Cost Confusion

| July 31, 2017 | 44 Comments

This article was inspired by thoughts brought to mind by Poetrooper’s F35 article yesterday.

. . .

Here’s a conversation you might hear somewhere inside the DC Beltway:

Congressional Staffer:  “So tell me, Mr. Program Manager – just what will one of those systems you’re developing for DoD cost?   Senator Whositz wants to know.”

Program Manager:  “Well, that depends.  What cost does he want?”

Congressional Staffer:  “C’mon, bud – don’t play games.  What will each of the systems cost?”

Program Manager:  “I’m not playing games.  What cost does he want?”

Congressional Staffer:  “Are you trying to get Congress to cut your program’s budget?”

Introduction.

The above might sound like an Abbot and Costello comedy routine – but it’s not.  When it comes to weapons systems, a question seemingly as simple as “How much will it cost?” can be hard to answer – because DoD, in it’s “infinite wisdom”, has defined at least eight distinct costs associated with a defense system under development.  Each means something different, and each is calculated differently.  And several (but not all of them) can be used, along with the total projected number of systems to be produced, to come up with a valid “unit cost” for the system by dividing the cost in question by the number of systems to be produced.

And, yes – which one is quoted to the press often depends on politics and desired “spin”.

The purpose of this article is to give an overview of the ways costs for DoD systems are calculated.  Just as importantly, it will also indicate what is – and what is not – included in each cost.

To help understanding, I’ll try to relate these costs to something we all presumably know all too well:  the cost of owning a car.

Obligatory warning:  the subject matter can be a bit soporific.  Might want to grab a caffeinated beverage or two before reading further.  (smile)

. . .

The eight costs DoD defines for a system under development are the Development Cost; the Flyaway/Rollaway/Sailaway Cost; the Weapon System Cost; the Procurement Cost; the Program Acquisition Cost; the Operations and Support Cost; the Disposal Cost; and the Life Cycle Cost.   All of these except Disposal Cost have been around for a while – since at least the release of DoD 5000.4-M in December 1992, and perhaps before.  The Disposal Cost is a relative newcomer.

So, what do these costs mean, and how are they calculated? Glad you asked.

1.  Development Cost.

Development cost is pretty simple.  It’s essentially the cost of virtually all activities needed to develop a new weapon system from Day 1 up to the point of production.  This includes research and development (R&D); design and engineering activities; much if not the vast majority of the system’s test activities; extensive modeling and simulation (or model development), if required; development of new technology or materials, if required; construction of prototypes and test articles/systems; and other activities.  In short, it’s what you gotta do before you set up the production line to make sure the system “works” (the quotes are intentional).

Development cost may be relatively small for a system using mature technology.  For one that was/is using “bleeding edge” technology (like the B-2), it can end up being a huge part of the total cost of getting the system to the field – particularly if the number of intended systems is cut dramatically after the program has begun.  (I’ll have more to say on that in a sidebar near the end of this article.)

To reference this to buying a car, it’s what Chevrolet (or Honda or BMW or Hyundai) spends to design the model you bought.  The buyers of new cars pay this.  You’ll probably never know how much of the purchase price it was for your car.

2. Flyaway/Rollaway/Sailaway Cost.

This is generally the most-favorable (e.g., lowest) cost for the system.  It is the cost of producing the system, including the costs associated with setting up and running the production line.  No spares, no essential associated equipment, no personnel to operate it or maintain it, no supplies or fuel.  Just the end item.

This cost will tend to go down over time.  The more systems are produced, the more widely the cost of setting up the production line gets distributed – and the more proficient the workforce tends to be at producing the item.  Both a current and an average flyaway/rollaway/sailaway cost can be calculated.  The current one is almost always the most favorable (lowest).

For buying a car, this equates to most – but not all – of what you paid for the vehicle.  No insurance, no maintenance, no associated tools or other equipment you need – just part of the cost of the car.  (Part of what you pay is actually the manufacturer recovering some of their development costs and the dealer’s overhead, but for commercial items this isn’t information that’s typically readily available to the consumer.)

3.  Weapon System Cost.

This cost is defined as the cost of the system, plus any required equipment needed to make it fully functional.  For example:  if the system requires an already-existing generator or a prime mover (truck or track) or radio to make it fully mission capable – or if it requires special test equipment or tools that aren’t already in the system – then those costs get added to the “flyaway” cost to produce the Weapon System Cost.

