

This afternoon I started a journey down the rabbit hole, this journey stated after a conversation with an individual who had a past association with several DOD program management offices and hearing some of the stories associated with these programs they were the managers, I sat on the other side of the table as a contractor.  The question came up as to just how much a F-35 the new hope for manned combat aircraft for the United States Air Force, the United States Navy, and the United States Marine Corp airframe cost the Department of Defense.

This individual was quick to quote the latest flyaway cost, the actual cost to build that airframe.  I asked is that really how you should calculate the cost?  I asked what about all of the R&D cost associated with the program that had been accumulated and still are accumulating?  Their response was to forget about it after all they were sunk cost, which sent a chill through me.  My experience in developing commercial products where the cost of development for my company came from cash flow and loans told me a different story.  These “sunk” development cost are typically quite sizeable in comparison to the actual production cost of the individual item, and that they have to be accounted for and eventually recovered through the sale of the end product, after all we hopefully are a profit making enterprise.  I foolish asked that since they had been associated with this program (for abet a short period) did they have an idea of amount of these costs?  Their response was that it was unknown to them.

This was quite a shock, and if this individual mindset were anywhere typical of the personnel in the program management office, then that would go a long way to explain the predicament of the project.  Note this is not to be critical of any individuals they have to operate and advance within the rules of the system that is the Department of Defense.  It is more of an indictment of the United States Congress for allowing it and the Department of Defense for perpetuating it, because in the end it is after all OPM (Other Peoples Money).

Military personnel are transient in their career ladders, never allowed to sit in any one billet for any extended period, never really allowed to master any single program or task.  The continuity is typically provided by the DOD civil service employee, however typically the ones that stay for any extended period in a program office have little if any real authority to effect change in a program, and those civil service employee that do have any real authority are typically quickly moving on to other slots.

My First step into the Abyss was a staggering in that it took at least an hour to find reliable detailed sources of data, and that is a story for another day.  But once the sources were found (typically Volume 2 RDT&E), one might expect that everything would be easy after that point, boy was that was a mistake.

The next step trying to make headway into the data was worse than the first step.  The data had to be extracted from various DOD budget documents (in this case USAF since they are the lead agency for the program), and various locations in these documents, along with several format changes, and in many cases the grand totals of actual expenditures for a given year had to calculate since they were not presented in the documents.   Additionally the various actual expenditures had to be computed several times in that next year budget document would provide revised actual expenditure from previous years.  For some unexplained reason the Department of Air Force could not added up expenditures, especially if they contain expenditures by other services or countries.

Due to my eyes glazing over and the headache that was building I decided not to aggregate cost of the F-35 program that exist in other parts of the Department of the Air Force budgets, like the Operations and Maintenance Budget, and Military Construction Budget, and in other weapon development program budgets (for example the Small Diameter Munitions program, but there are F-35 program cost in other program budgets)

If I did not know better I might suspect that some elements in the DOD, the Congress, and the contractors might be trying to hide something, but that could not be true, not in our Democracy.  Our elected representative and the individual that are appointed to positions in the Department of Defense both civilian and military are all honorable individual with no hidden private agendas or vested personal interests in these programs.

Well here are the results of one afternoon of scrounging around the DOD Budgets and it is not pretty.  First the data, for the full effect I decided to presented the data with all of the associated with digits, that way one can see just how large the numbers are.

The DOD repots typically record the numbers either in terms of Thousands or Millions of Dollars.  I think that it is done in an attempt to keep the appearance of the numbers small that way individuals who are just casually looking will not realize just how large they are and continue on their merry way none the wiser.

Before I get to the numbers that I could find, as a side note the cumulative spending (actual and planned) on the F-35 program if it were a nation would place it number 55 on the IMF nominal GDP list of 184 countries, and number 51 on the World Banks nominal GDP list of 190 countries, and finally number 51 on the United Nations List of nominal GDP list of 193 countries.

F-35 program actual and projected expenditures to date would exceed the nominal GDP of some 70 percent of the nations of the world.  We, and our allies have either spent or plan to spend a great deal of money on this weapon system that at the end of the day become one hell of a revenue stream and profit center for the Lockheed Martin Company.

