The F-35: Known Unknowns On Cost

The F-35: Known Unknowns On Cost

by David Archibald

8 December 2018

 

Our Auditor-General produced a report on the F-35 a few days ago. On page 21 there is an interesting paragraph that is worth quoting in full:

In 2014, Government directed Defence to inform the Prime Minister and the Minister for Finance prior to committing to procurements of JSF aircraft. In 2017, Defence advised Government that it had committed $266.3 million for materiel associated with JSF aircraft procurement without first informing the Prime Minister and Minister for Finance, as was required by Government. Defence further advised that the overall risk of the Australian JSF Program remained at Medium-High.

The unauthorized payment of $266.3 million is typical of a dysfunctional department run by idiots. Marise Payne was the Minister for Defence at the time. What is more interesting is that the Defence Department considers the F-35 to be “Medium-High” risk while it has been telling everyone that the F-35 is the best thing since sliced bread. Which means the Defence Department thinks there is a good chance the project will fail.

The Auditor-General’s report also quotes from the Independent Assurance Review of the F-35:

Finally, I am concerned about the level of funding for operation and support of our JSF. The funds required for sustainment, even for the next few years, have yet to be quantified or allocated. Sourcing the operating and sustainment funds for FOC [Final Operational Capability] and beyond could be a major challenge, particularly if those costs are not contained through the global support arrangements.

This has been reported as saying that the RAAF doesn’t know how much the F-35 is going to cost to operate. Which could be true or perhaps they are in denial.

Nevertheless the RAAF is in good company. In June 2018 the US Government Accountability Office reported that:

In October 2017, we found that DOD did not have insight into the program’s total sustainment costs, estimated at over $1.1 trillion over a 60-year life cycle. As a result, we recommended that DOD revise its F-35 sustainment plans to ensure that it has sufficient knowledge of costs.

The best estimate of cost is the current operating cost and that was quantified in March this year at a US House Armed Services Subcommittee on Tactical Air and Land Forces hearing in March this year.  The USAF’s Lt. Gen. Jerry Harris is quoted as saying:

the newer F-35s with 3I or 3F software were available to fly 60 to 70% of the time, which is a good number, but that the Air Force’s 100-block 2b and older F-35s’ availability percentage sat in the low 40s. He said that the cost of operation differed based on production block and usage, but was approximately $50,000 per hour.

USAF F-35

That US$50,000 per hour figure is a reliable number to use when estimating the cost of operating the RAAF’s F-35s. At the current exchange rate that is $70,000 per hour to get something that will be capable of taking off 60% of the time. To keep a pilot proficient takes 20 hours of flying per month so that will be $1.4 million or close to $17 million per annum. Flying less than that means that pilots start to lose the ability to fly the aircraft itself, let alone use it in battle. The US Marine Corps started having a higher aircraft accident rate in the last couple of years because their pilots weren’t getting enough time in the cockpit.

The problem will compound on itself because pilots join the RAAF to fly and if they don’t get enough flying time they will be unhappy and leave, meaning in turn that the millions spent on training them will be wasted. A number of years back our Department of Defence tried to save money by telling our tank crews they were limited in the number of kilometres tanks could be driven each year. The tank crews responded by turning the turret around and driving their tanks backwards so that the odometer didn’t register. That directive was to save just a few litres of diesel. The temptation to save money by ordering a reduction in F-35 flying hours will be too much to resist.

The three US services operating the F-35 are aware that they don’t have the budget to operate the F-35 in the numbers planned to be acquired, so they have said that they might cut back their orders by 30% to be able to afford the ones they will get.

In comparison to the $70,000 per hour that the F-35 will cost, the Gripen E is likely to cost about $10,000 per hour while being a much better fighter aircraft, ground attack aircraft and everything-else aircraft than the F-35. The F-35 might be a better AWACS-type platform, but if it can’t be relied upon to get in the air then it is not much use for anything. If an aircraft type has 50% availability then you need at least three of them to get a 87.5% chance that you can get at least one of those three in the air.  That is how bad the F-35 is.

Another known unknown is the actual capital cost of the F-35. The most recent production run that Australia signed up for is supposedly costing less than US$90 million per aircraft. But this article quotes the US GAO report from June 2018 mentioned above as stating that the cost is US$143.84 million per aircraft. The figures in the report itself are US$164.4 million for program acquisition cost per aircraft (which includes development and which we will be charged) and US$140.6 million for the build cost of each aircraft. At one stage Lockheed Martin were quoting the cost of the F-35 without the engine. Perhaps they are back to their old tricks.

 

David Archibald is the author of American Gripen: The Solution to the F-35 Nightmare.