For buying a car, there isn’t any real hardware equivalent – unless maybe you were foolish enough to buy a Volt or some other fully electric vehicle that required you to install a charging station in your garage.  In that case, the cost of the charging station would be added.  However, mandatory charges such as taxes, title fees, and required insurance could arguably be added here – though these IMO better fit into the “Operations and Support Cost” category.

4.  Procurement Cost.

The procurement cost for an item takes the Weapon System Cost and adds a few things:  initial spares and (for ships) often also includes outfitting and post-delivery costs.  If memory serves, it also includes costs associated with initial training and transportation of the system to the field users; however, I’ve been away from the “game” for a bit, and no longer have access to some of my former references.   I could be wrong about those latter two items.

If you tend to keep a spare set of plugs and filters on-hand, adding the cost of the first set of each you’d have to buy for a newly-purchased car might be an analog to the added costs here.  If you had to travel to pick up your new car and stay overnight, those costs could also be considered an “add-on” here – as could the charges for “dealer prep” and “transportation”.

5.  Program Acquisition Cost.

Program Acquisition Cost is the sum of Development Cost and Procurement Cost.  As such, it’s one of the overall figures that actually is meaningful.  Taking this figure, and dividing it by the projected number of such systems to be produced, gives a meaningful answer to the question, “How much will each of these systems cost?”

Unfortunately, this is why reducing the numbers to be produced often causes the overall unit cost of a system to skyrocket.  If a system’s Development Cost was $1 billion, that adds $1,000,000 to the cost of each system if you plan to produce 1,000 of them ($1B/1,000 = $1M).  If the number produced is cut to 20, that means each system now gets ($1B/20) = $50,000,000 added to its unit cost.

[Sidebar:  This is precisely why the B-2 ended up being a $2 billion aircraft.  Original plans for the B-2 called for 132 aircraft to be produced.  When this ended up being cut to 21, a huge development cost of substantially over $29 billion was “split” among only 21 aircraft – yielding a Procurement Acquisition Unit Cost for the B-2 of roughly $2.13 billion EACH ($44.75B / 21).  The flyaway cost for the B-2 was a bit over 1/3 of that, and would have continued to drop as more were produced.  However, even in that case IMO its average cost likely would have still been somewhere well above $500M each.]

For the automobile example, this is much of what you paid for the car, with the other adds noted above for initial spare parts, tag, tax, title, etc . . . .  As noted above, the development costs are hidden in the sticker price of the car; you’ll pay a pro-rata portion of them regardless, but you’ll probably never know how that was broken down.

6.  Operating and Support Costs.

Operating and Support costs are simple in concept.  They’re what it costs to operate the system after it’s deployed.  This includes operator salaries; fuel and lubricants; maintenance; post-deployent engineering upgrades and fixes; spare parts other than initial spares, and all other costs associated with normal operations and maintenance.

For most systems other than space systems, this is actually the single biggest cost category – anywhere from 50+% to 80% a typical military system’s life cycle cost, with somewhere around 2/3 being typical for non-software systems.  Space systems are the “outlier” here – they have much lower operating and support costs (and consequently higher development and procurement costs) than other military systems.  That’s generally because servicing a space system in orbit is still somewhat problematic.  (smile)

Since they are paid out of O&M funds (or, for military salaries, the military personnel appropriation), you virtually never hear about these costs when systems under development are discussed.  That’s too bad, because they’re typically the lion’s share of the cost of any weapon system.

An automotive analog is the recurring cost of license plates/insurance/oil/gas/filters/tires/brakes/other maintenance and repair that the vehicle requires post-purchase.  Drive a lot – or buy a lemon – and these costs are likely to exceed the purchase cost of the vehicle within a few years.

7.  Disposal Cost.

Although it seems as if we do, we really don’t keep military systems around forever.  Eventually they get retired.  But you can’t just haul them off to the local dump at end of life.

Demilitarizing a former weapons system isn’t free.  The cost may be low (“SGT Jones – go check to see that none of the troops stuffed anything sensitive or classified in the glovebox or under the seats of that deuce-and-a-half we’re sending to PDO or left any personal gear there.”).  Or it may be high (think prepping a ship for sinking as an artificial reef – which is why many end up sold to shipbreakers for scrapping).  It may actually result in a gain for Uncle Sam – e.g., the proceeds of selling a former military vehicle at auction.  But it’s only coincidentally zero, so it’s a cost to be considered.