Year	Incremental Spend	Cumulative Spend
1997	$636,173,000.00	$636,173,000.00
1998	$982,121,000.00	$1,618,294,000.00
1999	$982,023,000.00	$2,600,317,000.00
2000	$522,896,000.00	$3,123,213,000.00
2001	$684,831,000.00	$3,808,044,000.00
2002	$1,751,359,000.00	$5,559,403,000.00
2003	$3,824,210,000.00	$9,383,613,000.00
2004	$4,888,973,000.00	$14,272,586,000.00
2005	$4,921,949,000.00	$19,194,535,000.00
2006	$5,254,418,000.00	$24,448,953,000.00
2007	$4,997,965,000.00	$29,446,918,000.00
2008	$4,335,332,000.00	$33,782,250,000.00
2009	$6,445,317,000.00	$40,227,567,000.00
2010	$9,966,172,000.00	$50,193,739,000.00
2011	$12,916,401,000.00	$63,110,140,000.00
2012	$9,818,342,000.00	$72,928,482,000.00
2013	$12,862,345,000.00	$85,790,827,000.00
2014	$16,056,597,000.00	$101,847,424,000.00
2015	$20,318,908,000.00	$122,166,332,000.00
2016	$22,266,345,000.00	$144,432,677,000.00

Table 1

These numbers are astonishing in their size.  The sheer magnitude should be mind-boggling.  For those who are more visually inclined is a graph of the data in table 1.

The DOD is big on talking about flyaway costs, partly I suspect is that sticker shock might kill if not maim members of the Congress and more importantly the taxpayers of the United States.  Theoretically flyaway cost are the costs associated with actually building the airframe, and just forgetting any other accumulated program cost, after all those costs are sunk.  As of this writing the DOD is estimating that the flyaway cost for an airframe at 150 Million Dollars, and is estimated to fall to 100 Million Dollars (assuming 2443 airframes).  Just a side note in 1996 DOD projected the flyaway cost at 35 Million Dollars per airframe.  F-22A flyaway costs have been reported at 142.7 Million Dollars per airframe based 187 airframes.  Flyaway cost is a red herring it is designed to keep your eye off the true cost of airframe.

You and I paid those cost and they do matter.  Projected airframe cost for 215 airframes that the DOD is anticipating to have built by 2016 would bring the average cost per airframe to $671,779,893.02 Dollars each, 672 Million Dollars each.  That is a great deal of money to spend for an airframe, especially one that is expected to go into harms way.  Table 2 displays the cost of airframes based on cumulative program costs.

The first F-35’s (all two of them) cost the United States Government and the other participants at least $14,723,459,000.00 each for the first two airframes, for those who do not like to count up all the digits that is 14.7 Billion Dollars.  This is just an estimate in that I could not easily find program expenditures prior 1997.

Airframe	Dollars
2	$14,723,459,000.00
8	$4,222,781,250.00
15	$2,681,837,800.00
25	$2,007,749,560.00
50	$1,262,202,800.00
68	$1,072,477,676.47
87	$986,101,459.77
119	$855,860,705.88
167	$731,534,922.16
215	$671,779,893.02

Table 2

Below is a graph of the data in Table 2.  It would take the production of a great many airframes to get the cost down to point where the average cost of an airframe get under 500 Billion Dollars per airframe, and it is very likely that the cost of the airframe would never get below 250 Billion Dollars per airframe, given that there is current projected fly away cost for airframes are being advertised as 150 to 167 Million Dollars.

Well so much for this installment of the deal of the century.  The funds that we have spent to date on this program are lost.  But the funds that are currently planned to be spent can be saved and might actually make a small dent in our ever-expanding national debt.

This just in the JSF/F-35 Program office announced late in the afternoon 30 November that they have just reached an agreement with Lockheed Martin on the "Flyaway Cost" for the next batch of airframes (32) and will sign the contract modification for some $4,400,000,000.00 Dollars also know as 4.4 Billion Dollars sometime in the next few weeks. This is part of the allocated 12.8 Billion for FY 2013.  Why the big hurry, committed funds via contract or contract mod are not subject to sequestration.  We are taking care of the elephants, they will have enough food and water to weather the coming  storm, and the ever-expanding national debt just keeps rolling on to the sea.

