How the F-35 Nearly Doubled In Price (And Why You Didn’t Know)
On June 14 — Flag Day, of all days — the Government Accountability Office released a new oversight report on the F-35: Joint Strike Fighter: DOD Actions Needed to Further Enhance Restructuring and Address Affordability Risks. As usual, it contained some important information on growing costs and other problems. Also as usual, the press covered the new report, albeit a bit sparsely.
Fresh bad news on the F-35 has apparently become so routine that the fundamental problems in the program are plowed right over. One gets the impression, especially from GAO’s own title to its report, that we should expect the bad news, make some minor adjustments, and then move on. But a deeper dive into the report offers more profound, and disturbing, bottom line. Notorious for burying its more important findings in the body of a report — I know; I worked there for nearly a decade – GAO understates its own results on acquisition cost growth in its one-page summary, which—sadly—is probably what most read to get what they think is the bottom line.
In that one-page summary, GAO states the F-35 program now projects “costs of $395.7 billion, an increase of $117.2 billion (42 percent) from the prior 2007 baseline.” The much more complete story is in this table from the report:
The summary uses the wrong baseline. As F-35 observers know and as the table shows, the cost documentation of the F-35 program started in 2001, not 2007. There has been a lot more cost growth than the “$117.2 billion (42 percent)” stated.
Set in 2001, the total acquisition cost of the F-35 was to be $233.0 billion. Compare that to the current estimate of $395.7 billion: cost growth has been $162.7 billion, or 70%: a lot more than what GAO stated in its summary. However, the original $233 billion was supposed to buy 2,866 aircraft, not the 2,457 currently planned: making it $162 billion, or 70%, more for 409, or 14%, fewer aircraft. Adjusting for the shrinkage in the fleet, I calculate the cost growth for a fleet of 2,457 aircraft to be $190.8 billion, or 93%.
The cost of the program has almost doubled over the original baseline; it is not an increase of 42%. Now, you know why DOD loves the rubber baseline. Reset the baseline, and you can pretend a catastrophe is half its actual size.......