For an automotive example, think selling that old clunker in the driveway –  or having to pay someone to tow it away.

Life Cycle Cost.

This is the true “whole enchilada” with respect to a DoD system.  It’s the total cost of buying, owning, using, and disposing of a system from Day One to the day the system is completely “washed out” of DoD’s inventory.  It’s the sum of Program Acquisition Cost, Operations and Support Cost, and Disposal Cost.  Counter-intuitively, it’s also not one you hear that much about.

For an automobile, this is every penny you ever spent on that car.  Every last cent.  And for a privately owned auto, that neglects the value of your time, business use of car possibly excepted.

. . .

So What?

So, how are these used?  Well, as one DoD organization frequently puts it:  “That depends.”  (smile)

A PM trying to defending their program will generally try to make it seem as efficiently run and as low cost as possible.  That means they’ll likely focus any public statements on their system’s flyaway/rollaway/sailaway cost – typically the smallest of the costs – and will downplay others.  His or her position will be that, “Future improvements will keep those other costs under control, and we believe we’ll be able to lower them over time.”

Conversely, a system critic will focus on making the system appear costly.  Life Cycle Cost will be something he or she is VERY interested in determining. Barring that, they’ll focus on either Operations and Support or Program Acquisition Costs.  The latter is generally available.

Finally, when it comes to the unit cost of a particular system the number of items produced can matter A LOT.  Cut the numbers produced on a system with only minor Development Cost and there’s not a big effect.  Cut the numbers to be produced on a system with a huge R&D cost, and you could well triple the cost of the system.  That’s pretty much what happened on the B-2.

In any event, a meaningful number for the real unit cost of developing a military system under development can be obtained from two pieces of information:  the Program Acquisition Cost and the total estimated number of systems to be produced.  Using those two, a “best case” overall projected average unit cost for the system in question can be calculated.  I say “best case” because reducing the number to be produced virtually always raises the overall unit cost of any system – the development cost gets spread among fewer units, and you see less production line improvement due to workforce learning.

This is why I’m VERY concerned with the F-35. Per info I found yesterday while considering Poetrooper’s article about the F-35, the Program Acquisition Cost for the F-35 is currently estimated at approximately $406.5 billion.  The total number to be produced is currently estimated at 2,456.That yields a “best case” unit cost for the F-35 of $165+ million each.  That’s twice that of the F/A-18E/F.

Reduce the number to be produced – either through Congress cutting the budget or foreign customers deciding that it’s simply too damn expensive – and we could conceivably see a unit cost of 2 or 3 times that.  Add to that the fact that it simply can’t adequately replace the A-10, and, well . . . the term “white elephant” comes to mind.

Yes, that could indeed happen.  It already did once with the B-2.

A weapon system that is too expensive to buy in sufficient quantity, or is too expensive to use, is worse than not having one at all.  It won’t do the job – and the money wasted on such a white elephant could easily have been used to buy something useful instead.

. . .

Well, I hope this helps.  Might have a detail or two wrong above (I have been away from that for a few years now), but I’m pretty sure it’s in general correct.

 

References:

https://dap.dau.mil/acquipedia/Pages/Default.aspx

https://biotech.law.lsu.edu/blaw/dodd/corres/pdf/50004m_1292/p50004m.pdf

https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=8&cgiQuestionID=108656

Category: Military issues

Comments (44)

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  1. Graybeard says:

    Thanks, Hondo.
    Excellent analysis.

  2. Ret_25X says:

    It is the age old “cost vs price” game.

    When the government wants to gain acceptance of spending they talk about the “price” to be paid. As this often looks to be “free” to the untrained person, it seems enticing.

    Everyone cheers and gladly votes for more.

    Only later, when the national debt reaches $20 Trillion does anyone realize that the cost of the free shit is unaffordable.

  3. Texas Nomad says:

    Lets be honest – Senator Whozit isn’t seeking to cut the budget, he is inquiring why none of it is being spent in his state.

    • Hondo says:

      Could be. Could also be a big supporter of the system in question and be preparing for a Senate hearing on the matter so he can throw the PM a “softball” question.
      Or he could be a system opponent looking to torpedo it.

