JSF Costs Death-Spiraling out of Control?

After almost doubling in cost, the future of the F35/JSF is still being kicked around.

The projected cost of Lockheed Martin’s new Joint Strike Fighter has increased 60 to 90 percent in real terms since 2001, blowing well past a level requiring the program to be revamped, Pentagon officials said Thursday.

And even though the military is trying to deal with the problems, Congressional auditors said the program — the Pentagon’s largest — was likely to continue to increase in cost and suffer more delays.

The assessments, released at a Senate hearing in Washington, provided a reminder of the extent of the cost overruns in major weapons programs and showed how hard they can be to resolve.

The latest estimates were embarrassing to Lockheed Martin, the largest military contractor, and to the defense secretary, Robert M. Gates.

Last summer, Mr. Gates promoted the new jet, called the F-35, when he urged Congress to halt production of the F-22 fighter plane. Some senators now say they might not have made that decision if they had known about the problems with the F-35.

Christine H. Fox, the Pentagon’s top cost evaluator, said at Thursday’s hearing that the estimated price of each F-35 had jumped to $80 million to $95 million, as measured in 2002 dollars, from $50 million when Lockheed Martin was awarded the contract in 2001.

She said her office was still refining the cost estimate, which equals $95 million to $113 million for each plane in current dollars.

Under a 15-year-old law, the Pentagon has to notify Congress when the cost of military equipment exceeds the original projection by more than 25 percent.

The boys at DefenseTech have a good discussion of the "death spiral".

It’s called the acquisition “death spiral”: as a program’s costs go up the unit numbers purchased drop, hence per unit costs climb even more, fewer bought, etc. etc.

We’ve raised this issue here before. If the price of a unit of goods doubles, economic theory, and Pentagon acquisition history, teaches us that the quantity bought drops. Yesterday, Pentagon cost assessment and program evaluation director Christine Fox told the SASC that each JSF will now cost at least $80-$95 million, compared to an estimated $50 million back in 2002.

By: Brant