F-35 Costs Up and (Mostly) Down

The Pentagon’s official cost scorecard—the just-released selected acquisition report for calendar 2013—show that the F-35’s procurement costs are up but lifecycle costs are down, adding up to a net reduction in program costs. Stated in base year 2012 (when the project was restructured) dollars, overall F-35 costs—including development, procurement, operating, and support costs—dropped from $936.4 billion to $921.3 billion, or about two percent. Behind that overall figure, research, development, test and evaluation costs fell $0.2 billion due to shifting some money to later years. Procurement, though, rose $4.5 billion; mainly because of higher labor rates for Lockheed Martin and its F-35 subcontractors, and because aircraft purchases were deferred by some services and foreign partners, reducing the rate efficiency. Military construction costs dropped $0.2 billion due to lower-than-expected costs of work to go. Operating costs, which predict what will be spent over 32 years of production and 55 years of support, fell three percent, to $597.8 billion. The grand total for the program in then-year dollars (adjusted for predicted future inflation) is $1.3 trillion to $1.4 trillion, depending on which of two estimating models is used. Due to different methodologies, the System Program Office’s operating estimate numbers differ from those of the Cost Assessment and Program Evaluation shop, which builds the SARs, by about $100 billion. The SARs are the official numbers, though.