It’s possible for the F-35 program to reach its target of $25,000 per flying hour, but only if there’s a substantial change…
The F-35 fleet will triple in size by 2024, Merchant said, insisting single-year support contracts won’t work. The F-35 schedule calls for 131 aircraft to be delivered this year; 140 in 2020; 160 in 2021 and 170 in 2022.
“That ramp is going to eat us alive” without a change in the way parts and maintenance are done, he said.
That was with Ken Merchant, VP of Lockheed Martin, in “Lockheed Martin Proposes PBL Plan to Hit F-35 Operating Costs on Time.” To get to the $25K per flying hour target Lockheed wants a 5-year Performance Based Logistics contract in which it will put down $1.5 billion in seed money.
Program costs
Note, that’s $25K for the F-35 program. We’ve heard recently that the F-35A variant was at $44K per flying hour, but the less reliable Navy “C” and Marines “B” variants likely have substantially higher costs. I’ve not heard them reported separately.
Another thing to note about the cost targets is that they are quoted in base year 2012 dollars, which translates to ($25/.8709) = $28.7K per flying hour in FY 2020 dollars. By FY 2033, the figure is expected to grow to $37.1K per flying hour.
The plan, requiring the gov’t to enter into a 5 year contract, “could reduce operating and support costs for all the services by $18 billion by 2033, or 16 percent a year.” Who will still be around in 2033 to be held into account for that promise?
By the way, the numbers imply even with the 16 percent savings by 2033, the annual O&S cost would be $94.5 billion! (or $73 billion in FY 2020 dollars.) That’s nearly one-quarter of the entire DOD Operations and Maintenance budget request (base + OCO) for FY 2020. That’s not quite fair because the O&M budget doesn’t include military and civilian pay. [Update: O&M includes civilian pay, not military.] But still, $94.5 billion as a lower-end annual cost ($112.5 billion without the savings) is a substantial amount.
Learning and Rate
Usually, when quantity orders ramp up we get “rate effects” which should drive down costs, like bulk buying at Costco. The issue that seems to be appearing for the F-35 is the difficulty of ramping up quickly on production and sustainment for a very complex system. The hundred s of supplier all have to all ramp up flawlessly, gaining new skilled labor and buying capital equipment.
As for “learning effects,” we saw dramatic falls in final assembly touch labor costs, but as more jobs get automated perhaps the way learning shows up changes as well. It might look more like step functions, which depend on the quality of new software and manufacturing automation processes.
Metrics
One of the things about cost per flying hour targets, like any metrics, is that they can be reached at the expense of unintended consequences. For example, flying airframes more hours than needed could spread more of the fixed costs, or retiring the early and high cost LRIP aircraft ahead of schedule.
Or the metrics could be gamed. Was that quoted in Total Aircraft Inventory (TAI) or Primary Aircraft Inventory (PAI)? Does it include the engine subprogram, or development/upgrades to the ALIS logistics system?
A similar thing may be occurring as the DOD quotes relatively high mission capable rates for the F-35A, but that doesn’t include time in depot. Mission capable rates may climb to 80 percent while airframe availability — which includes time in depot — could be falling dramatically if the aircraft are sent to depot more often. Indeed, many F-35 fixes may be too complicated to do in forward areas, so we should look at airframe availability as a better overall picture.
At this point, its hard to say whether the F-35 is more like the F-111, which was more or less a flop with a nice terrain following radar, or like the F-15/F-18, which had growing pains but became looked at fondly with hindsight. I think it’s moving toward F-15 and F-18 status, though many of the early LRIP units may have to be discarded.
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