      In any case, any of those might be true – but they are also all irrelevant, at least to the whole point of the article.

      • Texas Nomad says:

        I liked the article. I am observing the immaculate political engineering it takes to get the most expensive weapons systems built.

        When we actually build a great, purpose-built, battle tested war machine, like A-10, B-52, or Abrams, the military can’t seem to trip over its own dick fast enough to replace it with something more expensive that doesn’t work as well.

  4. David says:

    http://www.mayofamily.com/RLM/txt_Clarke_Superiority.html
    should be required reading for anyone associated with any facet of military procurement. One of Arthur C. Clarke’s best.

  5. USAFRetired says:

    The DOD didn’t necessarily dream up all of those costs Some are created by Congress.

    To keep it simple as the statute (Nunn-McCurdy) deals with two APUC and PAUC when asking about a weapon system cost stick with those two.

  6. AZtoVA says:

    First rule of logistics tails is not to talk about the logistics tails….

    General manpower costs are usually considered sunk costs – a soldier (annual) cost is based on rank and years of service, not so much on MOS. You buy the individual whether or not they have the equipment to operate. NET (training costs) are included, though – cost of training existing service members on the new equipment.

    Overall, not a bad recitation.

    • Hondo says:

      General manpower costs are usually considered sunk costs . . .

      Yes. Sometimes. But sometimes not.

      One of the newer “selling points” (AKA “buzzwords du jour“) regarding DoD systems is “design for reliability” (or something similar). In plain English, that means “design it so it doesn’t break so often and can be fixed more quickly and easily when it does”.

      This has two major benefits: it raises the system’s operational availability (by reducing maintenance downtime) – and it also reduces the overall number of personnel needed to maintain the system.

      Personnel costs are one of the largest items in the DoD budget, and one of the fastest-growing. You can bet your butt that sharp PMs are using “reduces the number of required maintenance personnel” as a selling point for their systems at every opportunity.

      Whether this is a good thing or not is debatable. There is a good argument to be made that “too many maintenance personnel” is a self-correcting problem – if not a complete illusion – when the shooting starts and equipment starts getting “rode hard and put away wet” day after day.

      • Dinotanker says:

        Hondo,

        Thanks for the article! Methinks I heard something along these lines back when I worked Boeing. However, it was from the contractor side…

        The manpower costs topic kind of struck an off topic bell with me: Not being the brightest bulb in the box, I remember the drill sergeants at the armor school talking about the survivability of the M60A1 (unless it was a catastrophic hit). It took me a while to realize that they were really talking about how relatively easy it was to turn the TANK around and put it back on the battlefield, after they had hosed out what was left of the crew (Me and my buddies), welded up the holes, replaced the damaged components and put a coat of paint on the inside of the turret. DAMN that was a bit of reality slapping me upside the head…

  7. Sparks says:

    Thank you for the research and resulting article Hondo.

  8. Sparks says:

    I begin to think that the F-35 is at a place of “fish or cut bait”. Either start holding some feet to the fire to make it do what it was advertised to do and do so in a timely manner, or pull the plug and put our money elsewhere. My first thought is that it is already accepted, as reported by military commanders in the field that aircraft like the F-35 do not out perform the A-10 for CAS. That in itself is a show stopper, and a case for the A-10 to be kept and updated to be “all it can be”. Many ‘good idea’ weapons systems over the decades did not come to fruition with considered after thought by the Pentagon. One reason being that technology out paced the system while it was still in flight testing. I understand that just like the laptop I am typing with, though I paid a lot for it, it was outdated before it was delivered. My only benefit was that this time, after owning several systems before, I bought one which can be upgraded from the processor all the way out. Every component was designed to be removed and replaced with the newest model. The F-35 is designed to be upgraded and upgrades have already happened but most changes to it have been due to subsystem failure. Sixth generation aircraft are already being designed and unless the F-35 gets into the inventory soon, it will make no sense to continue with it. Getting into the inventory sooner is a problem because a rush to sell them often leads to deadly consequences due to sub par work or systems.

    I am not a genius nor consider myself an overly smart person but looking at my kitchen counter and seeing the wooden keeper holding 8 different knives tells me that one knife can’t do everything and each in fact is designed for a purpose.