Time to quit pouring more money down the rat hole?

First let me say that I am sorry that this is as long as it is, but it does need to be said.

Surprise Vice Admiral David J. Venlet Program Executive Officer F-35 Lightning II Program, had the task of giving the tax payers of the United States their Christmas Present early this year, unfortunately it is a sack of coal.

Admiral Venlet reported that major cracks and “hot spot” have been discovered in the aircraft airframe.  The really down side of this is that airframes have not even flown anything close to the required service airframe life of 8000 flight hour.  But, do not worry, because of this can be solved with nothing more than time and money, boy are we lucky, that we caught this before we spent a fortune on buying 2443 aircraft.  The cost to fix these issues according to Admiral Venlet “sucks the wind out of your lungs”.

Not bad for an aircraft that according to former RAND analysis John Stillion “can’t turn, can’t climb, can’t run”.  Remind me of the remarks that Admiral Thomas F. Connolly made to the Hon. John C. Stennis  (D. MS), Chairman of the Senate Armed Services Committee, when asked for his personal opinion as naval aviator, and test pilot if the TFX/F-111B was a fighter?  After a pause Vice Admiral Connolly replied “With all due respect sir, there is not enough thrust in Christendom to make a carrier fighter out of this aircraft”.  It should be noted that after Vice Admiral Connolly remarks the hearing was adjourned.

Is the JSF/F-35 the TFX/F-111B of the 21 first Century?  Admiral Connolly remarks cost him his fourth star and ended his career, but enshrined him in the pantheon of Naval Aviation Heroes.  Is Vice Admiral David J. Venlet made of the same timber?

Admiral Venlet at this time is only advising production of the F-35 be slowed until the problems can be ironed out, how nice.  How about slowing the production to zero for eternity.

It appears that Vice Admiral David J. Venlet is not in the same league as Vice Admiral Thomas F. Connolly, to bad.  Evidently sucking the wind out of your lungs has no effect on Admiral, especially as it applies to his duty to the service and for his shipmates now and those who will follow.  Does the term RAMP STRIKE mean anything to the Vice Admiral?

Off course the fix will drive the weight of the airframe up, there by reducing the range, combat maneuverability, and useable payload of the weapon system.  Another way of say it, is that it will not carry as much, will not carry it as far, and it will fly like the pig that it is quickly becoming.

This airframe problem goes back to the initial JSF fly off.  The Lockheed Martin JSF candidate was built not to be Carrier ready when it was tested.  This was a calculated risk by Lockheed Martin.  Lockheed Martin won the JSF fly off.  The McDonald Douglas/Boeing JSF candidate was built to Carrier ready when it was tested.

Given that Lockheed Martin aircraft was lighter (Not Carrier Capable) than McDonald Douglas/Boeing (Carrier Capable), and consequently due to it’s lower mass and mass moment arms was slightly quicker to accelerate, had slightly higher sustained turning rates, slightly quicker time to altitude, slightly high airspeed for given thrust setting, and slightly smaller wing surface area, everything that you would expect given that it was not dragging all that extra structure around that is needed for the more extreme forces encounter in carrier operations, it not surprising.

The real crime is that DOD accepted assurances from Lockheed Martin, that the Lockheed Martin naval version structure would be minimally heavier, but that even in this heavier configuration it would out perform the McDonald Douglas/Boeing JSF candidate, at least that is what their computer models told them.  (Remember all models are wrong, some models are useful for a very limited set of conditions).

This delay is a train wreck for some of he other nations that have made commitments to purchase this aircraft, namely Canada and the United Kingdom.

Vice Admiral Venlet doubts that the F-35 program would be cancelled.  I actual believe that it more of a hope than a doubt on the part of Vice Admiral Venlet.  To Vice Admiral Venlet, no matter what we have spent to date on this project, as far as the accountants are concerned the cost are sunk cost, we the people of the United States will never recover a dime back on this weapon system.

Some have said that this particular program is “low hanging fruit” and that it should go is not surprising.  If it is cancelled, it will not be the first program, several programs come to mind XB-70, A-12 Avenger II, F-111B (Naval Version F-111).  The world did not end with the cancellation of these programs, and if the F-35 is cancelled the world will not end, no matter that the Mayan calendar stops in 2012.

