02 May 2006

F-35 Budget Spins Out Of Control

The F-35 aka the Joint Strike Fighter, is the planned next (and quite possibly the last) manned fighter jet in U.S. military service, and is scheduled to have its first full fledged flight tests in the fall of 2006. While the Air Force's F-22 which will complete production in 2008 at about 180 planes (the original plan had been to buy 750) was designed primarily to replace the F-15 air superiority fighter and the F-117 stealth fighter, and F-35 is designed to replace the Air Force's main stay F-16 fighter, the Marine's AV-8B Harrier jump jet, and the Navy's F-18 carrier based fighter. It was supposed to be a low cost fighter.

The original plan had the F-35 costing from the high $20 millions, to about $40 million, depending on the model (The basic F-35A replaced the F-16, the F-35B replaced the Harrier, and the F-35C replaced the F-18, with the B and C versions more expensive than the A). A few months ago, the most expensive model's projected cost had grown to $60 million a piece. Now, the projected average cost of an F-35 has reached $82 million, each. Considering that current plans call for buying about 2,400 F-35s (original plans had called for buying 3,000), this is not chump change. Using the $40 million figure as a baseline, this is a cost overrun of $101 billion. The project is also 93 months behind schedule.

The Navy's C version was already slated to be the last put into service, their current aircraft are relatively new, and they have never been terribly enthusiastic about the F-35C, so if the program were to be cut, this version would be one place to do so. The F-35C was already the most expensive of the variants, despite the fact that the F-35B is more technologically complex. The price hike makes further upgrades of the current F-18 design more attractive.

The B version is harder to cut, as our allies, who are sharing in the cost of developing the F-35, want this version for their aircraft carriers.

We may also see the Air Force cut the size of its projected purchase of the A version. Its original planned buy included enough planes to replace every F-16 in the active duty Air Force, the Air Force Reserves, and the Air National Guard. Faced with cost overruns, the Reserve and National Guard part of the aircraft buys may have to be abandoned.

Of course, Congress could simply fund the entire current plan and pay another $101 billion, but it is hard to see Congress swallowing that much of a cost overrun. Increased budget projections for the F-22 and DD(X) were followed by reductions in the number of units ordered, and it is likely that the F-35 buy will follow a similar pattern (one which has already resulted in the planned purchase of 600 fewer aircraft for this very program). At the new price, for the existing budget, Congress could afford to purchase about 1,170 F-35s, instead of the planned 2,400, and I suspect that the ultimate decision made will be along those lines. This would still be enough to replace all of the F-16s in the active duty Air Force, and make the full currently planned buy of F-35Bs for the Marines, while making the other cuts outlined above.

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