    The political side of this is the F-35 has a huge multi-state appearance in manufacturing and getting politicians to see reason for stopping it, is near to impossible. That has always been a problem but with manufacturers as large as these, any decent from a politician can be answered easily by a parts plant in their state.

    I cannot say I have the answer to this but I do know a whole lot of OUR money has been thrown into a hole that has yet to show real fruit and it seems the more the F-35 is tested, the more distant the reality of its successfully adding to our war fighting efforts it becomes.

    It will take smarter people than me to know but IMHO, I think the F-35 is beyond redemption. It comes down to the old “throwing good money after bad” debate.

    • David says:

      ever try to throw a Swiss Army knife? I rest my case.

      • Texas Nomad says:

        If you get one with enough doohickeys it has a considerable weight and would make a fine projectile.

        • The Other Whitey says:

          At which point I can save the money I’d spend on that Swiss Army knife that I’d use for a purpose for which it wasn’t intended, and pick up a rock that would work just as well, possibly better, for free.

      • Sparks says:

        No, because I knew better. But thank you David, you made my point with far fewer words my friend.

        • Fyrfighter says:

          I think it was Poe that recently pointed out that pilots who have flown the F-35 in recent war games are more than impressed with it’s performance, air to air, and in those war games, it didn’t loose a single battle. That being said, and not being a pilot, I’m willing to trust pilots, if not politicians / bean counters on the value of the plane. I still don’t believe that it can / should replace the A-10, but if it’s used in the fighter role, not the CAS role, then it seems that maybe we should invest. I haven’t been a fan in general, but the post by Poe changed my mind..
          Just my 2c worth

          • Poetrooper says:

            Fyr, as I mentioned in my first article, the new battle doctrine calls for the F-35 to manage the battle space using the A10, the F-15, the F-16 and the F-22 all in the individual roles at which they excel. There’s a great illustration of this out there on the Web but I cant re-find it.

            There have been several articles in aviation publications lately indicating that the Air Force has resolved itself to supporting the role of a lingering, low-flying slow-mover for CAS whether it’s a Super-Warthog or one of several others they’re looking at currently.

            I have spent much of my life around military aviators and if they tell me this bird is worth every penny then I’m listening to the men who have flown and will have to fight the machine, not the multitudes of critics, of whom I was one, until the pilot reports began coming out.

            • Torinojon says:

              My question to you then is this: why do we need the F-35 to manage the battle space using various aircraft at our disposal when we already have such aircraft already in our inventory? The AWACS, and its naval equivalent do this very thing, do they not?

              • Poetrooper says:

                Do some reading on all the information that’s out there on aviation websites. You’re not talking apples and oranges, you’re talking about a peanuts and coconuts comparison.

                All of you bitching about this plane are clearly not conversant with its capabilities that are being reported by those flying it. They are impressed and as a former grunt as well as a former staff guy, I’m inclined to listen to the guy who’s in the fight, not the one in headquarters.

                All the complaints here are about costs. If this aircraft can do what the pilots flying it say it can do, I believe most of you will quit bitching about the price.

  9. Perry Gaskill says:

    This stuff veers way over into bean-counter land, Hondo. For what it’s worth, it might be useful to consider some additional basic issues which affect project costs:

    Scope of Work – Projects can often either fail or get very expensive because the scope of work isn’t clearly defined. For example, a project might be defined as replacing every fifth lug-nut on every Army Humvee. Such might be a valid definition of scope, but if and only if you actually know how many Humvees you have and where they are.

    Engineering Change Orders – In an ideal world, projects would always follow a clear scope of work to completion. In the real world, they almost never do. Unknown variables, changing conditions or sometimes someone just changing his mind can alter costs.

    PERT and CPM – Most large and/or complex projects use a variant of Project Evaluation and Review Technique (PERT) or Critical Path Method (CPM) which is mostly a fancy way of saying that tasks need to be completed concurrently instead of consecutively. Otherwise, something such as, say, an aircraft carrier would never be built. The problem you can run into is that tasks become interdependent to the point that if one is thrown off schedule, it can affect a range of other things.

    • Hondo says:

      Different issues entirely, PG. Relevant and important, yes – but far out of scope (smile) for the article I wrote. My article was only addressing the plethora of ways DoD “calculates costs” for systems under development. Those alone are enough to make you dizzy.

