GAO Draft Slams F-35 On ‘Unaffordable’ Costs: $8.8B Over Legacy Fighters

By COLIN CLARK

WASHINGTON: The F-35′s long-term costs may “not be affordable” and appear to be substantially higher than those of the existing combat aircraft fleets that the Joint Strike Fighter will replace, the Government Acocuntability Office says in a draft report.

“The annual F-35 operating and support costs are estimated to be considerably higher than the combined annual costs of several legacy aircraft,” the draft says. This issue is likely to be a topic of debate at the JSF Executive Steering Board meetings to begin Thursday in Oslo, Norway. The nine countries that invested in the F-35′s development will hold bilateral meetings on Wednesday. Then they gather in the shadow of the Norwegian parliament as a group the next day.

The estimated gap between the F-35 sustainment costs and those of the F/A-18, F-15, F-16 and the Harrier fleets as measured in 2010 is impressive, about $8.8 billion, an increase of 79 percent. That estimate comes from the Pentagon’s authoritative Cost Assessment and Program Evaluation (CAPE) office, the GAO draft report says. The draft says that costs for the legacy fleet were about $11 billion a year in 2010. Based on CAPE’s estimate, the F-35′s annual costs will be $19.9 billion in 2012 dollars.

A source close to the program pointed to this comparison as one example of how GAO was “comparing apples and oranges.”

Part of the reasons behind those higher costs can be found in these numbers cited by GAO. First, mean flight hours between critical failures: “As of March 2014, this metric was averaging well below its requirements at maturity, meeting an average of 42 percent of those requirements across all three variants,” the GAO says. And mean time to repair the aircraft “is worsening,” though the report does not offer a specific figure.

The GAO report points out throughout the draft report that CAPE estimates are substantially higher than those of the Joint Program Office, which manages the program, for almost everything to do with sustainment. The official CAPE estimate is $23 billion higher than the JPO’s. But the report says that the CAPE estimate for parts costs would be $120 billion higher than the JPO’s if “they used actual replacement rates being observed at F-35 sites.”

Also, the GAO says that DoD “has not fully addressed” aircraft reliability and technical data rights, which may affect sustainment.

The good news for the program is that the Defense Department does appear to have done a “comprehensive” job of building its cost estimates, GAO says.

Spokesman Joe DellaVedova said the Joint Program Office would not comment “on an unfinished, draft report that has not been publicly released.”

However, he defended the program’s efforts, noting it has created “a government-funded reliability and maintainability program,” and did it “while the fleet is young with about 100 aircraft, so any improvements we make now will reap significant benefits over the next 50 years with thousands of F-35s in the fleet.”

So far, he says  they’ve come up with about “200 initiatives to improve the reliability and the maintainability of the airplane.”

In addition, DellaVedova said they are “reviewing how the F-35 uses support equipment and studying ways where existing items could be modified or a maintenance procedure could be changed that would enable the fleet to use that piece of equipment. We are investigating how we can flatten the supply chain to get parts to the field faster. We are also working with the services and partners to optimize flight hour programs to ensure pilot readiness and reduce sustainment costs.”

In conversations with several sources close to the F-35 program who have seen this draft, they mentioned that GAO’s methods mean their estimates are inherently out of date. Questions were also raised about the GAO’s methodologies for analyzing fuel costs. The program office and Lockheed Martin have long chafed at the analyses done by OSD and the GAO on long-term program costs, so much of this isn’t surprising. But the program has clearly turned a corner in the last two years and Lt. Gen. Chris Bogdan, head of the JPO, has recently and repeatedly urged reporters and others to “get over” the program’s early years, wracked as they were by mismanagement, huge cost increases and schedule delays.

The GAO does say that the military “has begun some cost savings efforts and established sustainment affordability targets for the F-35 program, but DoD did not use the military service budgets to establish these targets,” so they “do not provide a clear benchmark…” As one example of that disconnect, the auditors say that the program “arbitrarily lowered” the estimate for F-35 fuel costs by 10 percent.

It will be very interesting to see if the GAO sticks to these conclusions when the report gets approved for release.