The United States Air Force might want to continue the program for they are very uses to flying aircraft with cracks.  The most notable USAF program being the C-141B, the work around was to limit the payload and aircraft CG limits, and to monitor the cracks.  If the cracks got too big, the airframe took one last trip to 309^th Aerospace Maintenance and Regeneration Group (AMARG) at Davis-Monthan AFB.  Do not let the name fool you it is the Bone Yard, essentially the roach motel for old airframes.

USAF procedures allow aircraft with cracked structures to be operationally flown.  USN procedures do not allow aircraft with cracked structures to be operationally flown.  The FAA takes a very dim view of operating aircraft with cracked structures.

Just like the TFX program of the 60’s it is time to shut it down, take what we can from the program and field an aircraft or aircrafts that we can afford to purchase and to operate.  Current estimates by the DOD suggest that F-35 will require 30 to 40 percent more maintenance hours per flight hour then the current systems (F-15E, F-16, F/A-18, and AV-8B).

There are other issues with the F-35 especially the naval version in that its spares storage area on the Aircraft Carriers is limited and this aircraft requires more volume per aircraft than the current aircraft.  Delivery of some of the spare parts to the carrier is currently problematic (Engines) in that this cannot be performed by current UNREP and VERTREP systems, nor can these spares be brought aboard by the current COD system, with out some serious modifications of either spare parts or the delivery systems.

Off course this can be solved, it only takes time and money.

The cancellation of the F-35 will hurt the Marines in that they will not have an aircraft to replace their aging AV-8B.  Except for the Marines, I not sure many experts will consider this to be a real issue.  For many experts the AV-8B is not considered by many to be a successful weapon system.  Its combat range (300 NM A/A 100 NM A/G) is limited, its payload was limited (A/G 3000 pounds), it is a complicated aircraft, and it required more maintenance then traditional fixed wing systems.

The AV-8B and Sea Harrier were derived from the Harrier.  The Sea Harrier was successful in the Falkland campaign, but this was more of fluke in that the opposition aircraft were operating at the limits of the operational range.  As a consequence of the short combat time and limited Anti-Radiation weapons (Shrikes) opposition aircraft could not perform much in the way of any type of SEAD mission.  The Sea Harrier could stay on combat station 6 times longer (30 Minutes versus 5 Minutes) than the opposition aircraft.

The Sea Harriers accounted for 20 opposition aircrafts, 17 of the kills were solely credited to the AIM 9L.  No public documentation exists on how many of the kills were head to head or head to tail, but given the operating conditions, and that the Blue Fox radar had no look down shoot down capability, I would suspect that many were head to tail in that the opposition aircraft had demonstrated that they could effectively use the local terrain to mask their entry into the combat box and attack with very little warning.

The AV-8B suffers from the same limitation as the Sea Harrier, but to slight lesser extent, but with a combat radius between 100 NM to 300 NM depending on mission, compared to other carrier based aviation assets the system has short legs.  The comment by RAF Squadron Leader Steve Long “that over it existing aircraft (FRS.3 and FRG.9) the F-35 will give the RAF and Navy a quantum leap in airborne capability.”  Given the British talent for understatement, on can only conclude that the FRS.3, FRG.9 and consequently the AV-8B are severely performance limited.

Do the Marines really need a replacement for the AV-8B, or should that mission also be retired when the airframes are retired?  In a full-scale armed conflict where the Marines could be performing their primary mission, assaulting an enemy shore, will they be operating in solitary mode, or will the Marines be supported by USN and USAF assets?

It is time to stop the madness, and just put the program out of its misery.  One size does not fit all; every attack aircraft does not have to be stealth.  An aircraft that tries to be everything to every fighter/attack/strike/recon community, in the end becomes nothing to every fighter/attack/strike/recon community because it is just one big compromise, and it will be just enough of a compromise such that it will be marginal in performing all of its various assigned missions.

Given other movements in combat aviation, in particular the advancement in the various UCAV, would the funds being expended on the F-35 program get us more bang for the bucks if they were spent on the development and fielding of advanced capability UCAVs?

To paraphrase Ronald Reagan “Mr. Obama cancel this program” (“Mr. Gorbachev tear down this wall”).