      FWIW: a GANTT chart is actually far more common these days in higher-level DoD project/program briefings than a PERT chart. That’s probably because Microsoft Project produces them more readily than it does a PERT chart – and they’re also pretty easy to do in Powerpoint. (smile)

      And don’t get me started on freaking requirements “creep” and/or ill-defined requirements. I won’t be adding any (smile) to comments I might make concerning that topic.

      For what it’s worth: “beancounting” is often used as a pejorative term, and when bullets are flying it’s indeed a bad thing to overemphasize. However, it’s a big part of how we make sure – BEFORE the bullets start flying – that we have enough beans/bullets/bandaids/trucks/radios/tanks/etc . . . to win the next war. And when DoD goes to Congress, that beancounting allows DoD to ask for the one thing Congress gives them that’s essential, and which they can’t get elsewhere: the $$$ to pay for those beans/bullets/bandaids/trucks/radios/tanks/etc . . . . It’s one reason why high-level DoD decision makers seem to dwell so much on “beancounting”.

      • Perry Gaskill says:

        I understand. Just trying to inject a half-ass sanity check. This stuff about DoD project costs reminds me of the old Enron mark-to-market accounting. Basically you can make the numbers anything you want them to be.

        • Hondo says:

          I’d disagree. The numbers say what they mean, and they’re really hard to fake – IF you’re dealing with someone who knows what the numbers mean. The problem is that many people don’t have a clue what those various “costs” actually mean – and thus are easily led down the primrose path by someone unscrupulous.

          Each of the cost figures have a valid use. The key is knowing what each really means, and when it’s appropriate – and when it’s not.

          • OldSoldier54 says:

            “The problem is that many people don’t have a clue what those various “costs” actually mean – and thus are easily led down the primrose path by someone unscrupulous.”

            Bingo.

            Great post, Hondo. Makes it very clear.

          • Poetrooper says:

            Hondo, I swear if I ask you where a certain place was, you’d tell me how to build a GPS system complete with devices and triangulating satellites.

  10. Green Thumb says:

    Sounds like All-Points Logistics may be in on this contract.

  11. Retired Grunt says:

    I’m proud of this article, you’re starting to sound like a program or school trained Force Manager. Just don’t get started on program years, construction and the multitude “colors of money” force insiders use. Planning, programming budgeting and execution blew this simple grunts mind at the schoolhouse….wow…

    • Hondo says:

      Oh, you want to know about the various “colors of money” and how long each is valid – and what they can and can’t be used for? Well, that’s a subject for another day. Short version: 5 “colors”, with validity periods ranging from 1 year to 5 depending on type (other than shipbuilding, which is valid for either 7 or 10 – I’d have to look that part up). Plus a few types of literally “no year” funds that never expire. And each has different rules regarding how they can and can’t be used.

      It’s not just an area governed by regs, either. Much of that is specified by Federal law – and quite often one doesn’t get a “free pass” for violating that, even if your “intent was pure”.

      Yeah, I’m competent to give an overview of that topic too with a little brush-up. Had to learn about that stuff along the way, too – if for no other reason than to keep out of trouble. If there’s a need, I guess I can write an article explaining some of that stuff.

      But I’d really rather not. If you think this article’s topic can make your head spin, well, you ain’t seen nothin’. (smile)

      • 1610desig says:

        Hondo, I was a COR once was never happy after milestone “B”, just wanted to get useful prototypes out to the field to spank bad guys..this is deep shit for us poser abusers and I think you could use a wee dram (or three) of Speyside single malt…you’re giving me flashbacks and I would prefer DTs (actually I’m strictly two drinks a day but added that for literary flourish)

      • USAFRetired says:

        O&M Dollars are 1 year money ( 1 year to obligate and 5 additional years to expend.

        R&D funds are 2 year money for obligation purposes with 5 additional years to expend.

        Procurement funds are 3 year money with the exception of shipbuilding that is 5 year. Again they have 5 years after expiration before the funding cancels.

        The obligation period plus the life of the funds post expiration can total 10 years if it is ship building, but the longest obligation period is 5 years.

        I’ve spent the last 13 years post retirement working in support of the Government on various acquisition programs.

        Hondo is correct when he talks about regulatory requirements as well as statutory requirements. The latter is like Gravity, its not just an idea its the law and woe be unto him who breaks the law.

        • Hondo says:

          You are correct. It’s a form of Procurement funding, but has a 5 year obligation period vice the normal 3. I must have been including the 5 year post-expiration validity period to come up with 10 years as a possibility. Dunno where I came up with 7.

          • USAFRetired says:

            My guess the 7 came from the 2 year obligation life for RDT&E funds plus the 5 year post expiration validity.

            The bad news is as a self respecting Ops guy I have learned a whole bunch about funding. The good news that has turned into a marketable commodity post retirement.

            • Hondo says:

              Actually, I think I made a different error. I knew Shipbuilding had 2 extra years with respect to other funds in its category, but I think I was erroneously remembering it as a variant of MILCON vice Procurement.

              5 + 2 does equal 7, so that fits.

              Still not sure where I was coming up with 10 unless it was 5 + 5 (5 yrs obligation, 5 years post-obligation validity) as you suggest above.

  12. PFM says:

    Don’t forget the potential partner buyers when talking about this – purchase agreements open up a whole new can of worms. I was just reading a few weeks ago where Lockheed had assured the Italians that components of their purchase (and replacement parts) would be made by Italian firms, and you can be certain that similar agreements were made with other buyers. What a tangled web we weave…

  13. Commissar says:

    Speaking of the F-35 I think it is too expensive for a system we do not need. Development cost is rarely a total waste since the tech will be used in future systems. But if we do not need the damn things or if we are better served buying alternative systems then the program should be killed.

    Personally, I dislike the F35 for its tendency to cannibalize support and funding for the A-10 with very little to show for the resources allocated.

    I would love to see resources put into updating and modernizing and finding ways to better scale the A-10 program for the current and near horizon operating environments.

  14. Commissar says:

    Also, nice write up, Hondo.

    • Hondo says:

      Thanks.

      I concur re: the F35. At over double the unit cost of the F/A-18E/F when all procurement costs are included, I doubt we’ll ever be able to afford the 2000+ we plan to procure for DoD (the others will go to overseas customers). And if the DoD production gets cut to around 1000 (which based on the B2’s and F22’s history I’d fully expect to happen), the unit price for the aircraft will close to double – to somewhere in the neighborhood of $300M each. For a single-seat aircraft.

      The other thing that bothers me about the F35 is the huge R&D cost. The F35 follows the F-117 and B-2; it should have been able to make use of their R&D regarding stealth to reduce R&D required in that area. Similarly, the F22 solved (more or less) supercruise, so reusing results from the F22 should have meant less R&D required in that area.

      Yet the F35’s R&D costs, as of 2 years ago, were over $55B – and the program’s cost has risen $27+B since then. I’d guess total R&D is now in the neighborhood of $60B.

      That’s over 2x what the B2 spent. And the B2 was breaking new ground (curved-surface stealth) in an area that the F35 should have benefited from.

      I’d love to know what issues are consuming all the F35 R&D funding. Seems to me the two “biggies” for that airframe (stealth and supercruise) have largely been solved in prior development efforts.

      • OldSoldier54 says:

        I have wondered about some of that, also.

        Which makes me wonder if misdirection and straight up lying are going on … to swell the already bloated corporate coffers.

  15. Fyrfighter says:

    I never thought i’d say this Commissar, but that has to be the most well thought out, coherent, and intelligent thing I’ve ever seen you write here…. I’m still not sure I about the need or lack of for the F-35, but still, well done

    • Poetrooper says:

      I have to disagree Fyrfighter. It doesn’t sound like he’s read any of the pilots’ accounts of the plane’s capabilities nor of the new warfighting doctrine for the F-35. It’s not just that the F-35 itself has 20-1 air to air shoot-down ratios at Red Flag and even better results against ground targets, but that it also has the ability to potentiate the lethal effects of the A-10, F-15, F-16 and F-22 in the way it effectively manages the battle space from a protective mother hen stand off position. I just read an article that this enhanced lethality of the F-16 is causing the Air Force to extend the life of the Super F-16 well into the 1940’s.

      That is the thing about this particular aircraft that makes it different from previous fighter/bombers. It is not a stand alone evaluation but an assessment of system wide impact.

  16. SFC D says:

    I concur, Fyrfighter! Kudos, Commisar!

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